First off, I do not believe for one second that pharmaceutical reform is knocking on the door of this country. Further, this blog is not about politics, not even really is it about economics or business (though I do use the language of economics and business). My blog is for the purpose of developing my idea-shipping skills. With the necessary disclaimer out of the way I would like to get on with the strategic management decisions being made by pharmaceutical companies developing cancer- fighting drugs at prices close to $100,000 a year simply to prolong a cancer patients’ life a few months.
I know I just said this is not really about economics; but, I am going to use an economical technique known as cost-benefit analysis without the use of quantitative data that would turn this into an economic report. It is akin to the pros and cons decision making tool we use when we are trying to decide if we want to stay in our current relationship or get out, quickly.
Benefits to the expensive drug treatment to prolong life of a terminal cancer patient: A few more months with loved ones, finishing end-of-life business.
Costs to the expensive drug treatment to prolong life of a terminal cancer patient: A few more months with loved ones, finishing end-of-life business, on a life support system, reeling from the negative side-effects of ineffectual treatments of chemotherapy, and other preventive medicines that prevented nothing, causing loose bowels, nausea, and probably another type of cancer or Cancer. The high monetary cost of the drug imposed on tax payers through employer/government health care programs; yet, “ Bob Svensson, 80, a former corporate finance officer from Bedford, Mass." would not spend that money," because the benefit doesn't seem worth it, he says.” His insurance company, ergo US taxpayers, foot the bill.
My education in marginal cost-benefit analysis tells me the pharmaceutical and health insurance companies should stop offering and paying for these drugs. Yet, how does one put a price on a life? Oh, these same companies do it all the time, you say? They deny non-terminal patients treatment, you say? I’m sure the 300+ million people living in America today have at least one story about the inconsistent or inhuman practices by these very oligopolies.
I had a lecture this semester about medical research for treatments that benefit those most willing to pay. The class was Economics of Racism at Sac State and we learned that while there is nothing biologically different about any human on the planet, there are still different genetic combinations between people of different ethnicities that allow the same disease to be contracted through genetic mutations over a different sequence of genes. As a result, the treatment for disease X will work on Person A, but not on Person B because the genetics of the two people differ. Typically these two people are from different “races;” and, Person B will not get a variation of the drug because he or she is poor and unable to qualify with the insurance company to pay for the drug.
The companies responsible for treating the sick and dying could still make lots of money without tossing a decent cost-benefit analysis out of the window. I fully understand the concept of increasing the market share of existing stock as the driving motive of a firm; perhaps, the companies in the health care industry should be not-for-profit entities so that universal health care would become a reality. Not-for-profits are not now targeted as socialist entities, so why the government cannot create a law serves and protects its citizens I am not sure; I stay away from politics.
Sunday, September 26, 2010
Sunday, September 19, 2010
We Are What They Feed Us
This week I take on the food industry in America. The more I learn about business the less I realize I know about the reality of my personal view on business. Being raised a vegetarian I have an incensed disdain for the processed foods served in the supermarket and I just cannot understand why people, children and adults, are so adverse to eating healthy food. So I will offer my thoughts on the corporate food industry in America.
The Economist (September 18, 2010) reports Harry Balzer of NPD, a research firm, saying “taste, value and convenience are the most important to the consumer (79).” My problem with the interpretation of consumer preferences by these food manufacturing companies is that companies such as Kellogg, Kraft, PepsiCo, and others create the taste, value and convenience consumers desire. These food companies, who, in effect, act as an oligopoly, need to make the food that is nutritionally good for us taste better to those finicky consumers, and make the preparation as easy as other food stuffs on the market, further reminding people that veggies cost less, therefore consumers can purchase more with their dollar.
My dad, master vegetarian chef of the family, used cumin on steamed vegetables and they taste so much better than vegetables that are served plain. I now spend $5 on a bouquet of veggies: broccoli, cauliflower, yellow squash, zucchini squash, asparagus and corn, spend five minutes chopping them up and another 5-10 minutes to steam them on the stove. Sprinkle some cumin and half the meal is prepared. Pepper tastes great, in addition to garlic power. Pour on vinaigrette dressing (not ranch), there are a number of ways to make something great for you taste great at a low cost and will not “inconvenience” the consumer much.
There was a time when the pre-packaged processed foods were a terrific, new item at the markets. Moms did not have to wait in long lines at the deli to get sandwich meat for school lunches and had more time to see Timmy’s soccer game. The turkey didn’t taste that much different and it stored in the refrigerator easily. Little did Mom know that jobs were about to be lost when the packaging process became automated. Now is the time to take a stand against the corporate automation by demanding less of the pre-packaged processed lunch meats, demanding more of the variety that comes from the butcher. This will work two-fold: a decrease in demand for the pre-packaged foods will drive up the price and therefore become less desirable to consumers (decrease in value), and the increase in demand of the butcher prepared selections will decrease the price, thus further increasing the value to the consumer.
There is little that is healthy about macaroni and cheese if it comes out of a box or if it is made from scratch. The reason the popular line of Macaroni & Cheese tastes good is due to the chemistry involved with the process. Cheese does not naturally melt to simulate “good” mac and cheese unless it comes in dehydrated form, filled with preservatives in a small package inside the cardboard box of enriched-(sugared) macaroni pasta. The food in that box will not taste like anything but the cardboard box unless the manufacturer includes all the chemicals made in the research and development lab. My eyes grow wide when I am standing in line at the supermarket behind a shopper with 20 frozen dinners from Healthy Choice. I wonder to myself “is your life so busy that you cannot spend a 1/2 hour preparing some food to eat?” No, he is just lazy. Perceived taste and perceived convenience will sacrifice good eating habits every time. Nah, perhaps I should say good eating habits are trumped every time by the perception of good taste and the perception of convenience to the consumer.
I know there is a middle ground between TV dinners and fully preparing a meal in the kitchen. Kraft, et al, is doing fine by Michelle Obama reducing the amount of sodium in foods (78), salt tastes good, though, and it is a natural resource, unlike most of what is in their food. I know my Morning Star weenies are filled with sodium because that is how you make something that is not meat resemble meat in taste and texture. Americans have high levels of sodium in the food eaten because that is how manufactures make a collection of synthesized atoms taste like beef or meatloaf when it really is not beef or meatloaf. The sodium levels in my family are at healthy levels because we don’t eat a majority of the food on the shelves of the supermarkets, we therefore eat all the salt on our food as we care to. These firms need to stop playing tit-for-tat game theory with the consumers who do not expect to be playing the game, our lives are at stake.
The Economist (September 18, 2010) reports Harry Balzer of NPD, a research firm, saying “taste, value and convenience are the most important to the consumer (79).” My problem with the interpretation of consumer preferences by these food manufacturing companies is that companies such as Kellogg, Kraft, PepsiCo, and others create the taste, value and convenience consumers desire. These food companies, who, in effect, act as an oligopoly, need to make the food that is nutritionally good for us taste better to those finicky consumers, and make the preparation as easy as other food stuffs on the market, further reminding people that veggies cost less, therefore consumers can purchase more with their dollar.
My dad, master vegetarian chef of the family, used cumin on steamed vegetables and they taste so much better than vegetables that are served plain. I now spend $5 on a bouquet of veggies: broccoli, cauliflower, yellow squash, zucchini squash, asparagus and corn, spend five minutes chopping them up and another 5-10 minutes to steam them on the stove. Sprinkle some cumin and half the meal is prepared. Pepper tastes great, in addition to garlic power. Pour on vinaigrette dressing (not ranch), there are a number of ways to make something great for you taste great at a low cost and will not “inconvenience” the consumer much.
There was a time when the pre-packaged processed foods were a terrific, new item at the markets. Moms did not have to wait in long lines at the deli to get sandwich meat for school lunches and had more time to see Timmy’s soccer game. The turkey didn’t taste that much different and it stored in the refrigerator easily. Little did Mom know that jobs were about to be lost when the packaging process became automated. Now is the time to take a stand against the corporate automation by demanding less of the pre-packaged processed lunch meats, demanding more of the variety that comes from the butcher. This will work two-fold: a decrease in demand for the pre-packaged foods will drive up the price and therefore become less desirable to consumers (decrease in value), and the increase in demand of the butcher prepared selections will decrease the price, thus further increasing the value to the consumer.
There is little that is healthy about macaroni and cheese if it comes out of a box or if it is made from scratch. The reason the popular line of Macaroni & Cheese tastes good is due to the chemistry involved with the process. Cheese does not naturally melt to simulate “good” mac and cheese unless it comes in dehydrated form, filled with preservatives in a small package inside the cardboard box of enriched-(sugared) macaroni pasta. The food in that box will not taste like anything but the cardboard box unless the manufacturer includes all the chemicals made in the research and development lab. My eyes grow wide when I am standing in line at the supermarket behind a shopper with 20 frozen dinners from Healthy Choice. I wonder to myself “is your life so busy that you cannot spend a 1/2 hour preparing some food to eat?” No, he is just lazy. Perceived taste and perceived convenience will sacrifice good eating habits every time. Nah, perhaps I should say good eating habits are trumped every time by the perception of good taste and the perception of convenience to the consumer.
I know there is a middle ground between TV dinners and fully preparing a meal in the kitchen. Kraft, et al, is doing fine by Michelle Obama reducing the amount of sodium in foods (78), salt tastes good, though, and it is a natural resource, unlike most of what is in their food. I know my Morning Star weenies are filled with sodium because that is how you make something that is not meat resemble meat in taste and texture. Americans have high levels of sodium in the food eaten because that is how manufactures make a collection of synthesized atoms taste like beef or meatloaf when it really is not beef or meatloaf. The sodium levels in my family are at healthy levels because we don’t eat a majority of the food on the shelves of the supermarkets, we therefore eat all the salt on our food as we care to. These firms need to stop playing tit-for-tat game theory with the consumers who do not expect to be playing the game, our lives are at stake.
Saturday, September 11, 2010
Shopenomics (changed)
There is a new web start-up called Swipely where a consumer can track her “path of consumption” throughout the day. According to The Economist “those who cherish privacy will recoil in horror, but for digital exhibitionists [Swipely] is a dream.” It appears to be the child of online banking and Facebook, only it is not connected to either; sadly, Swipely is a completely independent social network site. This is where the firm may have gone wrong and my suggestions are: Find some way to be integrated into Facebook and offer more coupons and deals to “swipers.”
Everybody and their mom have Facebook, literally. One reason Facebook is so popular is because it does so much for the user on one site and does not make online group activities difficult or confusing. Question: Why do I want to have a Facebook and a Swipely account since they both act in the same fashion? The idea behind Swipely is it “makes it easy for customers to tell their friends how they are spending their money in the real world, something they probably would not do if they had to type all the data in. (The Economist Sep. 11 2010, 76)” It is a similar idea to location-based social networking that lets people know where you are and allow businesses to send restaurant deals and travel tips. The technology Swipely uses allows for a secure, read-only connection to the bank of a user to download transaction history. Going back to my question, even if I did find the marginal benefit of Swipely to be greater than zero, why will my Facebook friends want to add another site when they have happy feet at Facebook?
The next deal is deals. If businesses are going to get me to advertise their product every time I use plastic to make a purchase, there should certainly be a rewards program involved. For places such as Starbucks and Dominoes, the consumer should be rewarded with a free latte or a free pizza after so many visits. Other stores that sell clothing and shoes might offer discounts on select items if a person “checks-in” to Facebook to tell all of her friends she is at H&M or J.C. Penny’s shopping. The Swipely sales team should go out there and get as many stores as humanly possible to get on board with the discounts and sales promotion so that each time a shopper “checks-in” or makes a purchase, the whole freaking world will know about it. The concept that Foursquare members can get discounts and perks from businesses by becoming “mayor” or frequenting a place often is genius and truly should be more accepted by the millions of people who update everything all day long.
I had to sign up with Swipely to get the down-low, however, I do not intend to make use of it. Honestly, I barely go to Facebook and only recently did I feel “ready” for the experience. Shopping, in the rich-world, has become a leisure activity that is a hobby for a lot of people, discounts on the new handbag from Louis Vuitton would make sense for a shopper who updated where she was. Frequent buyer rewards is a great way to increase loyalty if the consumer is going to broadcast every purchase made with the handy-dandy plastic card. Swipely is a good idea but it will not work as an independent social network site. Hey Mark Zuckerburg: Buy out this firm and make it work on Facebook.
Update: Daring Fireball uncovered this gem that relates nicely with my article. It is a little long; I'll admit, I didn't read the whole thing.
Everybody and their mom have Facebook, literally. One reason Facebook is so popular is because it does so much for the user on one site and does not make online group activities difficult or confusing. Question: Why do I want to have a Facebook and a Swipely account since they both act in the same fashion? The idea behind Swipely is it “makes it easy for customers to tell their friends how they are spending their money in the real world, something they probably would not do if they had to type all the data in. (The Economist Sep. 11 2010, 76)” It is a similar idea to location-based social networking that lets people know where you are and allow businesses to send restaurant deals and travel tips. The technology Swipely uses allows for a secure, read-only connection to the bank of a user to download transaction history. Going back to my question, even if I did find the marginal benefit of Swipely to be greater than zero, why will my Facebook friends want to add another site when they have happy feet at Facebook?
The next deal is deals. If businesses are going to get me to advertise their product every time I use plastic to make a purchase, there should certainly be a rewards program involved. For places such as Starbucks and Dominoes, the consumer should be rewarded with a free latte or a free pizza after so many visits. Other stores that sell clothing and shoes might offer discounts on select items if a person “checks-in” to Facebook to tell all of her friends she is at H&M or J.C. Penny’s shopping. The Swipely sales team should go out there and get as many stores as humanly possible to get on board with the discounts and sales promotion so that each time a shopper “checks-in” or makes a purchase, the whole freaking world will know about it. The concept that Foursquare members can get discounts and perks from businesses by becoming “mayor” or frequenting a place often is genius and truly should be more accepted by the millions of people who update everything all day long.
I had to sign up with Swipely to get the down-low, however, I do not intend to make use of it. Honestly, I barely go to Facebook and only recently did I feel “ready” for the experience. Shopping, in the rich-world, has become a leisure activity that is a hobby for a lot of people, discounts on the new handbag from Louis Vuitton would make sense for a shopper who updated where she was. Frequent buyer rewards is a great way to increase loyalty if the consumer is going to broadcast every purchase made with the handy-dandy plastic card. Swipely is a good idea but it will not work as an independent social network site. Hey Mark Zuckerburg: Buy out this firm and make it work on Facebook.
Update: Daring Fireball uncovered this gem that relates nicely with my article. It is a little long; I'll admit, I didn't read the whole thing.
Sunday, September 5, 2010
What’d You Do With My Cloud?
Here is an improvement on a business idea for the firm who created Instapaper, the software that allows a computer user to save the content of a webpage to read later even if there is no internet connection. (Per the recommendation of Daring Fireball): Make an add-on for your program that will work like an RSS Reader. Otherwise how am I supposed to “read later” when I am offline if I can only access the saved webpages when I am online?
Perhaps I am not doing something correctly; however, the queue at Instapaper I created while surfing with a connection is on the cloud. Now that I am no longer with a connection I cannot access the cloud where I saved the webpages. I may not be a tech wizard but I am pretty savvy when it comes to getting around a computer: We had our first Apple/Macintosh computer in my home when I was in 5th grade and I had to take classes in Management Information Systems (Windows, Office, and Internet Explorer) last year in college. If there was anything I am average at, it is the computer.
Something is not right with the design of Instapaper because I am unable to make it work without an internet connection, when the whole point of the software is to be able to do work without an internet connection. It is a good idea; I suggest a new version, or perhaps the creation of an Firefox bookmark add-on that will store the queue of webpages to be viewed once the internet connection has been disconnected.
Perhaps I am not doing something correctly; however, the queue at Instapaper I created while surfing with a connection is on the cloud. Now that I am no longer with a connection I cannot access the cloud where I saved the webpages. I may not be a tech wizard but I am pretty savvy when it comes to getting around a computer: We had our first Apple/Macintosh computer in my home when I was in 5th grade and I had to take classes in Management Information Systems (Windows, Office, and Internet Explorer) last year in college. If there was anything I am average at, it is the computer.
Something is not right with the design of Instapaper because I am unable to make it work without an internet connection, when the whole point of the software is to be able to do work without an internet connection. It is a good idea; I suggest a new version, or perhaps the creation of an Firefox bookmark add-on that will store the queue of webpages to be viewed once the internet connection has been disconnected.
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