The best time to be born is now

June 7, 2018 Ben Yeoh

“Everything is not fine. We should still be very concerned. As long as there are plane crashes, preventable child deaths, endangered species, climate change deniers, male chauvinists, crazy dictators, toxic waste, journalists in prison, and girls not getting an education because of their gender, as long as any such terrible things exist, we cannot relax. But it is just as ridiculous, and just as stressful, to look away from the progress that has been made.”

These 32 charts suggest the world is better over the last 50 years and that the best time in the world to be born is now.

Source: Hans Rosling’s book Factfulness

And more

Worth a read if interested in the area: my previous blog (including Rosling's quiz) on Rosling’s book.

Top selling Drugs

March 17, 2018 Ben Yeoh

What’s the length of a patent? 20 years. What’s the social contract behind patents ? Society gives you a time-limited monopoly to incentivise you to invest in R&D and intangibles and enable you to profit at higher levels due to lack of competition.

Drug development takes 8 to 12 years on average, so the average commercial life of a drug based on its first composition of matter patent should run approx 10 years.

Noticeable how many best selling drugs have 20+ years protection. Oft involving long litigation.

One way the pharma industry erodes the social contract is by NOT meaningful innovation and by extending monopolies beyond expectations.

One way it can strengthen trust is by developing life saving medicines and ensuring access.

It’s an active debate what creates more long-term value for shareholders and society.

I’ve written about the history of patents and patent philosophy here.

Original EP Vantage article here

One of the best Munger speeches on how to think about a mental model of inversion can be found here.

If you'd like to feel inspired by commencement addresses and life lessons try: Neil Gaiman on making wonderful, fabulous, brilliant mistakes; or Nassim Taleb's commencement address; or JK Rowling on the benefits of failure. Or Charlie Munger on always inverting; Sheryl Sandberg on grief, resilience and gratitude or investor Ray Dalio on Principles.

Cross fertilise. Read about the autistic mind here.

More thoughts:  My Financial Times opinion article on the importance of long-term questions to management teams and Environment, Social and Governance capital.

How to live a life, well lived. Thoughts from a dying man.

Healthcare spend, US no consensus on health as a right

February 10, 2018 Ben Yeoh

More noise on US healthcare as JP Morgan, Berkshire Hathaway and Amazon form a venture to look at lowering healthcare costs (Bloomberg article). I’ve been meaning to write a long series of pieces on health, given it is one of my specialties and I can talk about health for almost as many days as I can talk about theatre or investments and sustainability.

But, it’s hard to compress those thoughts succinctly.

So, I only wanted to point out 2 points. First, US healthcare spend is at around 16.6% GDP (in 2014; but close to 18% in 2017 and likely 20% in 2025!) and now vs UK at 9.9% (2014 adjusted) and Germany at close to 11% and China at about 6%. (Noticeable for the UK its health spend is one of the lowest in the G7, on this measure although higher than the OECD average for now, it probably falls to average in next few years; UK data here and more and world bank data here; US govt analysis here)

These averages disguise a huge amount, which is a discussion for another time, but it is much larger than other developed nations and on balance the average health result in the US (again the mean and median disguising many items) are not as good as other developed nations, across many health measures (see a balanced view on key measures here from Kaiser

I’ve also seen data where items such as socio-economic status, smoking, obesity and other key factors have been balances and US is still worse at the mean).

One of the problems in the US, is that there is no socio-political consensus that healthcare is a human right, in the same way it is in Europe.

Ultimately funding healthcare is as much (or if you follow Cambridge economist Ha-Joon Chang’s line of thinking, the politics is everything (23 Things They Don’t Tell You about Capitalism) political as economic. Some of the US population believes healthcare is a right and should be public funded, but others in the US do not believe it is a right. Those others believe the healthy should not subsidise the unhealthy. This gives rise to the system the US has and there is the added difficulties of the healthcare economics of risk pools, which is perhaps somewhat unique to healthcare.

So even as the economics of US health weigh even more heavily, I don’t see any easy way out for the country unless they can form a consensus on whether it is a right and settles once and for all if it should be privately or publicly funded or what the split should be and then perhaps move towards a system like Singapore or Switzerland. Or can think about distributive justice.

Why are drug prices high?

November 22, 2017 Ben Yeoh

Why are drug prices high? Cutting through complex roots, I note patents grant drugs time-limited monopolies that are then priced often on what markets/payors can bear to pay, and society values health highly.

Patents have roots in the idea that without incentives intangible assets (ideas, processes, designs, R&D) would be under-produced. The length of patents and copyright, now mostly globally harmonised has an intriguing and semi-arbitrary history.

Note the US did not grant copyright to foreign works for most of the 1800s and then from limited nations from 1891.

In Japan, Texas Instruments applied for 14 semi-conductor patents in 1960, these were not granted for decades allowing Japanese companies to copy the tech and advance their own industry. (The patents threatens to disrupt the development of a domestic semiconductor industry, an area that business and government leaders had decided was strategic to Japan’s long-term economic growth. By refusing to act the bureaucracy allowed the Japanese companies to copy the tech without paying for years). This was one key component (there were others such as low interest loans, accelerated depreciation, and other measures that lowered capital costs, enabled Japanese companies to continue investing heavily despite years of large losses. Also US firms that wanted to make joint ventures in Japan were obliged to transfer technologies as part of the deal)

Drug R&D is expensive and often fails. The cost of this failure is another major reason for the high price of drugs. Most drugs tested in humans never make it to market. Recent data H/T Bernstein / KMR:

Preclinical 17.3 compounds to yield one approved product, a failure rate of 94.2%

Phase 1 compounds: It takes ~11.8 phase 1 molecules to yield one approved product. The implied hit rate is 8.5% (or inversely, a failure rate of 91.5%).

Phase 2 compounds: It takes ~5 phase 2 molecules to yield one approved product. The implied hit rate is 20% (or inversely, a failure rate of 80%).

Phase 3 compounds: It takes 1.4 phase 3 molecules to yield one approved product. The implied hit rate is 71% (or inversely, a failure rate of 29%).

Another cut suggests:

As shown, for the period 2012-2016:

Phase 1 drugs: 42% advanced to phase 2 (58% stopped)

Phase 2 drugs: 29% advanced to phase 3 (81% stopped)

Phase 3 drugs: 74% advanced to registration (26% stopped)

Registration: 95% of drugs filed for approval got approved (5% didn’t make it past the regulators.)

Cross fertilise. Read about the autistic mind here.

What a healthcare investment banking conference looks like

November 19, 2017 Ben Yeoh

I went to a healthcare conference this week, sponsored by an investment bank. My Linkedin post is below (for those not on there). It was noted, the lack of women.

https://www.linkedin.com/feed/update/urn:li:activity:6336858664145600512

Though I note: Both surface gender, race and my guess LGBT etc. too are under represented vs general population. But the proportion did seem roughly representative of the women entering finance. (Only 1 in 4) So much more needs to be done at interview, application and out reach levels. Investment/Finance is not super attractive (and hasn't been) at moment...

Cross fertilise. Read about the autistic mind here.

Digital Pill. Schizophrenia drug.

November 18, 2017 Ben Yeoh

The U.S. pharmaceutical drug regulator (Food and Drug Administration, FDA) approved this week (on Nov 13) the first drug with a digital ingestion tracking system. Abilify MyCite (aripiprazole tablets with sensor) has an ingestible sensor embedded in the pill that records that the medication was taken. The product is approved for the treatment of schizophrenia, acute treatment of manic and mixed episodes associated with bipolar I disorder and for use as an add-on treatment for depression in adults.

The NY Times raises privacy and coercion concerns. The FT and NYT both discuss problems around compliance and adherence* of taking drugs. Adherence to prescription drugs is remarkably low at only about 50%** (in one study, though I’ve seen 75% in others which I can’t locate) Although a tracker might only address one part of the myriad of problems with adherence.

There are other two points, I view, as more intriguing.

The two other aspects not picked up are (1) Branded drug defence [generic makers won't have this] and (2) The historic (arguably still be present) of use of anti-psychotic drugs to keep patients sedated in care homes to make it easier for the patients to be handled but not in the patients’ best interests. This has included patients with autism, learning disabilities and dementia.

The positive news here is that better awareness is driving this abuse of drugs as a chemical restraint down. The bad news, is that is still seems prevalent.

A UCL study here on the abusive practice in UK. A NPR report on same issue here in US.

**See this Mayo Clin paper here.

“approximately 50% of patients do not take their medications as prescribed. Factors contributing to poor medication adherence are myriad and include those that are related to patients (eg, suboptimal health literacy and lack of involvement in the treatment decision–making process), those that are related to physicians (eg, prescription of complex drug regimens, communication barriers, ineffective communication of information about adverse effects, and provision of care by multiple physicians), and those that are related to health care systems (eg, office visit time limitations, limited access to care, and lack of health information technology).”

*There is some healthcare philosophy behind these terms. Often, the terms adherence and compliance are used interchangeably. However, their connotations are somewhat different: adherence presumes the patient's agreement with the recommendations, whereas compliance implies patient passivity. As described by Steiner and Earnest,5 both terms are problematic in describing medication-taking behavior because they “exaggerate the physician's control over the process of taking medications.”

Cross fertilise. Read about the autistic mind here.

Top 3 Pharma concerns International Federation of Pharmaceutical Manufacturers and Associations

November 11, 2017 Ben Yeoh

“Suing Nelson Mandela to defend HIV drug patents in South Africa was about the dumbest thing the industry ever did.”

Thomas Cueni appointed earlier this year as director-general of the International Federation of Pharmaceutical Manufacturers and Associations, said to the FT. I might put it in the top 10, but perhaps there are other items to challenge it.

The whole area of drug pricing and patents in Africa was one of the earliest catalysts for my involvement in the sustainability / ESG / responsible investing / whatever you want to call it.

Cueni noted his top 3 priorities:

“(1) The biggest health threat right now is antimicrobial resistance. If we don’t get our act together, instead of 700,000 people dying each year we may have 10m by 2050. (2) universal health coverage. You will not be able to make much progress unless you address the funding issues. You need functioning health systems. But as long as two-thirds of the world pays out of pocket, you will struggle to reach universal health coverage. We as an industry can contribute. (3) ethics and integrity."

I think most of us are not super aware of (1) the antimicrobial resistance, apart from the odd super-bug headline. (2) is simply not happening in the US. And (3)… well it’s better than before but these surveys do not paint a good picture of trust.

This Harris Poll survey suggests only 9% of patients believe pharma puts patients ahead of profits. Perhaps even more alarming are the PatientView surveys which look at patient groups (see below)

Patient-groups' perceptions of the pharma industry (2011-2016) at various activities of importance to patients, % of total responses that stated the pharma industry was 'Excellent' or 'Good' at each activity.  Source: PatientView — **Patient-groups' perceptions of the pharma industry (2011-2016) at various activities of importance to patients,** *% of total responses that stated the pharma industry was 'Excellent' or 'Good' at each activity. Source: PatientView*

Although this is reflective of poor trust everywhere globally it seems.

Cross fertilise. Read about the autistic mind here.

Infant Mortality, SDG - what the data says

July 24, 2017 Ben Yeoh

Infant mortality. What does the data say? In a series of thoughts on what human development data is suggesting, I examine the good, the bad and what might be missing.

Infant Mortality rate is measure per 1,000 live births. It measures the number of deaths of children under one year. Many factors contribute to infant mortality, such as the mother's level of education, environmental conditions, and political and medical infrastructure. Medically, Premature birth is the big contributor with other leading causes birth asphyxia, pneumonia, and term birth complications.

It would come under #SDG Goal 3 and is often considered a measure of human development.

The good news the world average has been cut in half over the last 25 years from50 to 24. The bad news is that still leaves many poorer nations still a far ways off the richer nations. There is the opportunity to accelerate here. Tunisia goes from 44 to 12 during this time. Brazil goes from 51 to 15.

The US improves but the pace of its improvement lags many other developed nations. Slovenia improves faster. Slovakia over takes the US. This pattern is reflected in many other indicators suggesting that on many measures the US is slipping. The UK joins the US in slipping in the HDI (Human Development Index), but not on this measure.

I’ll come to systemic risks such as climate change and forced mass migration in future thoughts, but looking at these patterns and some of the underlying drivers (improved health and education) there are reasons to be optimistic that we should still see improvements over the next decade, although my sense is that the US is likely to continue to slip or stall relative to its peers.

Sources: see http://hdr.undp.org/en also I’m a fan of Hans Rosling’s works, his legacy can been seen here https://www.gapminder.org/ and his TedTalk here (11.9m views) https://www.ted.com/talks/hans_rosling_shows_the_best_stats_you_ve_ever_seen

The HDI is brought to life by google using google explorer.