Non-Environmental Cost-Benefit News

We've all been there. At the car sales lot, being simultaneously wooed by big-numbered rebates rolling off the tongue of a fast-talking salesperson. The experience is both tantalizing and worrisome. Promotions are so common in the marketplace that they are basically a ubiquitous part of our buying experience. An article in the March 2005 issue of the Journal of Consumer Research taps into this marketplace phenomenon, explaining how consumers react to and are affected by promotions. It seems that while promotions can be a good thing, consumers also construe them negatively as well.

"Marketing promotions and incentives can be a double-edged sword. On the one hand, as prior research and common wisdom suggest, consumers are enticed by the proffered benefits and rewards. On the other hand, this article assumes that consumers may perceive the incentives as intended to influence their consumption behavior and limit their brand choice. Such threats to consumers' perceived freedom arouse promotion reactance," explains author Ran Kivetz (Columbia University School of Business).

While many previous studies have examined promotions, Kivetz asserts this is the first wholesale study of how consumers react to promotions, particularly their skepticism of incentives.

"Despite voluminous research on promotions, the basic notion that they can evoke reactance has not yet been studied," writes Kivetz. "It is further proposed that consumers reduce such reactance and reaffirm their autonomy by selecting promotions and incentives that foster a consistency between the reward and the reinforced behavior."

Promotion Reactance: The Role of Effort-Reward Congruity. RAN KIVETZ. 2005 by JOURNAL OF CONSUMER RESEARCH, Inc. - Vol. 31 - March 2005

http://www.journals.uchicago.edu/pipermail/jcr-toc/2005/000015.html
http://www2.eurekalert.org/pub_releases/2005-03/uocp-nsi032905.php

Objective To establish the cost effectiveness of nurse led secondary prevention clinics for coronary heart disease based on four years' follow up of a randomised controlled trial.

Design Cost effectiveness analysis.

Setting 19 general practices in north east Scotland.

Participants 1343 patients (673 in intervention group and 670 in control group, as originally randomised) aged under 80 years with a diagnosis of coronary heart disease but without terminal illness or dementia and not housebound.

Intervention Nurse led clinics to promote medical and lifestyle components of secondary prevention.

Main outcome measures Costs of clinics; overall costs to health service; and cost per life year and per quality adjusted life year (QALY) gained, expressed as incremental gain in intervention group compared with control group.

Results The cost of the intervention (clinics and drugs) was £136 ($254; {euro}195) per patient higher (1998-9 prices) in the intervention group, but the difference in other NHS costs, although lower for the intervention group, was not statistically significant. Overall, 28 fewer deaths occurred in the intervention group leading to a gain in mean life years per patient of 0.110 and of 0.124 QALYs. The incremental cost per life year saved was £1236 and that per QALY was £1097.

Conclusion Nurse led clinics for the secondary prevention of coronary heart disease in primary care seem to be cost effective compared with most interventions in health care, with the main gains in life years saved.

by James P Raftery, professor, Guiqing L Yao, research fellow1, Peter Murchie, Cancer Research UK research training fellow in primary care oncology, Neil C Campbell, senior lecturer, Lewis D Ritchie, Mackenzie professor of general practice

BMJ 2005;330:707 (26 March), doi:10.1136/bmj.38342.665417.8F (published 16 February 2005)
BMJ http://bmj.bmjjournals.com
http://bmj.bmjjournals.com/cgi/content/abridged/330/7493/707

Kenneth A. Small, Clifford Winston, and Jia Yan apply recent econometric advances to study the distribution of commuters’ preferences for speedy and reliable highway travel. Their analysis applies mixed logit to combined revealed and stated preference data on commuter choices of whether to pay a toll for congestion-free express travel. They find that motorists exhibit high values of travel time and reliability and substantial heterogeneity in those values. Small, Winston, and Yan suggest that road pricing policies designed to cater to such varying preferences can improve efficiency and reduce the disparity of welfare impacts compared with recent pricing experiments.

by Kenneth A. Small, Clifford Winston, and Jia Yan. Working Paper 05-02. Feb 2005.
AEI-Brookings Joint Center www.aei-brookings.com
http://www.aei-brookings.com/publications/abstract.php?pid=900

GlaxoSmithKline (NYSE: GSK) today announced that its booster vaccine candidate, BoostrixTM [Tetanus Toxoid, Reduced Diphtheria Toxoid and Acellular Pertussis Vaccine, Adsorbed (Tdap)] received a unanimous favorable recommendation from the Vaccines and Related Biological Products Advisory Committee of the U.S. Food and Drug Administration (FDA). Currently, there is no pertussis vaccine approved for use in the U.S. for children seven years of age or older. Immunity from childhood vaccination generally wears off after five to 10 years, leaving many adolescents susceptible to this highly contagious disease. If approved, Boostrix would add a pertussis component to the routine tetanus/diphtheria booster currently recommended for adolescents. The committee's favorable recommendation, although not binding, will be considered by the FDA in its final review of the Biologics License Application (BLA) for Boostrix.

Reported cases of pertussis have increased since the mid-1970s. According to the Centers for Disease Control and Prevention (CDC), there were almost 20,000 cases in 2004 – the highest number of reported cases in more than 40 years. In addition, 39 percent of cases reported to the CDC in 2003 occurred in adolescents 10-19 years of age. Adolescents, in whom classic signs and symptoms of pertussis are often absent, may go undiagnosed and be the source of infection for susceptible infants and other family members.

"Pertussis is a serious and growing public health threat, and we are extremely pleased that the FDA Advisory Committee has provided a unanimous favorable recommendation for FDA approval of Boostrix," said Barbara Howe, M.D., vice president, Clinical Research and Development and Medical Affairs, Vaccines North America, GlaxoSmithKline. "If approved, Boostrix would add a pertussis component to the routine tetanus/diphtheria booster currently administered to adolescents – a population in which there is a significant disease burden."

In making its recommendation, the FDA Advisory Committee reviewed several clinical trials which included safety and immunogenicity data from one pivotal trial, which studied Boostrix in more than 3,000 adolescents in the United States, aged 10 to 18. The Phase III clinical trial showed Boostrix to be comparable to a U.S.- licensed Td vaccine [Tetanus and Diphtheria Toxoids] with regard to overall safety and immunogenicity. In addition, the use of Boostrix induced anti-pertussis antibody levels, which were statistically higher than those observed in infants following primary immunization with a DTaP vaccine (Infanrixâ) [Diphtheria and Tetanus Toxoids and Acellular Pertussis Vaccine Adsorbed] in whom efficacy against pertussis disease was demonstrated in a previous study.

In this observer-blinded, randomized, controlled, multi-center clinical trial, 4,114 healthy 10-18-year-olds were vaccinated with one dose of Boostrix or a U.S.-licensed Td vaccine. Each subject had completed his or her routine childhood vaccinations against diphtheria, tetanus and pertussis according to the U.S. recommended schedule. According to study results:

* In both treatment groups, > 99.9 percent of subjects had anti-diphtheria and anti-tetanus concentrations > 0.1 IU/ml, indicating seroprotection against diphtheria and tetanus
* In the Boostrix treatment group, the levels of anti-pertussis antibodies, anti-PT, anti-FHA and anti-PRN were measured and were statistically higher than pertussis antibody concentrations observed in infants, following primary immunization with a DTaP vaccine (Infanrixâ), in whom efficacy against pertussis disease was previously demonstrated
* The overall safety profile was comparable between the Boostrix and Td groups

"Adolescents are an important reservoir for the disease and often the source of infection for infants," noted Dr. Colin Marchant, adjunct associate professor, Boston University School of Medicine, Boston, MA. "Adding pertussis to the current tetanus and diphtheria booster shot for teens is a logical strategy to prevent this disease in adolescents – without additional injections – and may help reduce the risk of transmission to infants in whom pertussis can be deadly."

Pertussis, commonly known as "whooping cough," is a highly contagious bacterial infection of the respiratory system that causes spasms of severe coughing. It is spread through airborne droplets of an infected person's cough or sneeze. The first symptoms of pertussis are similar to the "common cold" with a mild fever, runny nose and a cough. Symptoms generally progress to more severe coughing episodes, often with a high-pitched "whoop," followed by vomiting. Adolescents generally exhibit different symptoms of the disease, often without the classic "whoop," making it difficult to diagnose. However, for these older pertussis sufferers, severe coughing episodes can lead to vomiting, a hernia, or even a broken rib. These severe coughing episodes can last up to 100 days. While pertussis is threatening to all, this highly contagious disease can be deadly in infants who are too young to be fully immunized. Up to 90 percent of non-vaccinated susceptible household members may develop the disease when exposed to people infected with pertussis.

Pertussis, which is under-reported and under-recognized, is a common cause of prolonged cough illness in adolescents and adults. In fact, in a clinical study involving 442 adolescents and adults who had a cough-related illness for more than seven days, approximately 20 percent of these patients had laboratory-documented pertussis.

In addition to the public health threat pertussis poses, the disease also has economic repercussions. A cost-benefit analysis for the use of a pertussis booster vaccine in adolescents projected that vaccination of people in the U.S. ages 10-19 during a 10-year period would prevent up to 1.8 million cases of pertussis and save as much as $1.6 billion in direct and indirect costs.

"With nearly two million doses of Boostrix distributed worldwide since 1999, GlaxoSmithKline is extremely pleased that our efforts to develop a booster vaccine for pertussis in the U.S. have resulted in a favorable recommendation from the FDA Advisory Committee," said David M. Pernock, senior vice president Pharmaceuticals, Philadelphia & Vaccines, GlaxoSmithKline. "As a leader in combination vaccines, GlaxoSmithKline will be proud to introduce Boostrix as the first of a number of new and important candidate vaccines from our pipeline specifically targeted at preventing disease in adolescents."

Diphtheria is a serious disease that results in the death of approximately five to 10 percent of infected persons, with higher death rates (up to 20 percent) in persons younger than five and older than 40 years of age. Initial symptoms may include malaise, sore throat and low-grade fever. As the disease progresses, a membrane can form over the airway and result in respiratory obstruction which can lead to death. Other complications may include heart failure and paralysis. Most cases of diphtheria occur among unvaccinated or inadequately vaccinated persons.

Tetanus (lockjaw) is a severe, often fatal disease. The bacteria that cause tetanus are widely found in soil and the manure of many animals. Almost all reported cases of tetanus are in persons who have either never been vaccinated, or who completed a primary series, but have not had a booster in the preceding 10 years. Infants of unvaccinated mothers are at risk for neonatal tetanus. Early symptoms are lockjaw, stiffness in the neck and abdomen, and difficulty swallowing. Later symptoms may include fever, elevated blood pressure and severe muscle spasms.

Contact: Amanda Foley, 919-483-2839, Cohn & Wolfe
Eurekalert www.eurekalert.org
http://www.eurekalert.org/pub_releases/2005-03/cw-gru031505.php

According to the Kaiser Family Foundation’s recent survey research, most Americans say they favor price controls on prescription drugs.[1] But the good news is that there is a rich professional literature on the history and the disastrous consequences of price controls.[2] As applied to prescription drugs, recent research shows that price controls would lead to less drug research, fewer new prescription drugs, and reduced availability of prescription drugs. That is a tradeoff that Americans might be less inclined to make.

Reduced Drug Research and Development

Commerce Department researchers recently examined the prescription drug markets in member countries of the Organization for Economic Cooperation and Development (OECD), a 30-country organization of which the United States is a member and which professes “a commitment to democratic government and the market economy.”[3] The Commerce Department study focused on 11 OECD members and determined that these “governments have relied heavily on government fiat rather than competition to set prices, lowering drug spending through price controls applied to new and old drugs alike.”[4] The study found that price controls in OECD countries caused a $5 billion to $8 billion annual reduction in funding for drug research and development.[5] Further, the study estimated that a $5 billion to $8 billion increase in research and development “could lead to three or four new molecular entities annually.”[6]

The Loss of Future Drug Therapy

The impact of price controls would vary with the degree to which the controls were set below market prices. According to a recent study published by the National Bureau of Economic Research, a 40 percent to 45 percent cut in pharmaceutical prices “would have a significant impact on the incentives for private firms to invest in research and development.”[7] The study estimated that, under such price controls, “the number of compounds moving from the laboratory into human trials would decrease by 50 to 60 percent. Because of the uncertainties involved, fewer compounds moving into clinical trials directly translates into fewer new products – the effects of which wouldn’t be fully felt for several decades because of the long development cycle. Moreover, because of the spillover effects of R&D, less activity today reduces the possibilities for new opportunities in the future. Thus, these effects would likely compound themselves over time.”[8]

In a separate study, researchers at the American Enterprise and the Brookings Institution reached a broadly similar conclusion. Price controls directly undercut new investments in new cures and treatments. If price regulations similar to those enacted in the Veteran’s Administration in 1992 that required “pharmaceutical prices in the U.S. to grow no faster than the general price level” had been in place in the general health care economy from 1980 to 2000, the study estimates that, of the 520 new chemical entities approved for the U.S. market during those years, “198 drugs would have been “lost.”[9]

Unnecessary Pain and Suffering

Researchers for The Manhattan Institute, in a recent study on drug pricing, estimated that in 2006, when the Medicare Modernization Act of 2003 is fully implemented, “the federal government will be purchasing or paying for nearly 60 percent of all prescription drugs in the United States.”[10] With control over such a large proportion of the drug market, instituting price controls—even under the moniker “negotiations”—would have serious consequences for the development of new drugs.

The Manhattan Institute study estimates that between 1960 and 2001 there was $188 billion less R&D in drug therapies than there otherwise would have been because of the various ways that the government already influences drug prices.[11] This loss translates into unnecessary pain and suffering for potentially millions of patients.

A Slowdown in Drug Availability

Not only would price controls add to the delay in the development of drugs and eliminate any number of new drugs, they would also cause a delay in the introduction of new drugs into the market. A 1999 study by the Boston Consulting Group found that the more interference in the market there was in a given country, the longer it took approved drugs to reach the marketplace. “Greece, Belgium, and France, markets with considerable market intervention, have the longest delays between product approval and marketing, whereas Germany, Norway, the U.S., and the U.K., countries with relatively less intervention, have the fewest delays.”[12]

The study continues, “One of the causes of such delays can be negotiation over price. Interviews with industry leaders confirmed that the time it takes to negotiate pricing was increasingly the bottleneck in launching new medicines. While governments try to achieve the lowest possible price, and companies hold out for a price they will accept, large segments of the population that may benefit substantially from the new treatments are left waiting. The problem is particularly acute in Europe, where parallel trade and cross-country reference pricing can cause uneconomically low prices to spread between countries.”[13]

Conclusion

With the passage of the Medicare Modernization Act of 2003, the government dramatically increased its activity in the prescription drug market. Not surprisingly, as cost estimates for the Act’s prescription drug benefit soar, some in Congress are looking toward price regulation as a way to hold expenses down. In this vein, some have proposed legislation that would allow the federal government to “negotiate” drug prices as part of the prescription drug benefit. The use of the word “negotiate,” however, is misleading. It is, in fact, a process of government price fixing.[14]

The use of price controls to combat rising costs is an ancient prescription, and in the case of prescription drugs, one that is practiced in much of the rest of the world. No politician, over the course of 4,000 years of experience, has yet devised a humane system of price controls for consumers, free of shortages or a decline in the quality of the controlled goods or services.

The negative impact of such a policy cannot be overstated. While further shifting costs to consumers in the uncontrolled sector of the pharmaceutical market, Congress would also sacrifice future medical breakthroughs by stifling incentives for private research. The quality of care available to both present and future generations of patients would decline, and the costs in personal pain and suffering are guaranteed to increase.

by Derek Hunter, Research Assistant in the Center for Health Policy Studies at The Heritage Foundation. WebMemo #680

[1] Kaiser Family Foundation, “Views on Prescription Drugs and The Pharmaceutical Industry,” Kaiser Health Poll Report, ( January/February 2005), at www.kff.org/healthpollreport. According to the Kaiser survey, 65 percent of respondents favor legal limits on drug prices, and 46 percent of those who favor such price controls say they would still favor them even if it meant less research and development of new drugs. In the face of the increasing challenge of infectious diseases and the rapid growth of chronic illness, this is a remarkable finding.
[2] See, e.g., Eammon F. Butler and Robert L. Schuettinger, Forty Centuries of Wage and Price Controls: How Not To Fight Inflation (Wshington, D.C.: The Heritage Foundation, 1979).
[3] OECD website, About OECD page.
[4] “Pharmaceutical Price Controls in OECD Countries: Implications for the U.S. Consumers, Pricing, Research and Development, and Innovation,” U.S. Department of Commerce, International Trade Administration, December 2004. http://trade.gov/td/chemicals/drugpricingstudy.pdf
[5] Ibid.
[6] Ibid.
[7] Thomas A. Abbott and John A. Vernon, “The Cost of Pharmaceutical Price Reductions: A Financial Simulation Model of R&D Decisions,” NBER Working Paper Series No. 11114, February 2005 at http://www.nber.org/papers/w11114.
[8] Ibid.
[9] Rexford E. Santerre and John A. Vernon, “A Cost-Benefit Analysis of Drug Price Controls in the U.S.,” AEI-Brookings Joint Center for Regulatory Studies, October 2004.
[10] John A. Vernon, Rexford E. Santerre, Carmelo Giaccotto, “Are Drug Price Controls Good for Your Health?” Center for Medical Progress, The Manhattan Institute, December 7, 2004, at http://www.manhattan-institute.org/pdf/mpr_01.pdf.
[11] Ibid.
[12] “Ensuring Cost-Effective Access to Innovative Pharmaceuticals: Do Market Interventions Work?” The Boston Consulting Group, April 1999.
[13] Ibid.
[14] For a comprehensive overview of this process, see Edmund F. Haislmaier, “Compromising Quality: The High Cost of Government Drug Purchasing,” Heritage Foundation Backgrounder No. 1764, May 25, 2004, at www.heritage.org/research/healthcare/bg1764.cfm

The Heritage Foundation www.heritage.org
http://www.heritage.org/Research/HealthCare/wm680.cfm

Eighty percent of firms that outsource customer service and support contact centres with the primary goal of reducing cost will fail over the next two years because they do not properly manage the customer experience, according to Gartner.

The research firm also believes that, at least until 2008, 60% of organisations that outsource parts of the customer-facing process will encounter customer defections and hidden costs that outweigh any potential savings they derive from outsourcing.

Some of the difficulties are caused by firms failing to manage the customer service experience sufficiently and by companies locking themselves into long-term outsourcing contracts without conducting appropriate pilot testing.

Other difficulties include risks related to knowledge management and retention, highlighting the fact that customer service outsourcing providers have staff attrition rates of up to 70% to 80%, compared to an average of 19% to 25% in in-house contact centres.

"Our research shows there are significant risks associated with outsourcing customer service," said Gartner research director Alexa Bona. "Historically, outsourcing has been seen as a way to reduce costs by getting others in cheaper locations, or with greater economies of scale, to own the processes that are not core to the business. Companies are encountering problems because they don't approach this strategically. They usually lack information to make meaningful cost/benefit analysis and often focus on inappropriate or unmeasureable service levels and cost metrics."

According to Gartner, companies that outsource successfully can achieve cost savings of 25% to 30%. However, Ms Bona warned that a poorly managed model can reduce the quality of the customer experience, dilute the brand values of the company and fail to deliver cost savings.

She advised organisations new to business process outsourcing to start by outsourcing onshore.

"Don't be lured by the apparent cost appeal of placing end-to-end customer services processes in the cheapest offshore locations without conducting a thorough assessment of the transition methodologies of the off-shore provider, as well as your own ability to manage off-shore relationships," she said.

Gartner has set out its recommendations for organisations when defining their customer service outsourcing strategy:

* Identify objectives – be certain customer-facing business processes need to be outsourced;

* Map customer-facing processes from end to end and dedicate sufficient management resources to the intersection between outsourced and retained processes;

* Develop contracts that require innovation in service delivery to reduce the cost of ongoing operation; and

* Do not underestimate the management time required to make an outsourcing relationship work.

Despite the difficulties, the worldwide market for customer service outsourcing is set to grow from $8.4bn in 2004 to $12.2bn in 2007, with the offshore component of this remaining small, reaching less than 2% in 2005 and increasing to less than 5% in 2007, according to Bona.

www.out-law.com
http://www.out-law.com/php/page.php?page_id=mostcustomerservic1110282302&area=news

Most people wouldn't want a message from work disrupting their day at the beach. But Eric Horvitz was so happy when it happened to him that he took out a camera and captured the moment in a photo.

The e-mail message had been singled out and sent to the Microsoft senior researcher's mobile phone by a special program that he and others in his group developed.

The program examined the message's contents, determined its importance and decided it warranted interrupting him during a family outing on Whidbey Island. The moment perfectly illustrated Horvitz's long-term vision for technology in the information age -- as something to augment and assist people, not overwhelm them.

In fact, Horvitz did consider the message urgent, and he was able to respond quickly, without being burdened by any of the more routine matters that remained in his in box, awaiting his return from vacation.

"These technologies can actually work on your behalf to say, 'Relax, you don't need to see everything. If something can't wait until later, I'll let you know,' " he said. "I didn't need to be personally anxious and check all the time."

The prototype is one of the ongoing projects in Microsoft Research's Adaptive Systems and Interaction group, which Horvitz manages. The 14-person group is working on software that senses the world around it and learns from experience to adjust to situations and to reason in real time.

The projects are examples of artificial intelligence -- using technology to perform tasks that would otherwise require human perception and reasoning.

"I see something very big happening to humanity in terms of a new relationship with technology over the next 100 years," Horvitz said, predicting a future when "companion software" works in conjunction with human life in a way that could be considered "intelligent or humanlike."

Along the way, there are also plenty of practical applications for the technology that's emerging. The system that sent the urgent message to Horvitz's phone is an extension of a project known as "Priorities." The technology analyzes incoming messages, weighing their importance against what the recipient is doing at any given moment to decide whether to pass them along immediately or wait until a better time.

The message for Horvitz was from a journal editor who hadn't received an abstract the Microsoft researcher had sent her. Examining the message, the system considered a long list of factors, including Horvitz's relationship to the sender, the length of the message, key phrases, dates and times mentioned in the text, whether the message was written in past or present tense and whether it included questions.

"The system knew what I was doing," Horvitz said. "It knew that I was off with the kids having a good time, yet it did the cost-benefit analysis and it forwarded a single message to me."

The project reflects a consistent theme running through much of the work by Horvitz and others in the group -- making technology more sensitive to situations and settings to determine whether, when and how to get someone's attention.

Other projects along those lines include "Bestcom," a system that determines the best method of communication between two people at any particular moment, based on their preferences for different situations. The system has been deployed internally at Microsoft, and some of the more basic message and call-routing principles are evident in a new telephony product, dubbed "Istanbul," from Microsoft's Real-Time Collaboration Business Unit.

Some of the more advanced technologies developed by the Adaptive Systems and Interaction research group, such as the ability to predict when someone will be available, haven't yet made their way into Microsoft products, but they show the direction the company is headed.

Another project from the group appears to be on a faster track toward public availability. Known as JamBayes, the system shows traffic conditions in the Seattle region and predicts upcoming conditions based on an underlying statistical model that analyzes a long list of factors, including weather, the day of weekend sports schedules.

The system, which works on mobile phones through a program called SmartPhlow, is used by about 2,000 Microsoft employees. Horvitz said Microsoft has been talking with others interested in licensing the technology and deploying it nationally.

by TODD BISHOP
www.hispanicbusiness.com
http://www.hispanicbusiness.com/news/newsbyid.asp?id=21459

Each year 4 million babies around the world die in the first month of life. More than half the deaths could be avoided with simple measures such as cutting umbilical cords with sterile blades, prescribing antibiotics for pneumonia and keeping newborns warm.

Those are among the findings of a group of studies released yesterday that seek to direct the world's attention to the large number of infants in poor countries who die soon after birth, usually at home and often unnamed.

The high mortality arises from poverty, ignorance and disorganization in poor countries, and is exacerbated by fatalism on the part of many parents, a lack of political will in governments and the inattention of global health experts, the researchers concluded.

"This disaster has to end," said Vinod Paul, an Indian physician and expert in the care of newborns, yesterday at a launch of the initiative in Washington. "We believe the vast majority of these deaths can be prevented by the knowledge we have today. We do not need new knowledge."

"In West Africa, one of every three mothers will lose a newborn," said Anne Tinker of the charity Save the Children, calling that evidence of "an unacceptable disparity between the haves and the have-nots."

Four studies reviewing the magnitude of "neonatal" mortality around the world, strategies for reducing it, a roadmap for improving newborn care in poor countries and an estimate of costs were published online yesterday by the Lancet, a European medical journal.

Much of the data have appeared elsewhere in recent years. What is new is gathering in one place the "evidence base" for action by donor nations, charities and the developing countries themselves.

Among the new information was the calculation that at least 41 percent of the 4 million deaths, and possibly as much as 72 percent, could be prevented if current knowledge were put to use.

The Lancet Neonatal Survival Steering Team, composed of researchers at many universities and charitable organizations, also estimated that to cut neonatal deaths in half would cost $4.1 billion per year on top of the $2 billion now being spent on the problem by poor countries and outsiders.

The 4 million deaths occur among the 130 million babies born worldwide each year. Deaths in industrialized countries account for 1 percent of the total. Two-thirds occur in 10 countries: India, China, Pakistan, Nigeria, Bangladesh, Ethiopia, Congo, Indonesia, Afghanistan (news - web sites) and Tanzania.

Programs to improve health in developing countries traditionally target pregnant women and young children. Newborns have been relatively overlooked, even though they are the most vulnerable -- especially in the first few days of life. Of children who die before age 5, 38 percent die in their first month. Of them, three-quarters die in the first week.

One cheap intervention that could eliminate the 7 percent of deaths caused by tetanus is giving pregnant women two tetanus shots, if they have not had any. The mothers pass their immunity to their babies, who can become infected if the umbilical cord is cut with a contaminated instrument.

Teaching mothers and health workers to recognize infection in very young babies -- and get them to a doctor or provide antibiotics themselves if that is not possible -- could reduce the 26 percent of deaths caused by pneumonia and sepsis (bloodstream infections).

Making those improvements, however, will require training many more midwives and other health care workers -- a huge undertaking. In south Asia and sub-Saharan Africa, only about one-third of women deliver with the aid of a "skilled birth attendant."

However, some interventions cost nothing.

One of the authors of the Lancet series, Gary L. Darmstadt, described successful efforts by a team of U.S. and Indian researchers to change behavior in a region of 300 villages and 100,000 people in the state of Uttar Pradesh in northern India.

Traditionally, women who have just delivered consult a Hindu holy man called a pandit on when to start breast-feeding. After checking astrological tables and other sources, the pandit generally advises that feeding begin two or three days after birth. Until then, the baby is given tea or sugar water.

Many new mothers also squeeze out of their breasts and discard the thick, antibody-filled, disease-preventing first milk, known as colostrum, because it is mistakenly considered old and dirty.

One of the pandits in the area was a physician. After gaining his trust, the researchers asked him to consider changing his advice.

"We just leveled with him and said: You're a medically trained person; you know that breast-feeding is critically important," recounted Darmstadt, of the Johns Hopkins University's Bloomberg School of Public Health.

The man agreed, and he persuaded five other pandits serving the area to change their advice, too.

"I think, in essence, he took an evidence-based approach," Darmstadt said.

By David Brown
The Washington Post www.washingtonpost.com
http://www.washingtonpost.com/wp-dyn/articles/A4799-2005Mar3.html?sub=AR

Each year, the state forgoes about $500 million in tax revenue by giving income tax credits and general excise tax exemptions to companies and individuals.

The tax breaks were provided by lawmakers in years past primarily to spur economic development, but no one can say for certain how many jobs have been created by the tax breaks.

That could change under a bill that's making its way through the Legislature. House Bill 1720 would require a biennial cost/benefit analysis of myriad tax breaks by a state tax advisory panel.

The bill comes amid concern about a lack of accountability for incentives granted to a variety of special-interest groups including the technology, television and film, and hotel industries.

"I see it as a problem that we are poking so many holes in our state budget and we're about to poke more holes," said Rep. Glenn Wakai, D-31st (Salt Lake, Tripler), who introduced the bill, which was passed by the House Finance Committee this week. "To me, we should be plugging the pukas in our state coffers before we talk about raising taxes."

The Legislature also is considering raising general excise tax collections by $300 million annually to pay for a rail transportation system

The high number of tax breaks given to Hawai'i businesses and a lack of cost/benefit data drew criticism in a 2003 report by the state's Tax Review Commission.

The commission's most recent study in 2003 recommended a regular review of tax credits and exemptions and the jobs they create. Two years later, just what the state gets in return from business incentives related to economic development remains largely unknown.

The proliferation of tax breaks makes it increasingly difficult to predict state tax revenues, according to the commission's report.

Between 1957 and 1969, the state had only three tax credits. As of 2003, there were 20. In addition, revenue from more than 40 types of transactions are exempt from the state's general excise tax.

The various tax credits cost the state an estimated $103 million in the fiscal year ended June 30, 2003, with about $43 million of that loss the result of corporate and insurance company tax credits and nearly $60 million attributed to tax credits for individuals.

Separately, exemptions to the general excise tax cost the state an estimated $382 million in 2003, the most recent data available.

To put that in perspective, the state government's two-year budget exceeds $7 billion.

There currently is no accounting of how many jobs were created via tax credits and exemptions.

In one of the few subsidy studies conducted, technology tax credits resulted in an estimated 600 to 800 new technology jobs in 2002 at a cost of between $105,000 and $140,000 in lost tax revenue per job, according to state officials.

HB 1720, which would require a cost/benefit analysis of tax incentives, is scheduled for a floor vote in the House next week. If the House passes it, the bill will need Senate approval and Gov. Linda Lingle's support to become law.

The Lingle administration does not support the bill. A similar bill introduced last session failed to advance.

"The concept and the idea (of a cost/benefit analysis) I think is good," said Sen. Will Espero, D-20th ('Ewa Beach, Waipahu), chairman of the Senate Business and Economic Development Committee.

Even if the bill becomes law, a report may not come for years. That's because the current version of the bill requires the all-volunteer Tax Review Commission to conduct the analysis. The commission's next report isn't due until 2008.

The debate over the benefit of tax breaks comes as an increase in state revenues has lawmakers considering creating a slew of new tax credits.

"There are credits all over the place," said Lowell Kalapa, president of the nonprofit Tax Foundation of Hawai'i. "Where are we going to find the money for all of this?"

A study of the effectiveness of such economic development measures is long overdue, Kalapa said.

by Sean Hao, shao@honoluluadvertiser.com, 525-8093
The Honolulu Advertiser http://the.honoluluadvertiser.com
http://the.honoluluadvertiser.com/article/2005/Mar/03/bz/bz03p.html

Stents are tiny metal scaffolds inserted in the artery after angioplasty -- a procedure in which a little balloon is used to clear out plaque that can trigger a heart attack.

While stents keep arteries open, they can, paradoxically, increase the risk of the artery reclosing, a condition called restenosis. To address this problem, scientists developed stents coated with drugs that reduce the risk of restenosis.

But drug-eluting stents cost about $2,900 each, compared to $500 for a traditional stent. Angioplasty patients receive, on average, 1.4 stents.

The question for the cash-strapped health system then becomes: Is the additional cost worth it?

A series of papers published in a recent edition of the Canadian Medical Association Journal demonstrates just how difficult it is to answer that sort of question -- and these questions are arising with increasing frequency as new technologies come along.

A team led by Fiona Shrive, a researcher in the department of community health sciences at the University of Calgary, calculated that to extend a person's life by one year -- a measure called a QALY, or quality-adjusted life year -- using a drug-eluting stent costs $58,721 (includes price of operation plus medical care.)

Generally speaking, an intervention -- be it a drug, surgery or prevention program -- with a cost per QALY of less than $50,000 is deemed cost effective. That means that across-the-board use of drug-eluting stents would not be a good investment, at least not at their current price.

But Ms. Shrive and her research team dug further and found that using drug-eluting stents for diabetics and people over the age of 75 produced costs per QALY of $44,135 and $40,129 respectively. In other words, it makes good economic sense to use drug-eluting stents, but selectively.

"It's not an either/or question on whether we should use this new technology," said Dr. William Ghali, co-author of the paper and a professor of community health sciences at the U of C.

"A tailored strategy is a much more reasonable and efficient use than across the board."

Dr. Ghali said there is anecdotal evidence that drug-eluting stents are being used selectively, but there do not appear to be explicit policies in place.

About 35,000 angioplasties are performed in Canada annually, and almost all patients get stents. It is not clear, however, what percentage get drug-eluting stents.

Dr. Ghali underscored the difficulties that arise in adapting new technologies with a personal anecdote, saying that, as a researcher, he is "not an enthusiast of drug-eluting stents," but if he were a patient, he would definitely want one.

"Does asking for it justify getting it?" he wondered.

Dr. Ghali also stressed that the cost per QALY calculation, while a good tool, does not take into account where extra money would come from in a cardiology program with limited resources.

In a commentary also published in the Canadian Medical Association Journal, Dr. James Brophy of the division of cardiology and epidemiology at Royal Victoria Hospital in Montreal said a switch to drug-eluting stents would cost at least $75-million more and provide only marginal benefits.

He noted that for all the touted benefits, drug-eluting stents do not reduce the risk of heart attack or death. And while the newer devices do reduce the risk of restenosis and the need for a second surgery, that is only a concern for a small minority of patients.

In the new research, derived from a large database of cardiac patients in Alberta, 8.2 per cent of patients undergoing angioplasty needed a second operation.

"About 90 per cent of patients do not experience clinical restenosis with conventional stents and therefore would not derive any additional benefit from having a sirolimus-eluting stent," Dr. Brophy said. (Sirolimus is the chemical used to coat stents; there are also stents available that are coated with paclitaxel.)

He added that a good number of repeat surgeries are likely due to disease progression, not restenosis, so drug-eluting stents would not make a difference.

Dr. Brophy said the debate about the value of new technologies should be a broader one, comparing the costs and benefits of prevention programs and simple, proven treatments. (Aggressively treating diabetics with blood pressure medication, for example, has a cost per QALY of $1,959, and that approach could delay or prevent a number of surgeries.)

"Our current infatuation with interventional cardiology must be questioned," Dr. Brophy said, arguing that money is better spent on primary and secondary prevention programs than on fancy bells and whistles like drug-eluting stent

By ANDRÉ PICARD, Page A15
The Globe and Mail (Candada) www.theglobeandmail.com
http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20050302/HSTENT02/Health/Idx

California manufacturers could save up to one million jobs if both they and the state government take concerted action, according to a report released today by the Bay Area Economic Forum, a public-private partnership of business, government, university, labor and community leaders.

"One million jobs are up for grabs unless we act now," said Sean Randolph, president and CEO of the Bay Area Economic Forum. "How California addresses the challenges to its manufacturing base is critical to the state's economic future."

So far, an estimated 200,000 manufacturing jobs have been lost in California due to economic conditions and improved productivity, while 90,000 have been lost due to falling exports and 20,000 due to jobs moving to other states. And California is at risk of losing many more as manufacturers seeking lower taxes, cheaper energy and less restrictive labor laws consider moving jobs overseas and to other states. But many companies tend to overrate the benefits of offshoring and would be much more likely to remain in California if regulatory burdens were reduced, according to the report, conducted by McKinsey & Company and co-sponsored by the California Manufacturers and Technology Association, Silicon Valley Manufacturing Group and Semiconductor Industry Association.

"We are under tremendous pressure to become more price competitive," said Kelley McKenzie, chief counsel of New United Motor Manufacturing (NUMMI), a Toyota and GM vehicle manufacturing plant with about 5,500 employees in Fremont, California. "The reforms listed in this report would certainly go a long way to help companies like NUMMI retain well-paying, high quality manufacturing jobs in California."

California has 1.5 million manufacturing jobs, far more than any state (70 percent more jobs than runner-up Texas), and the industry directly supports an additional three million jobs statewide. Manufacturing also contributes $150 billion annually to the state's economy. Because the sector is of critical importance to California, the Bay Area Economic Forum has proposed a partnership between government and manufacturers, including a pragmatic action plan and timetable, in an effort to preserve jobs and sustain a dynamic manufacturing base in the state.

What State Government Can Do to Enhance Competitiveness

The report recommends three primary actions that state government must take to save California's manufacturing sector from further erosion:

1. Level the Playing Field -- Improve regulations and laws to
make California manufacturers more competitive. California has
the nation's highest workers' compensation rates, its energy
costs are 61 percent above the national average and the
state's tax rate is higher than all other states except
Pennsylvania. California also imposes far more regulations
than other states. For instance, it determines overtime by an
eight-hour workday standard, so employers cannot use four
10-hour shifts as other states do.

2. Build Technical and Vocational Skills -- Create a smarter
workforce, one that can meet the changing needs of
manufacturers. Other states are actively working with
manufacturers to ensure curricula in schools mesh with local
needs and that training programs enjoy sufficient funding.

3. Promote California Manufacturing -- Launch a campaign to
highlight the importance of manufacturing to California, the
benefits of manufacturing in the state and the commitment of
both state government and private sector leaders to create an
environment that is supportive of manufacturing.
What Companies Can Do to Enhance Competitiveness

Many companies that assess the real costs and benefits of offshoring will find it's not a panacea, the report concludes. It recommends that manufacturers:

1. Focus On Delivering Customer Value -- Customers care about
more than cost. They also want rapid delivery, customization
and reliable quality assurance.

2. Accurately Measure Total Landed Costs -- Companies must assess labor savings within the context of their own cost and revenue structures. Moving offshore for cheaper labor has little
impact when labor is a small fraction of a company's costs.

3. Implement World Class Manufacturing Techniques -- By
implementing world class manufacturing techniques, such as
lean, companies can minimize the impact that wage rate
differentials have on overall cost structures. In addition,
they can shorten lead and cycle times to be more responsive to
customer needs.

"We urge the California legislature and Governor Schwarzenegger to tackle the issues outlined in this report," said Jack Stewart, president of the California Manufacturers and Technology Association. "Manufacturing has an enormous impact on California's prosperity and offers good paying jobs that are worth saving."

"Manufacturing in California should be a live issue," added Robert Sternfels, a partner with McKinsey & Company, an international management consulting firm. "Government and business have just a narrow window in time to create the right climate for long-term manufacturing."

The full report can be found at www.bayeconfor.org.

Established in 1988 by the Bay Area Council and Association of Bay Area Governments (ABAG), the Bay Area Economic Forum is a public-private partnership of business, government, university, labor and community leaders that develops analyses and implements programs to strengthen the region's competitive economy and quality of life. For more information, please visit www.bayeconfor.org.

Contact: Bay Area Economic Forum, Sean Randolph, 415-981-7117, sean@bayeconfor.org

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