Patents and Genes

The gene which is linked to breast cancer and other cancers, BRCA, was patented by a company named Myriad. The ACLU took them to court, the DC Patent Court, and sued to have the Patent rejected, namely you cannot patent genes.

Is this good or bad. It costs money to ascertain genetic structure, yet the gene was from a person who in turn received nothing. Myriad did something that can now be done by thousands of first year grad students. Does any of this make sense.

The DC Court threw out the Patent. An interesting analysis is presented by Noonan and is worth a read.

Noonan states:

As a reminder, the following U.S. Patents were at issue in this litigation: U.S. Patent 5,747,282, 5,837,492; 5,693,473,5,709,999, 5,710,001 and 6,033,857.They are assigned to Myriad Genetics, the University of Utah Research Foundation, and the National Institutes of Health (the '282, '001 and '441 patents); Myriad Genetics, Centre de Recherche du Chul, and the Japanese Cancer Institute (the '473 and 999 patents); and Myriad Genetics, Endo Recherche, HCS R&D Ltd. Partnership, and the University of Pennsylvania (the '492 and '857 patents). All but the '492 and '857 patents claim priority to an application filed August 12, 1994; all but the '473 patent (December 2014) and the '857 patent (March 2017) will expire (upon timely payment of maintenance fees) in 2015.

Noonan continues:

As the District Court predicts, however, this case is now headed to the Federal Circuit, which may benefit from amici curiae briefs from those stakeholders, such as major patent bar groups, universities and others, who sat on the sidelines during the District Court case.The dangers and negative consequences of a ban on gene patenting have been set out before and won't be repeated here.That doesn't make the outcome any less dangerous, or the consequences any less threatening to the biotechnology industry or our society.

There appears to be a great deal of concern in the Press over this issue on both sides. We however see merit in both sides and find this a Solomon like problem.

The New Health Care Law: Intendended and Unintended Consquences

The response of many companies to the new Health Care law will have many intended and unintended consequences. The letters from Congressman Waxman, an almost dictatorial response, are typical of what we expect as things mature in this area.

Just look at the Waxman edict to Verizon wherein he demands:

To assist the Committee with its preparation for the hearing, we request that you provide the following documents from January 1,2009, through the present: (1) any analyses related to the projected impact of health care reform on Verizon; and (2) any documents, including e-mail messages, sent to or prepared or reviewed by senior company officials related to the projected impact of health care reform on Verizon. We also request an explanation of the accounting methods used by Verizon since 2003 to estimate the financial impact on your company of the 28% subsidy for retiree drug coverage and its deductibility or nondeductibility, including the accounting methods used in preparing the cost impact released by Verizon this week.


Just imagine how much this will cost Verizon! And where do you think the money will come from, the rate payers. Not only do we get slammed by Health Care legislation but we get slammed by Waxman by making an incredible workload even greater. Waxman, a man who never created a single job, is creating overhead which will further reduce corporate value. Was this intended or unintended?

The issue is simple. To pay for the new Bill, the Congress eliminated the tax deductibility of drug benefits from corporations, and thus what Verizon and all others had anticipated as a deduction to their employees and retirees was now a charge and thus they had to report it to shareholders! Waxman took umbrage with this. You really cannot make this up!

Waxman further asserts:

After the President signed the health care reform bill into law, your company told its employees that provisions in the law could adversely affect your ability to provide health
insurance. A Verizon executive vice president sent an e-mail to all Verizon employees stating that "we expect that Verizon's costs will increase in the short term" as a result of health care
reform. Verizon also cautioned employees that "changes affecting the Part D subsidy will make it less valuable to employers, like Verizon, and as a result, may have significant implications for both retirees and employers.


The new law is designed to expand coverage and bring down costs, so your assertions are
a matter of concern. They also appear to conflict with independent analyses. The Congressional Budget Office has reported that companies that insure more than 50 employees would see a decrease of up to 3% in average premium costs per person by 2016? The Business Roundtable, an association of chief executive officers from leading U.S. companies, asserted in November 2009 that health care reform could reduce predicted health insurance cost trends for businesses by more than $3,000 per employee over the next ten years.

Will these people ever learn? The get the "facts" they want when the hold Congressional hearings, and if perchance something else is introduced they damn it on the spot. So will they learn? Doubtful!

The main question is what else will we find here!

Some Facts on Broadband

The NY Times had an editorial today on broadband and one of the faculty of Harvard Law School also wrote an op ed piece. In none of these polemics has anyone addressed any facts! Sometime and somewhere the facts should be included. So let me take another opportunity to relay them to those dreamers who think that this can be done quickly and painlessly.

1. First, the cost of fiber is as follows:

a. The cost of aerial construction is about $4500 per mile. That is fairly low and it assumes that the pole is pristine clean and there are no other costs and that aerial is all we need. That is also just the labor.

b. The cost for buried is almost $30,000 per mile, again just for labor.

c. The cost for make-ready, namely the cost to fix the pole so that the space one uses for simple aerial is $21,000 per mile. That is the cost to have the power and telcos move their stuff.

Now assume that we have say 20% buried, 50% make ready, and 80% aerial. The total labor costs per mile are $6000 plus $8400 plus $3600 or $18,000 per mile. If one were to borrow this money say from RUS with a 5.5% annual interest and a twelve year pay back one would pay $180 per month per mile for the fiber construction costs alone. That is about 1% of the CAPEX per month.

Now let us look at the cost of the fiber. The fiber is about $4000 per mile or $40 per month per mile.

The added electronics is about another $500 per subscriber or $5 per month per sub.

Now we have the drop costs of $200 per subscriber, the electronics of $500 per subscriber and the in home electronics for a 2 television set home of $1000 per subscriber. Thus the subscriber per home costs are $1700 per subscriber. However the per month costs are much higher since the lifetime of the electronics is six years. Namely it is 1.6% of the CAPEX per month or $27.20 per month per subscriber.

Now let us look at a simple middle class suburban neighborhood of homes with 200 feet of frontage, namely 200 feet from property line to property line. When one adds in streets and dead space that amounts to 300 feet or about 36 homes per mile. That is pretty dense for a lot of America. You see many are well below twenty but let us use 36. Then assume we have 50% penetration, a real wild optimistic guess, you will see why soon. That is 18 subs per mile.

The full fiber costs were $22,000 per mile or now $1225 per sub plus $1700 per sub for a drop and equipment for a total of $2975 per sub. This is an optimistic number.

Now the costs per month for the system alone is:

a. For the fiber and with 18 subs per mile we have $10 per sub per month for the construction, plus $2.25 per month per sub for the fiber or a total of $12.25 per month per sub for the stuff on poles.

b. The for the equipment we have $27.20 per sub per month.

Thus we have $39.45 per sub per month just for the CAPEX alone!

Now for the other costs.

2. The monthly operating costs fall into several categories.

a. The pole attachments are $2 per month per pole. There is about 120 feet between poles so each home has two poles and at 50% penetration this is $4.00 per month per sub for pole attachments.

b. Equipment maintenance is 5-10% per annum or say 0.5% of the CAPEX per month. There is approximately $3000 CAPEX per sub and this is reflected in a $15 per month per sub for maintenance costs.

c. The next cost is the Internet transit costs, the cost to peer with the Internet backbone. It is about $10-20 per Mbps per month. That means that if you were to stream at 1 Mbps 24 hours a day each and every day it would cost that much. But no one does that, they go on and off. So let's do a simple calculation. Let us assume that someone is on 30% of the time, and that when they are on they are transmitting or receiving 20% of that time and lest us assume they do so at 25 Mbps. That is a heavy user. This equals 1.5 Mbps as a load per sub. Assume we get a good deal at $10 per Mbps per month so each sub costs $15 per month.

Thus the total monthly cost of service is $4.00 plus $15.00 plus $15.00 or $34.00.

We can add them to yield, $73.45 per month per sub, before any operating costs! Now these numbers may vary depending on density of HH and penetration. Higher density and penetration will make some better but not all. A triple play will make things much better and an overbuild on an existing system, say a Verizon overbuild, may make them even better. But from whole cloth you really face an up hill battle.

3. Now add operating costs. They are as follows:

a. Billing is $2.00 per month per sub

b. Network Management is $1.00 per month per sub

c. Customer Care is $2.00 per month per sub

d. Overhead is $2.00 per month per sub.

That is $7.00 per month per sub for OPEX!

The total is $80.45 per sub per month! That is a lot. How can cable companies do it, the secret is video and voice. The CAPEX is marginal and the OPEX is shared. The COS is also somewhat shared.

So how do these industry opinion leaders deal with these facts. Well frankly they don't, for they appear to be clueless. We did these number when we obtained our RUS funding five years ago and it is a risky business. Two competitors is about all the market can stand. That is what we have today.

As to Amsterdam, it is totally different. It is dense in terms of housing, as is most of France, they lived in clustered areas as compared to the US. The US is different and thus more costly.

The US is geographically and demographically different than many countries, having lived from time to time in 23 of them. Thus when we look at the costs of broadband in isolation it is quite high. What one wonders is the role of Government in this area. Economics drives the deployment, not wishful thinking and politics, at least it should. Not one of these opinion writes seems to have the slightest bit of experience in this field yet they make statements for which they have no basis in fact.

At some time perhaps these opinion leaders may have to face the facts, but we suspect the facts are a bit above their arguments. These opinion makers want the Government to fund, build and operate the backbone! This was abandoned by almost all nations decades ago, yet they want to recreate it here!

Imagine if the world was run by engineers instead of lawyers and economists, facts would matter. Oh by the way, China is!

The FCC Plan and Reality

Today the FCC issued its Broadband magnum opus. Before getting into it I want to relate a few tales.

This past weekend we had a torrential downpour, some may call it Gorian Global Warming, I just called it a heavy Spring rain, but whatever. As usual, Jersey Central Power and Light let the power go again. You see there is one street where there are hundreds of trees with branches between the power lines. Duhh! Ya think they would cut them. Every year at least once the trees fall and the lines are cut for 24+ hours! Well again this weekend. And the Government wants Smart Grids, it's the last 1000 feet, stupid, and that indeed is what the power guys are, stupid!

Now the old copper lines for the telephone worked, they always work. I have had 10 power losses in the last three months, we went on battery backup, and Cablevision goes dead at 11 AM like clockwork! They even adjust for EDT! Amazing!

Now to broadband. You see copper telephone has its own power, broadband fiber does not, it relies on house current! So guess what, when the morons at the local power company drop the circuits as they are wont to do frequently then your wonderful broadband goes dead too. You see glass does not conduct power from the Telco Central Office.

This is the law of unintended consequences. 100 Gbps goes to zero really quickly! Especially when you have no power. You see, we moved my US company to the Czech Republic in 2002 mainly due to continual power outages in the US, amongst other factors!

Thus the FCC has a wonderful Plan, but in the end, unless the current Administration nationalizes the telcos also, and I thought all nations had abandoned that dumb idea, that it is ultimately still a market decision as to what someone gets depending on where they chose to live. Perhaps we will see communications nationalized also, as will be newspapers, education, autos, banks, healthcare, and on and on. Who would ever thunk!

Some Of The Reconcilliation Bill

The following are three sections of the Reconciliation worth reviewing.

The first is the standards for the plans mandated. There is no intention to manage demand in this plan. It mandates massive amounts of coverage and there is not a single element of responsibility on the part of the patient to improve their own health. For example one may become as obese as one whats and one is insured for all resulting harm to society at large by those who remain healthy. The elements are:

Subtitle B—Standards Guaranteeing Access to Affordable Coverage

SEC. 111. PROHIBITING PRE-EXISTING CONDITION EXCLUSIONS.

SEC. 112. GUARANTEED ISSUE AND RENEWAL FOR INSURED PLANS.

SEC. 113. INSURANCE RATING RULES.

(a) IN GENERAL.—The premium rate charged for an insured qualified health benefits plan may not vary except as follows: (1) LIMITED AGE VARIATION PERMITTED.—By age (within such age categories as the Commissioner shall specify) so long as the ratio of the highest such premium to the lowest such premium does not exceed the ratio of 2 to 1. (2) BY AREA.—By premium rating area (as permitted by State insurance regulators or, in the case of Exchange-participating health benefits plans, as specified by the Commissioner in consultation

SEC. 114. NONDISCRIMINATION IN BENEFITS; PARITY IN MENTAL HEALTH AND SUBSTANCE ABUSE DISORDER BENEFITS.

SEC. 116. ENSURING VALUE AND LOWER PREMIUMS. (a) IN GENERAL.—

A qualified health benefits plan shall meet a medical loss ratio as defined by the Commissioner. For any plan year in which the qualified health benefits plan does not meet such medical loss ratio, QHBP offering entity shall provide in a manner specified by the Commissioner for rebates to enrollees of payment sufficient to meet such loss ratio.

Subtitle C—Standards Guaranteeing Access to Essential Benefits

SEC. 121. COVERAGE OF ESSENTIAL BENEFITS PACKAGE. (a) IN GENERAL.—

A qualified health benefits plan shall provide coverage that at least meets the benefit standards adopted under section 124 for the essential benefits package described in section 122 for the plan year involved.

(1) NON-EXCHANGE-PARTICIPATING HEALTH BENEFITS PLANS.—In the case of a qualified health benefits plan that is not an Exchange-participating health benefits plan, such plan may offer such coverage in addition to the essential benefits package as the QHBP offering entity may specify.

(2) EXCHANGE-PARTICIPATING HEALTH BENEFITS PLANS.—In the case of an Exchange-participating health benefits plan, such plan is required under section 203 to provide specified levels of benefits and, in the case of a plan offering a premium plus level of benefits, provide additional benefits.

SEC. 122. ESSENTIAL BENEFITS PACKAGE DEFINED.

(a) IN GENERAL.—In this subdivision, the term ‘‘essential benefits package’’ means health benefits coverage, consistent with standards adopted under section 124 to ensure the provision of quality health care and financial security, that— (1) provides payment for the items and services described in subsection (b) in accordance with generally accepted standards of medical or other appropriate clinical or professional practice; (2) limits cost-sharing for such covered health care items and services in accordance with such benefit standards, consistent with subsection (c); (3) does not impose any annual or lifetime limit on the coverage of covered health care items and services; (4) complies with section 115(a) (relating to network adequacy); and (5) is equivalent, as certified by Office of the Actuary of the Centers for Medicare & Medicaid Services, to the average prevailing employer-sponsored coverage.

(b) MINIMUM SERVICES TO BE COVERED.—The items and services described in this subsection are the following:

(1) Hospitalization.

(2) Outpatient hospital and outpatient clinic services, including emergency department services.

(3) Professional services of physicians and other health professionals.

(4) Such services, equipment, and supplies incident to the services of a physician’s or a health professional’s delivery of care in institutional settings, physician offices, patients’ homes or place of residence, or other settings, as appropriate.

(5) Prescription drugs.

(6) Rehabilitative and habilitative services.

(7) Mental health and substance use disorder services.

(8) Preventive services, including those services recommended with a grade of A or B by the Task Force on Clinical Preventive Services and those vaccines recommended for use by the Director of the Centers for Disease Control and Prevention.

(9) Maternity care.

(10) Well baby and well child care and oral health, vision, and hearing services, equipment, and supplies at least for children under 21 years of age.

(c) REQUIREMENTS RELATING TO COST-SHARING AND MINIMUM ACTUARIAL VALUE.—

(1) NO COST-SHARING FOR PREVENTIVE SERVICES.—There shall be no cost-sharing under the essential benefits package for preventive items and services (as specified under the benefit standards), including well baby and well child care.

(2) ANNUAL LIMITATION.—

(A) ANNUAL LIMITATION.—The cost-sharing incurred under the essential benefits package with respect to an individual (or family) for a year does not exceed the applicable level specified in subparagraph (B).

(B) APPLICABLE LEVEL.—The applicable level specified in this subparagraph for Y1 is $5,000 for an individual and $10,000 for a family. Such levels shall be increased (rounded to the nearest $100) for each subsequent year1 by the annual percentage increase in the Consumer Price Index (United States city average) applicable to such year.

(C) USE OF COPAYMENTS.—In establishing cost-sharing levels for basic, enhanced, and premium plans under this subsection, the Secretary shall, to the maximum extent possible, use only copayments and not coinsurance.

The above set of benefits will be quite costly. The idea of a catastrophic coverage was totally rejected. There is gross neglect of cost sharing of any reasonable form. For those under $100,000 annual income there is Government, namely taxpayer, support.

The next area is the bundling issue, namely giving control over to the hospitals along with Government. The Plan states:

SEC. 1152. POST ACUTE CARE SERVICES PAYMENT REFORM PLAN AND BUNDLING PILOT PROGRAM.

(a) PLAN.—

(1) IN GENERAL.—The Secretary of Health and Human Services (in this section referred to as the ‘‘Secretary’’) shall develop a detailed plan to reform payment for post acute care (PAC) services under the Medicare program under title XVIII of the Social Security Act (in this section referred to as the ‘‘Medicare program)’’. The goals of such payment reform are to— (A) improve the coordination, quality, and efficiency of such services; and (B) improve outcomes for individuals such as reducing the need for readmission to hospitals from providers of such services.


(2) BUNDLING POST ACUTE SERVICES.—The plan described in paragraph (1) shall include detailed specifications for a bundled payment for post acute services (in this section referred to as the ‘‘post acute care bundle’’), and may include other approaches determined appropriate by the Secretary.

(3) POST ACUTE SERVICES.—For purposes of this section, the term ‘‘post acute services’’ means services for which payment may be made under the Medicare program that are furnished by skilled nursing facilities, inpatient rehabilitation facilities, long term care hospitals, hospital based outpatient rehabilitation facilities and home health agencies to an individual after discharge of such individual from a hospital, and such other services determined appropriate by the Secretary.

(b) DETAILS.—The plan described in subsection (a)(1) shall include consideration of the following issues: (1) The nature of payments under a post acute care bundle, including the type of provider or entity to whom payment should be made, the scope of activities and services included in the bundle, whether payment for physicians’ services should be included in the bundle, and the period covered by the bundle.

(3) Whether the bundle should be applied across all categories of providers of inpatient services (including critical access hospitals) and post acute care services or whether it should be limited to certain categories of providers, services, or discharges, such as high volume or high cost MS– DRGs.

(4) The extent to which payment rates could be established to achieve offsets for efficiencies that could be expected to be achieved with a bundle payment, whether such rates should be established on a national basis or for different geographic areas, should vary according to discharge, case mix, outliers, and geographic differences in wages or other appropriate adjustments, and how to update such rates.

(5) The nature of protections needed for individuals under a system of bundled payments to ensure that individuals receive quality care, are furnished the level and amount of services needed as determined by an appropriate assessment instrument, are offered choice of provider, and the extent to which transitional care services would improve quality of care for individuals and the functioning of a bundled post-acute system.

(6) The nature of relationships that may be required between hospitals and providers of post acute care services to facilitate bundled payments, including the application of gain-sharing, anti-referral, anti-kickback, and anti-trust laws.

(7) Quality measures that would be appropriate for reporting by hospitals and post acute providers (such as measures that assess changes in functional status and quality measures appropriate for each type of post acute services provider including how the reporting of such quality measures could be coordinated with other reporting of such quality measures by such providers otherwise required).

(8) How cost-sharing for a post acute care bundle should be treated relative to current rules for cost-sharing for inpatient hospital, home health, skilled nursing facility, and other services.

Finally there is the proposal for Health Centers, or a modicum of the old Public Health Care System. It is funded as follows:

TITLE I—COMMUNITY HEALTH CENTERS SEC. 2101. INCREASED FUNDING.

Section 330 of the Public Health Service Act (23 U.S.C. 254b) is amended— (1) in subsection (r)(1)— (A) in subparagraph (D), by striking ‘‘and’’ at the end; (B) in subparagraph (E), by striking the period at the end and inserting ‘‘; and’’; and (C) by inserting at the end the following: ‘‘(F) Such sums as may be necessary for each of fiscal years 2013 and 2019.’’; and (2) by inserting after subsection (r) the following: ‘‘(s)

ADDITIONAL FUNDING.—For the purpose of carrying out this section, in addition to any other amounts authorized to be appropriated for such purpose, there are authorized to be appropriated, out of any monies in the Public Health Investment Fund, the following:

‘‘(1) For fiscal year 2010, $1,000,000,016 ‘‘(2) For fiscal year 2011, $1,500,000,000. ‘‘(3) For fiscal year 2012, $2,500,000,000. ‘‘(4) For fiscal year 2013, $3,000,000,000. ‘‘(5) For fiscal year 2014, $4,000,000,000. ‘‘(6) For fiscal year 2015, $4,400,000,000. ‘‘(7) For fiscal year 2016, $4,800,000,000. ‘‘(8) For fiscal year 2017, $5,300,000,000. ‘‘(9) For fiscal year 2018, $5,900,000,000. ‘‘(10) For fiscal year 2019, $6,400,000,000.’’.

There is no part of the Reconciliation which speaks to abortion thus eliminating the Stupaks, if they so chose.

We Told You So:High Yield Debt is Next

The NY Times today finally has an article on the explosion or implosion of high yield debt. We wrote about this two years ago when this down turn, a nice term if you will, for the current economy. They seem to indicate about a trillion of such debt coming due in the next three to four years.

They state:

When the Mayans envisioned the world coming to an end in 2012 — at least in the Hollywood telling — they didn’t count junk bonds among the perils that would lead to worldwide disaster. Maybe they should have, because 2012 also is the beginning of a three-year period in which more than $700 billion in risky, high-yield corporate debt begins to come due, an extraordinary surge that some analysts fear could create a glut in the debt markets.

With huge bills about to hit corporations and the federal government around the same time, the worry is that some companies will have trouble getting new loans, spurring defaults and a wave of bankruptcies.

We saw Sirius and then Fairpoint, and the list goes on. There is really well over two trillion in such poorly structured high yield debt, the old junk bonds. It will take the Times about another year or two to catch on to this one.

The Times continues:

“An avalanche is brewing in 2012 and beyond if companies don’t get out in front of this,” said Kevin Cassidy, a senior credit officer at Moody’s.

Private equity firms and many nonfinancial companies were able to borrow on easy terms until the credit crisis hit in 2007, but not until 2012 does the long-delayed reckoning begin for a series of leveraged buyouts and other deals that preceded the crisis.

That is because the record number of bonds and loans that were issued to finance those transactions typically come due in five to seven years, said Diane Vazza, head of global fixed-income research at Standard & Poor’s.

We see that this will cause additional depression on major segments of the market. Even large companies like Verizon live on debt and this may very well drive up the cost of debt, an ersatz inflation.

The Government debt will add to the problems just when all whatever is breaking out. The geniuses in Washington will be creating the next perfect storm just in time for the 2012 election, Mayans notwithstanding.

Beware the Ides of March

CAESAR

Who is it in the press that calls on me?
I hear a tongue, shriller than all the music,
Cry 'Caesar!' Speak; Caesar is turn'd to hear.

Soothsayer

Beware the ides of March.

CAESAR

What man is that?

BRUTUS

A soothsayer bids you beware the ides of March.

CAESAR

Set him before me; let me see his face.

CASSIUS

Fellow, come from the throng; look upon Caesar.

CAESAR

What say'st thou to me now? speak once again.

Soothsayer

Beware the ides of March.

Here is the Reconciliation Bill from the House. Yes this is an added 2309 pages on top of the almost 3000 we already have and yes it reintroduces the Public Option plus more Government Control!
























Perhaps 2010 would be a good year to die, for some. Except, of course, if you are a Government Employee or Union Member, and of course that goes without saying. I wonder who will be left to create value in our economy and pay all those taxes that will be demanded? You see, despite the talk about the Restaurant at the End of the Universe, middlemen do not survive with us thinkers and doers all dead!

Thus beware the Ides of March!

Baseline Portfolio: March 2010

We continue to track the Baseline Portfolio which we created in early December 2008. The first observation is that the annualized gain, albeit still high, has been slowly declining. The portfolio showed significant volatility at the beginning of the current Administration but has since shown a slow but continuing decline.

The major stock which is a surprise is still Verizon. The reasons for its decline are still somewhat a mystery since we see significant top side as LTE and other technologies are deployed. IBM and Dow Chemical are the greatest returns showing over 60% in this period. IBM has been a solid predictor of a recovering business climate and Dow Chemical is a harbinger for strong economic growth. In many ways Verizon would be a lagging stock in such a combination.

Kraft and J&J show a 15% return, modest and better than the Treasury rates especially when dividends are added in. Both are also market laggards. They await for the consumer to return.

China, Google, and the US

China Daily has an interesting combination of articles. The first is the one on Google and its actions in China. There it states:

Google "will bear the consequences" if it stops censoring search results on its Chinese website, the Ministry of Industry and Information Technology (MIIT) said on Friday. The statement by Minister Li Yizhong at a press conference was the strongest one yet by the Chinese government over the issue since Jan 12, when the US-based Internet search giant threatened to pull out of China because of cyber attacks that it claimed originated from the country. The Chinese government welcomes Google to expand its market share in the country if it abides by Chinese laws and regulations, Li said...

But when reporters asked him what China would do if Google stops censoring search results on its local website, Li, 65, said: "If you don't respect Chinese laws, you are unfriendly and irresponsible, and you will bear the consequences." Google has been in negotiations with Chinese authorities over providing unfiltered online services since its announcement two months ago of the alleged cyber attacks and its unwillingness to continue censoring its search results on domestic website Google.cn.

In the same day they also have published a report on the lack of freedom in the US. They state:

The State Department of the United States released its Country Reports on Human Rights Practices for 2009 on March 11, 2010, posing as "the world judge of human rights" again. As in previous years, the reports are full of accusations of the human rights situation in more than 190 countries and regions including China, but turn a blind eye to, or dodge and even cover up rampant human rights abuses on its own territory. The Human Rights Record of the United States in 2009 is prepared to help people around the world understand the real situation of human rights in the United States.

They go on:

In the United States, about 30,000 people die from gun-related incidents each year (The China Press, April 6, 2009). According to a FBI report, there had been 14,180 murder victims in 2008 (USA Today, September 15, 2009). Firearms were used in 66.9 percent of murders, 43.5 percent of robberies and 21.4 percent of aggravated assaults (http://www.thefreelibrary.com). USA Today reported that a man named Michael McLendon killed 10 people in two rural towns of Alabama before turning a gun on himself on March 11, 2009. On March 29, a man named Robert Stewart shot and killed eight people and injured three others in a nursing home in North Carolina (USA Today, March 11, 2009). On April 3, an immigrant called Jiverly Wong shot 13 people dead and wounded four others in an immigration services center in downtown Binghamton, New York

They continue:

After the September 11 attack, the US government, in the name of anti-terrorism, authorized its intelligence authorities to hack into its citizens' mail communications, and to monitor and erase any information that might threaten the US national interests on the Internet through technical means. The country's Patriot Act allowed law enforcement agencies to search telephone, email communications, medical, financial and other records, and broadened the discretion of law enforcement and immigration authorities in detaining and deporting foreign persons suspected of terrorism-related acts. The Act expanded the definition of terrorism, thus enlarging the number of activities to which law enforcement powers could be applied. On July 9, 2008, the US Senate passed the Foreign Intelligence Surveillance Act Amendments Act of 2008, granting legal immunity to telecommunication companies that take part in wiretapping programs and authorizing the government to wiretap international communications between the United States and people overseas for anti-terrorism purposes without court approval (The New York Times, July 10, 2008). Statistic showed that from 2002 to 2006, the FBI collected thousands of phones records of US citizens through mails, notes and phone calls.

Needless to say there is truth in all of their allegations. They seem to be balancing to their own people as well as the world the fact that the US has as much of an environment of control as does China. Frankly the trends in the US are frighteningly in that direction.

Both articles are worth the read on a side by side basis. It provides insight into how others see the US and in fact how the US actually functions. Post 9/11 both Republican and Democrat leaders have tightened the reigns of freedom in the country, often with fearful long term consequences.

The report finishes with statements of the following type:

According to a report by the US Congress, the US foreign arms sales in 2008 soared to 37.8 billion US dollars from 25.4 billion a year earlier, up by nearly 50 percent, accounting for 68.4 percent of the global arms sales that were at its four-year low (Reuters, September 6, 2009). At the beginning of 2010, the US government announced a 6.4-billion-US dollar arms sales package to Taiwan despite strong protest from the Chinese government and people, which seriously damaged China's national security interests and aroused strong indignation among the Chinese people.

The final statement is:

We hereby advise the US government to draw lessons from the history, put itself in a correct position, strive to improve its own human rights conditions and rectify its acts in the human rights field.

Is this a friendly warning, a shot across the bow, a reflection of how others see the US or a valid set of observations. The kettle and the oven may have things in common, one may fear.

Another Look at the PSA Test

In a recent Urology Today posting they discuss the variations in PSA testing and PCa, prostate cancer, in Europe and the US.

Specifically they state:

This study compared PSA screening performance for detecting CaP in the ERSPC-Rotterdam with the US population. The authors report that PSA screening performance in this analysis could provide quantitative explanations for the different mortality results of ERSPC-Rotterdam and the US Prostate, Lung, Colorectal and Ovarian trial. ..The model includes 18 detectable preclinical states in the natural history of CaP that are derived from combinations of clinical stage, grade, and metastatic stage. In this model, PSA testing and subsequent biopsy is modeled as a single test, therefore PSA test sensitivity also depends on whether a positive test is followed by a biopsy.

...The predicted CaP incidence peak in the US was higher than the observed CaP incidence Peak (13.3 vs. 8.1 cases per 1,000 man-years), suggesting a lower detection of CaP in the US than in ERSPC-Rotterdam. The lower sensitivity of PSA screening in the US compared with ERSPC-Rotterdam may be due to a higher PSA cutoff level for recommending biopsies in the US. Data suggests that the biopsy compliance rate is over twice as high in the screening arm of ERSPC-Rotterdam. However, other differences included racial differences between the US and Rotterdam, frequency of PSA testing, explanations for the drop in CaP incidence after 1992 and the inability to compute 95% confidence intervals for the sensitivity parameters.

The study found that PSA screening in the US did not detects as many CaPs as in ERSPC-Rotterdam due to the lower sensitivity of PSA testing followed by a biopsy.

This study presents in a bit convolved way the problems with PSA testing. They are:

1. PSA tests are not consistent. One assay will give different results from another assay. The difference that we have measured can be as great as a 50% variation from assay to assay. The stated variation is less than 10% but the measured is closer to 50%. Thus a single test can have great variability.

2. Repeat testing with the same assay also has testing variances due to life style. Namely irritated prostates and the like cause variations in PSA as much as 25%.

3. PSA Velocity, VPSA, is the dominant test metric and that requires many years of tracking. It is the average of three consecutive measurements and the derivation of velocity therefrom. Thus one needs a good baseline of ten years of annual PSA data at a minimum to determine reliable PSA velocity. The three sample test is an attempt to reduce the variability from the above two causes.

4. There is a recent tendency to delay biopsy from an exaggerated PSA test. In fact many internists and family physicians do not pay attention to velocity because they do not have access to the data! It is questionable if they are even aware of the velocity testing.

5. The problem today is that PSA testing looks at just one PSA sample and we know they are highly variable. Thus rather than sampling bi-annually the test should be performed annually and the long term data recorded and analyzed.

The problem of having data on patient histories is pandemic. For example the PSA is but one yet so too is HbA1c, and even blood pressure as well as HDL and many other variables. Medicine is a science and art which is often driven by a change, change in some chemistry measurement, change in weight, sight, moles, and the like. Thus it is imperative that a good HIT notwithstanding that the patient develop their own records, and bring them with them to the physician. Noticing a change can save a life.

Genetic Profiles: A New Dating Paradigm

Nature published an article on the expansion of genetic profiling and mapping of the entire gene for each and every person.

The article states:

The family-based approach has also provided researchers with another way to estimate the rate at which parents pass mutations to their offspring. Galas and his colleagues estimate that each offspring will have 70 new mutations, less than half the number obtained with previous approaches. "It is really important to know this number because it represents the source of all genetic variation we have, for good or bad, for health or disease," says Joseph Nadeau, a human geneticist at Case Western Reserve University in Cleveland, Ohio.

Although whole-genome sequencing might be highly accurate and getting cheaper, it isn't yet within practical reach. Lupski and colleagues, for instance, estimate that their study cost around US$50,000. Less complete forms of sequencing can provide similar information about the genetic underpinnings of diseases such as Miller syndrome and primary ciliary dyskinesia.

Thus one may wonder as the costs decrease and having the capability to have one's genome as part of a self contained ID, such as a Government Health Care Card and Passport, one could consider a new iPhone App where two people could compare genomes and see if they have a compatibility for a future family or if they should just "date" and walk away.

In fact one could consider say a Facebook app performing matching functions to "optimize" such pairings! What next?

The FCC and the Internet: What Happened to the Market?

The NY Times reports on the forthcoming release by the FCC of its Broadband Strategy. The Times states:

According to F.C.C. officials briefed on the plan, the commission’s recommendations will include a subsidy for Internet providers to wire rural parts of the country now without access, a controversial auction of some broadcast spectrum to free up space for wireless devices, and the development of a new universal set-top box that connects to the Internet and cable service.

The effort will influence billions of dollars in federal spending, although the F.C.C. will argue that the plan should pay for itself through the spectrum auctions. Some recommendations will require Congressional action and industry support, and will affect users only years from now.

The question is by what authority does the FCC act under to take actions to essentially nationalize the deployment of broadband? The answer seems to be that they are doing this plan to ask Congress for just such an authority.

The development of the Internet has evolved in a manner of that of the free market. Entrepreneurs and engineers get together and deploy some new elements and if it takes it gets more open market funding and it evolves. The current FCC seems to have the hubris that they and they alone have the insight as to how it evolves. As we had written just a short while ago the FCC lacks technical talent and as Government types they also lack and business expertise.

Thus this is just another step of a Government takeover of another sector of our economy. Banks, autos, health care, and now communications. One could even argue that they control agriculture given the role of the USDA in part.

They believe that they are central planners and as such have wisdom and insight that is supra the market. The Soviet planners had a similar mindset. One wonders what the true intent is of these planners. Perhaps it is the fear of this planning process that drives down Verizon and AT&T stock.

The focus on rural is somewhat understandable but the intensity of that focus is questionable. In the 1930s the REA, the predecessor of the RUS at USDA performed a laudable function for a largely agricultural nation. We are not that any longer. RUS still performs a valuable function in its day to day business. Telecommunications is important for many segments of our society. In the normal RUS day to day world they make rational economic decisions and these decisions are for the most part validated in their paybacks. The FCC's dream of an Internet world of their own making is highly suspect.

The Ongoing Prostate Cancer Debate

Prof Ablin, the professor who discovered the PSA antigen which is used in testing for prostate cancer, PCa, wrote a scathing editorial in the NY Times this week decrying the test and its implications.

He starts by stating:

The test’s popularity has led to a hugely expensive public health disaster. It’s an issue I am painfully familiar with — I discovered P.S.A. in 1970. As Congress searches for ways to cut costs in our health care system, a significant savings could come from changing the way the antigen is used to screen for prostate cancer.

Americans spend an enormous amount testing for prostate cancer. The annual bill for P.S.A. screening is at least $3 billion, with much of it paid for by Medicare and the Veterans Administration.

I will have to strongly disagree with the good Professor. His test alone has some problems which is well recognized. Yet his test alone as a single measurement upon which to act dramatically was never intended to be used that way. Thus I believe that the whole basis for his argument lack any merit. I will make my argument here again, probably for the fifth time in this blog. It is a pity that so few professionals have so narrow a view.

Facts: PSA by itself as a one time test with a threshold of 4.0 as applied to all men does not significantly reduce mortality. This is a true fact. The Professor states:

The medical community is slowly turning against P.S.A. screening. Last year, The New England Journal of Medicine published results from the two largest studies of the screening procedure, one in Europe and one in the United States. The results from the American study show that over a period of 7 to 10 years, screening did not reduce the death rate in men 55 and over.

The European study showed a small decline in death rates, but also found that 48 men would need to be treated to save one life. That’s 47 men who, in all likelihood, can no longer function sexually or stay out of the bathroom for long.

As we had demonstrated almost a year ago, these studies used the 4.0 level as the benchmark and the European study had long periods between testing and the US study did two year testing and again applied 4.0 for all.

None of the studies recognized the newer research that said that 2.0 was the threshold for those under 60 and that velocity was a major component. Velocity is the change in PSA per year, and it is recognized that if the velocity exceeds 0.75 per year for men over 65 and with a stable PSA over 4.0 then the sensitivity and specificity rises appreciably. Second for men under 60 or with a baseline long term PSA under 2.0, if the velocity exceeds 0.25 the sensitivity and specificity also is quite high.

Also we know that free PSA and % Free PSA are further indicators of PCa, since the PCa cells bind the free PSA whereas the normal acinar cells do not.

Finally, family history is critical. It falls into three categories; no PCa, PCa of an indolent form, and PCa of a virulent form.

Thus if one has no PCa in ones family then most likely you have a lesser chance of having a virulent PCa. If your family history is of indolent forms then there is a good chance you too with have that form. If your family history is of a virulent form then you too may most likely have that form. What is a virulent form, well my father had that form. PSA went from 4 to 40 in two years and 40 to death in two years! Why did that happen, well we do not yet fully know the dynamics of the cancer pathways, we do know that PTEN was knocked out at some point and off it went.

This using a Bayes methodology, we really want to measure the following probability:

P[PCa| PSA, PSA Velocity, Percent Free, Percent Free Velocity, Family History]

Then given the a priori data we can determine an a posteriori probability and act accordingly.

The good Professor seemed to neglect all of these facts! One may as why he did so, political, professional, personal reasons, one can only wonder.

The Professor continues his, in my opinion, rant:

So why is it still used? Because drug companies continue peddling the tests and advocacy groups push “prostate cancer awareness” by encouraging men to get screened. Shamefully, the American Urological Association still recommends screening, while the National Cancer Institute is vague on the issue, stating that the evidence is unclear.

The federal panel empowered to evaluate cancer screening tests, the Preventive Services Task Force, recently recommended against P.S.A. screening for men aged 75 or older. But the group has still not made a recommendation either way for younger men.

Prostate-specific antigen testing does have a place. After treatment for prostate cancer, for instance, a rapidly rising score indicates a return of the disease. And men with a family history of prostate cancer should probably get tested regularly. If their score starts skyrocketing, it could mean cancer.

The test, when combined with other variables has been shown to have merit. Yet one of the factors is the patients history, the long term PSA data, not a single PSA measurement. One of the problems with a single PSA measurement is that there is a +/- 50% variation in PSA measurements. The PSA may vary from say 1.5 to 1.8 to 2.1, to 2.1 in the same person but using differing assays! That in itself would set off alarms. Yet if there were a 20 year history then one could better determine the velocity and watch for results and not jump to surgery.

More Facts: Prostate Biopsies, the sextant or 6 core forms, have been notoriously poor in detecting cancer. In addition the biopsy cannot as current performed determine indolent versus virulent forms, that is a genetic marker issue. One could do an assay on the cells for PTEN marker presence but that is still an experimental procedure. One could use the PCA3 test which determines Gleason 7 or greater with reasonable specificity and sensitivity but that is only a recent development and by the time one gets to Gleason 7 one may have a PCa which will have positive margins after prostatectomy.

One would like to get PCa at Gleason 5 or 6 with negative margins. This often means more cores. Thus for say a 40 cc prostate one needs 12 to 14 cores, and yet one may still have a 20% or greater chance of missing a cancer. In a larger prostate, say 60 cc one may need 20 cores and yet still have an almost 20% chance of detecting a PCa on the next biopsy say 6 months later.

The problem is that we do not have the genetic tools to detect PCa, and in fact almost all Cancers, at the earliest a stage. The problem with PCa is that we do not know the indolent from the virulent from even at biopsy!

Is the answer as the Professor argues just abandon the testing! I think not. Death from PCa is not a pretty picture, it is akin to breast cancer. Mets to bones, collapse of the spine, disseminated intravascular coagulation, and the like is not a pretty picture, even if the good Professor would like to shuck these off.

You see, the reason why I am so concerned is that I have just gone through the process, I used my Bayesian analysis, and yes we found something. Using the Bayes approach I was 100% sensitive and 100% specific. So from my close perspective, I used the educated consumer model and it worked. I thank the Professor for his test yet I find his wanting on its implications. It is a shame that he has joined the chorus of those who want Government to control our health, and our death!

Cablevision and ABC

Well the media moguls are at it again. Cable vision has a bit over 3 million subs, a smaller system than most, but in the NYC market. Tonight the moguls at ABC are demanding $1 per month per sub. That is right, an added $12 per year of $40 million per year total when you round it all up.

ABC was "given" the use of the spectrum, free you see, for the public benefit. Well, stick it to the public is their attitude. Not that I watch the Oscars anyhow, but many folks do, it's Sunday night and it is not as if there is anything else. Perhaps you could read a book, talk with your spouse and children, write on your blog, whatever.

But as I wrote when the Fox problem arose, this is just abject greed. We have newspapers enticing Senators to pass bills to give them special treatment because they are messing up, but the broadcast guys are just outright greedy.

It will be interesting to see how this plays out. In my discussions with my cable friends it appears that the Dolans are out in front on this one and ABC looks like the heavy.

CBO and Current President's Budget

The CBO issued a report on the current President's Budget. We summarize the result here.

The CBO states:

CBO’s preliminary analysis indicates the following:

If the President’s proposals were enacted, the federal government would record deficits of $1.5 trillion in 2010 and $1.3 trillion in 2011. Those deficits would amount to 10.3 percent and 8.9 percent of gross domestic product (GDP), respectively. By comparison, the deficit in 2009 totaled 9.9 percent of GDP.

Measured relative to the size of the economy, the deficit under the President’s proposals would fall to about 4 percent of GDP by 2014 but would rise steadily thereafter. Compared with CBO’s baseline projections, deficits under the proposals would be about 2 percentage points of GDP higher in fiscal years 2011 and 2012, 1.3 percentage points greater in 2013, and above baseline levels by growing amounts thereafter. By 2020, the deficit would reach 5.6 percent of GDP, compared with 3.0 percent under CBO’s baseline projections.

Under the President’s budget, debt held by the public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020. As a result, net interest would more than quadruple between 2010 and 2020 in nominal dollars (without an adjustment for inflation); it would expand from 1.4 percent of GDP in 2010 to 4.1 percent in 2020.

First we show the CBO Baseline which had been the expected prior to the issuance of the Budget. The Revenue, Outlays and Deficits are shown below.


















Then we show the percent of annual deficit and total debt as a percent of the GDP.


















We then repeat this for the current President's Budget as presented. First the Revenue, Outlays and Deficits.




















Now the percent of deficit and total debt as a percent of GDP,




















Now we look at these in some detail.

First, under the original CBO numbers the total public debt was peaking in 2014 at about 62% of GDP. Now we see a larger peak but the total debt as a % of the GDP reaches 90% as compared to 67% That means we are facing a catastrophic economic collapse. The current Administration seems to have a total disregard for this train wreck.

Second under the original plan the deficits were hundreds of billions per year but not too bad. Yet under the current President's Budget they exceed a trillion again and again.

This is gross fiscal mismanagement. Why do we have the problem we have:

Under the former President we spent the deficit for the War in Iraq. That supposedly is ending. Thus we should recover $200-400 billion annually.

Under the current recession we lost $400 billion in tax revenue from the unemployment and the payments to the unemployed equaled $300 billion for a $700 billion swing. Unless we see a sustained unemployment situation, driven by the uncertainty in what is going on in Washington, we can assume that the $700 will go away.

Thus where are we spending all of this money? Well simply Congress and the current President are adding new programs as if there were no tomorrow. The debt load will destroy the country as we know it. Perhaps that is the goal!

Newspapers and Congress: How Dumb Can They Get?

Senator Cardin of Maryland crafted a Bill to save the newspapers. Cardin states:

In recent months, the Seattle Post-Intelligencer, the Rocky Mountain News, the Baltimore Examiner and the San Francisco Chronicle, among others, have either ceased daily publication or announced that they may have to stop publishing. A number of other publications, including newspapers owned by the Tribune Company, owners of The Baltimore Sun, have filed for bankruptcy or have had to institute severe cutbacks that have impacted news coverage.

The Newspaper Revitalization Act would allow newspapers to operate as non-profits, if they choose, under 501(c)(3) status for educational purposes, similar to public broadcasting. Under this arrangement, newspapers would not be allowed to make political endorsements, but would be allowed to freely report on all issues, including political campaigns. Advertising and subscription revenue would be tax exempt and contributions to support coverage or operations could be tax deductible.

The measure is targeted to preserve local newspapers serving communities and not large newspaper conglomerates. Because newspaper profits have been falling in recent years, no substantial loss of federal revenue is expected.

“We are losing our newspaper industry,” said Senator Cardin. “The economy has caused an immediate problem, but the business model for newspapers, based on circulation and advertising revenue, is broken, and that is a real tragedy for communities across the nation and for our democracy.

“While we have lots of news sources, we rely on newspapers for in-depth reporting that follows important issues, records events and exposes misdeeds. In fact, most if not all sources of journalistic information – from radio to television to the Internet – gathers their news from newspaper reporters who cover the news on a daily basis and know their communities. It is in the interest of our nation and good governance that we ensure they survive.”

According to Barclays (sic) Capital, newspaper advertising revenue was down by about 25% for 2008, and circulation continues to steadily decline at most major newspapers as readers increasingly turn to alternative electronic news sources.

Senator Cardin added: “This may not be the optimal choice for some major newspapers or corporate media chains, but it should be an option for many newspapers that are struggling to stay afloat.”

Well is this were the buggy whip, the horseless carriage, gas lamps, would the Senator also attempt to hold back the future? Most likely so. One need read the Bill to see how extreme he gets.

It appears that newspapers are doing whatever the can to get us the taxpayers to keep their old way of doing things in business. Clearly they have a business model which is decay. For example in today's Times Week in Review there is a cartoon with grandma saying the "the newspaper says that the letter is dying..." The father asks what is a letter as he uses email and the little boy asks what is a newspaper while playing with some mindless electronic gadget. Grandma is either made to look like an a technophobic or the kid a self possessed idiot, both may apply.

Yet this is what is happening. For example I am now using video conferencing more than ever before, grandson to me, and dad uses email. Yet for newspapers, well no one trusts what the write. Look at the NY Times, we know its political bent, we know it twists every story it writes, thus I must deconvolve the truth from the spin if at all possible. This is nothing new, what is new is that in the print media it is dominated by left wing preachers.

Thus we go to the Internet for news. There we can use reason and judgment to determine the truth, as any one would do.

So who is pushing Cardin, I guess one just has to follow the money!

Uemployment and Romer

The Government released unemployment for February and it remains at 9.7%. The gap between what Romer stated and reality again widens and she remains in place. We have estimated that the actual rate still is above 12.5% and this would include all those looking.

The Surgeon General and Obesity

The current Surgeon General has testified before Congress on the issue of childhood obesity. The irony of this is that if one looks at the Surgeon General one could see possibly a rather obese person, not the example one wants to set telling others to reduce their weight.

This is not a singular observation. The NY Times wrote a story on this at the time of her appointment. The Times states:

Despite her impressive résumé, Dr. Benjamin has been criticized for her weight. Critics have raised questions about whether Dr. Benjamin will have a credibility problem as she tries to address the nation’s obesity problem.

In an interview with ABC’s “Good Morning America,” Dr. Benjamin responded to the criticism.

“Health and being healthy and being fit is not about a dress size,” she said. “It’s about how fit you are at that moment in time. I’m just like 67 percent of Americans. I struggle with my weight just like they do, so I understand. And I want to have them help me, and I’ll help them, and we’ll work together to try to become a healthier nation.”

No madam, you are obese and almost morbidly so. Further your rather than having people help you all it requires is that you shut your mouth! Input less output is net accumulation. The fundamental law of physics. It works all the time and you are accumulating at an astonishing rate. Your response is to attack and then place the responsibility on others.Admit the fact that you are morbidly obese and do something about it. For how could you ever tell anyone else to do the same.

Since obesity costs us more than $300 billion annually, one wonders why we have such a poor example in such a significant position. It is akin to having a chain smoker in a smoking cessation program. Her testimony today just further raises the issue of true leadership.

What do we have for our children to look up to. It takes will power and character to reduce the weight and keep it off. I know, I have done it for eight years now. I remember my last root beer, my last vanilla wafer, and my last three musketeers! I guess there is nothing more critical than ex smokers, recovering alcoholics and former fattys! But the ability to show others that you can do what you are asking of them goes to the heart of integrity!