Pondering

Another explanation why meds cost so much; this ties into the GIK valuation issue

This post will be deep background on the GIK valuation issue. I won’t connect the dots to the international versus US pricing issue, just lay out a few pieces of the puzzle.

One of many fascinating things I’ve learned about pharmaceuticals while blogging about mebendazol and the related valuation issues is the dramatic disparity of the prices for meds in the US and overseas. There is also a huge gap between branded and generics.

I’ve looked for data on the difference in consumption of meds and costs paid here in the US versus the rest of the world. Can’t find what I’m looking for. Somewhere sometime I saw a comment that we in the US consume 10% of all prescription meds but pay 50% of the costs. Can’t support that with anything other than hazy memory. I am fairly comfortable that the disproportionate relationship exists, even if the numbers are off.

Why does that disparity exist? Is it, perhaps, a good thing?

The underlying economic model is US residents pay for all the astoundingly huge development costs of brand new wonder drugs and the rest of the world pays the incremental costs of making another pill.

What that model does is recover the billions of dollars needed to find a new drug and motivates big pharma to look for another blockbuster.

Megan McArdle explains the issue much more clearly in her article Would you Pay $84,000 for a New Liver?

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Jim Ulvog

Draft California law may allow AG to do more than browse annual filings

There is a perception that regulators, such as the IRS, California Franchise Tax Board, and California Attorney General scour every filing they receive from charities to make sure every charity is obeying every law and has every box checked correctly. Based on that detailed analysis, the agencies decide who to audit for misconduct and they start enforcement action on everyone that steps so much as an inch out of line or answers even one question “wrong”.

Umm. Not quite.

The perception amongst my colleagues who work with charities is that the various regulators barely have time to file the reports and probably don’t have time to study anything. I have long guessed that the volume of reports is so overwhelming that there isn’t time to carefully consider anything unless someone from the public complains.

In her report, Bill targeting ‘scam charities’ in California law moves forward, Kendall Taggart from the Center for Investigative Reporting confirms my colleague’s read of the situation is more accurate that the common perception.

Charities and fundraisers operating in California are required to file an annual report with the Registry of Charitable Trusts in the Attorney General’s office. The initial filing is a CT-1. The recurring annual report is the RRF-1.

Here is some info from the article: (more…)

Jim Ulvog

How to summarize half a dozen developmental economics books in one sentence

You want to boil down hundreds of pages from several books? I came across one sentence that does a good job:

…poverty is a symptom— of the absence of a workable economy built on credible political, social, and legal institutions.

I’ve been reading a lot of economics books lately. (Okay, okay, you can pray for me – a CPA reading economics books for relaxation and learning and growth.)

If we can figure out how we on this planet have gotten to the place where we have the highest wealth, best health, and longest life expectancy in history, we can keep going on the same path. Likewise, we can maybe figure out how to bring along those people groups that don’t share in the abundant bounty.

Here is the ache in many hearts:  How do we ‘solve’ poverty and suffering?

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Jim Ulvog

Toxic charity summarized in one post – – hurting by helping

Jeff Rutt, founder of HOPE International offers Confessions from a Recovering Toxic Charity Addict.

He explains his church was sending so many containers of assistance to their partner church in Ukraine that they were causing serious harm to the church. Here are five lessons he learned from the pastor of their partner church: (more…)

Jim Ulvog

How do you keep one rogue employee from destroying your company? Or at least prevent a FCPA guilty plea and $108M fine?

I often ponder just how do you create a high-enough quality environment with superb-enough controls that you can make sure one out-of-control person can’t take down your whole organization.

I have four examples.

Most of them (but not all) had really good internal controls, great procedures, told their staff constantly what was acceptable, reminded staff of ethical and legal requirements. Some had rigorous internal monitoring procedures.

Yet one out-of-control person took out a bank, severely damaged another bank, and another individual came close to seriously hurting an international accounting firm. A group of people cost one company a guilty plea under the Foreign Corrupt Practices Act along with a hundred million dollar fine, deferred prosecution agreement, and tons of negative publicity. Let’s take a look at Barings Bank, KPMG, Société Générale, and HP.

Barings Bank trading losses

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Jim Ulvog

Don’t pick a fight with someone who buys pixels by the terabyte and especially someone with 13,700 Twitter followers

There’s an old line from the newspaper era: Don’t pick a fight with someone who buys ink by the barrel. If you do, tomorrow you will see 10,000 printed copies of the next step of the argument.

The internet equivalent is:

Don’t pick a fight with someone who buys pixels by the terabyte.

Today’s addendum is: especially when said person routinely prints 13,700 copies of tweets.

Francine McKenna got a threatening email from a guy who had a role in a failed company. You can read all about it: Benjamin Wey Sent Me A Threatening Email About AgFeed.

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Jim Ulvog

Please try to stay out of court

In my journeys as a CPA serving the nonprofit community, I’ve been able to observe one (or more) charity/charities that have been in court because of their involvement in civil litigation. The time and costs involved can be substantial if you find yourself in civil court.

I can’t talk about those situation(s) because of confidentiality rules.

There are several things an auditor would routinely do in such situations.  The auditor would see the costs incurred from looking at the general ledger. Because of the possible financial impact, the auditor would have discussed the status of the case and possible outcomes with management, looked at legal invoices, and read the legal confirmation letter received from outside counsel. I can’t tell you what steps I took in any particular situation.

What I can say after seeing one/some specific situation(s) is that you should try really, really hard to stay out of court.

The costs can be high. The distraction for your leadership (and membership if you have members of some sort) can be significant.

One situation I can talk about

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Jim Ulvog

Why aid and development are difficult

Life is complicated.

My reading over the last two years has opened my eyes to why successful aid and development is so difficult. Unintended consequences and complexity in general are a few reasons why it is hard to make things better in poor countries and why improvements are so slow.

Many of my readers processed through the ideas I’ll mention in this post a long time ago. This is old news for many.

For me, and for some readers of this blog, this is new territory. One of many reasons I blog is to work through what is new for me.

Here are two more articles that illustrate the complexities of facilitating change:

Systemic lack of justice

Why We’re Losing the War on Poverty is an interview in Christianity Today with Gary Haugen discussing his book, The Locust Effect: Why the End of Poverty requires the End of Violence.

The lack of functioning law enforcement allows violence to prey on the poor and plunder them. The corrosive effect of violence undermines everything else in a society. The one sentence summary: (more…)

Jim Ulvog

It is amazingly easy to create video content

Tech tools available today make it easy for a novice to create usable videos. No one will confuse what you create with what comes out of Hollywood or Madison Avenue, but it won’t cost thousands of dollars per minute of content either.

To show how easy it is, I’ve accumulated several of my videos and briefly discussed them on my other blog, Outrun Change:

Here is my most popular video, with over 3,600 views:

[youtube=http://www.youtube.com/watch?v=1qeibzgSemY]

Making videos is incredibly easy. I hope my simple efforts will encourage you to try it yourself.

Keep in mind I’m working with a point-and-shoot camera, have zero editing experience, and possess a level of creativity that is only slightly higher than the average accountant.

Equipment that is not cheapest on the market, some minimal experience, and measurable levels of creativity combined with the astounding tools available today would result in great video for your organization.

Jump in, the water’s fine!

Jim Ulvog

Simple, Complicated, Complex, Chaotic – a way to make sense – part 4

Previous posts introduced the simple/complicated/complex/chaotic quadrants of the Cynefin Framework and discussed how that can be used to analyze development issues.

Implications for economics

This framework has huge implications for discussions of economic issues. So many areas come to mind that are actually complex but we treat them as if they are complicated.

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Jim Ulvog

Simple, Complicated, Complex, Chaotic – a way to make sense – part 3

Previous posts introduced the Cynefin framework and described a bit of how it helps make sense.

Where it gets messy

Distinguishing between the complicated and complex quadrants is the biggest challenge.

As I ponder the Cynefin framework, I realize that distinction is the cause of many heated differences of opinion.

It is also the cause of many unintended consequences. I’ve talked about that a lot on my blogs.

Applying the solutions from the complicated quadrant to issues in the complex quadrant is the conceptual cause of most of the harm from those unintended consequences.

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Jim Ulvog

Simple, Complicated, Complex, Chaotic – a way to make sense – part 2

Previous post introduced the four quadrants of the Cynefin Framework: simple, complicated, complex, and chaotic.

One of the major implications of the framework is to highlight that the world is not neatly ordered. 

In addition, leadership styles need to change based on the nature of the situation.

Boundaries

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Jim Ulvog

Is your church a life-saving station or a club house? A parable.

The parable of the Live-Saving Station

 

[youtube=http://www.youtube.com/watch?v=KjxgAbxaspg&feature=player_detailpage]

 

Text version can be found here. That site asserted in 1990 the text is used by permission and is copyrighted by Youth Specialties. Thus I won’t quote the text. You can check it out with one click.

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Jim Ulvog

Simple, Complicated, Complex, Chaotic – a way to make sense – part 1

For the last week I’ve been pondering a new tool to help understand the world around me. It’s called a sense-making model by its inventor.

The Cynefin Framework was developed by David Snowden. It’s pronounced cunevin or ku-nev’-in.

This series of posts will give an overview, provide two links to videos, and apply the model to several areas.

The model has four quadrants. The primary driver is how the relationship between cause and effect changes based on the nature of the situation.

Simple

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Jim Ulvog

More good stuff on overhead ratios and “worst charities” – 11-7-13

Two great opinion pieces in the Chronicle of Philanthropy that are worth your time, both dealing with the ‘overhead’ issue. At first glance they seem to have opposing views. I think they are both correct with many good points, which illustrates the complexity of the issues.

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Jim Ulvog