You are cordially invited to the Investor Symposium hosted by Matson Money.
When: Thursday, July 31, 2014 – Saturday, August 2, 2014
Where: Horseshoe Casino & Conference Center
1000 Broadway, Cincinnati, OH USA
Speakers Include:
Arthur B. Laffer, PhD: Chief economic advisor to Ronald Reagan
Terrance Odean, PhD: Professor at Cal-Berkley, expert in the field of investor behavior
Lyman Ott, PhD: Expert in the field of statistics, providing validity to Free Market Portfolio Theory
Concert featuring country singer (and former leader of Hootie & The Blow Fish) Darius Rucker
Seating is limited. RSVP by emailing reservations@matsonandcuprill.com. Admission is free to all Matson & Cuprill clients and their guests.
In The Headlines
Express Scripts Battles Drug Makers over the High Cost of Drugs
Chief medical officer of Express Scripts, Dr. Steve Miller, is in the business of helping companies rein in high drug costs. When Gilead Sciences priced its hepatitis C drug Sovaldi at $1,000 per pill, he denounced the drug maker for unfair pricing. He compared the $25,000 price tag for treating hepatitis C just five or six years ago to the $84,000 cost for a 12-week treatment using Sovaldi. This represents a 68% increase over previous drugs. “They are taking a premium on top of a premium, and we think that’s not sustainable,” Miller said.
Express Scripts research lab projects hepatitis C drug-spending will double in the U.S. this year with the launch of Sovaldi and companion treatments, and increase 200% in 2015 and 2016. “The cocktail to treat the patients is going to cost well north of $100,000 per patient. We have 3 million patients in the U.S. with hep C. That would be $300 billion to treat them all.”
Miller has embarked on a pricing crusade, launching a coalition to bring together insurers and employer health plans. His strategy is to leverage their buying power to push Gilead to lower the price by letting the drug maker know they are prepared to drop Sovaldi when rival drugs come onto the market over the next year. “If there’s a product that comes out that is less expensive, we are going to move our entire market share there,” he said.
Gilead has defended Sovaldi’s pricing, arguing that it cures the hepatitis C virus, which now causes more deaths in the U.S. than HIV, and results in health savings over the long term. But in countries with universal health systems, like the UK, the drug maker sells the drug for 25% to 35% less than the U.S. price.
However, drug industry consultant Lauren Barnes said it is unlikely U.S. regulators will move to force the company to do the same here. “I don’t think our country is ready to stomach drug negotiations and drug regulations to that extent,” said Barnes, senior vice president of Avalere Health. But with more high-priced specialty treatments in the pipeline—at a time when more Americans are gaining health coverage through the Affordable Care Act—some analysts say it could be just a matter of time before the U.S. pushes for price controls.
“If it was just hep C and this was one big drug therapy,” it might be manageable, said Ana Gupte, an insurance analyst with Leerink Partners. But Sovaldi is just the tip of the iceberg. “We have a number of new breakthrough cancer therapies that are likely to come to market in the next few years. It will place a huge burden on payers,” she said.
Express Scripts’ Miller said he expects the furor over Sovaldi will prove to be a tipping point for U.S. pricing. He is encouraged that many drug makers are increasingly willing to work with payers. “I have had more pharmaceutical companies reach out to me in the last couple of months … saying, ‘Listen, we want to deal with your coalition,’ ” he said.
Gilead is not one of them, but Miller believes that one way or another, things will change. “If the market doesn’t do it, we are going to end up with government intervention—and no one wants that.”
The Right to be Forgotten in the Google Age
In Luxembourg, the Court of Justice of the European Union (EU) recently ruled that individuals have the “right to be forgotten,” meaning they have the right to ask Google to remove information about them from its search index. In America, where the right to free speech trumps the right to privacy, commentators such as City University of New York journalism professor Jeff Jarvis sees the ruling as “a blow against free speech.” But even free speech absolutists have good reason to side with the EU.
Magazine publishers were among the first organizations to have to deal with the issue. Paul Ford used to work as an editor at Harper’s Magazine and was charged with putting its archives, dating back to 1850, onto the Web. After the digital archive went online in 2007 and the articles began to show up in Google search results, people started asking the magazine to remove items, some decades old. Ford recalls that the petitioners were sometimes litigious, sometimes plaintive. For example, one man submitted a funny letter about sex to a contest years before, and the magazine published it. Now he was looking for a job, and the letter was the top search result for his name. He worried that a prospective employer would not get the joke.
The EU ruling addressed a similar situation. In 2010, Mario Costeja González of Spain sued Google and the Spanish daily newspaper La Vanguardia for displaying in the search results for his name “an announcement for a real estate auction organized following attachment proceedings for the recovery of social security debts owed by Mr. Costeja González,” according to a report released by the court. He wanted either Google or the paper to remove the record. He wanted to start over.
Harper’s decided it had a professional and ethical requirement to preserve the historical record of the magazine online, no matter how inconvenient. According to Ford, its policy was simply to block Google from indexing the article when asked—and it seemed to work. Years later, the Spanish court took a similar position, ruling that the local paper was not obliged to remove González’s records from its archive. “The information in question,” it noted, “had been lawfully published.”
Google regularly removes illegal material, copyright violations, and the like from its index. But there is no obligation for publishers, be they Harper’s or a newspaper in Spain, to maintain the same rigorous recordkeeping on Google’s index of the Web. In fact, the search giant makes it easy for publishers to obscure certain pages from its index, by using its webmaster tools or adding a line of code in a text file called “robots.txt.”
There is precedent for deletion of less sensitive material, too. In 2001, Google bought Deja News, inheriting a large archive of Usenet discussions created by thousands of people. Suddenly Google was both a publisher and an indexer. Usenet discussion groups were always public, but people saw them as fleeting. Now those conversations were permanent. After some outcry, Google allowed people to request that old posts be removed from its index—to exercise the right to be forgotten.
At Harper’s, only a few requests came in per year, from people caught up in the sweep of a search engine, people who did not fill out LinkedIn profiles or blog or tweet. These are the people who end up identified by Internet detritus such as court proceedings, old articles, and mug shots.
Internet users, without intending to, have collectively ceded to Google the right to define their public personas. But the Google search engine is a consumer product, not a public trust. By granting the right to be forgotten to its citizens, the EU will allow them to shape their own personas. Now, many in the U.S. are wondering if the government here will follow the EU’s lead.
Sources:
1. http://www.cnbc.com/id/101697100 – CNBC
2. http://buswk.co/1mhrESg – BusinessWeek
The Good News Is . . .
• The U.S. Department of Housing and Urban Development announced that sales of new single-family houses in April were at a seasonally adjusted annual rate of 433,000. This represents a 6.4% increase over the revised March 2014 estimate of 407,000. The average sales price of new houses sold in April was $320,100. The seasonally adjusted estimate of new houses for sale at the end of April was 192,000, which represents a supply of 5.3 months at the current sales pace.
• Tiffany & Co., a leading jeweler and specialty retailer, reported earnings of $0.97 per share, an increase of 38.6% over year-ago earnings of $0.70. The firm’s earnings topped the consensus estimate of analysts by $0.19. The company reported that revenues rose 13.0% to $1.0 billion. Management attributed the company’s improved earnings to growth in fine jewelry sales in Europe and Asia, as well as improvement in its operating margin.
• Cobham, the British aerospace and military contractor announced that it was buying the Aeroflex Holding Corporation for $1.46 billion. Cobham will pay $10.50 a share, or about $920 million, for Aeroflex, a wireless communications company based in Plainview, N.Y., and assume $540 million in debt. According to Robert Murphy, the CEO of Cobham, the acquisition will help the company obtain greater exposure to growing commercial markets that increasingly demand more data, connectivity, and bandwidth.
Sources:
1. http://1.usa.gov/1jnTFEH – US Dept. of Housing & Urban Development
2. http://www.cnbc.com/id/18080780/ – CNBC
3. http://bit.ly/1muYf8S – Tiffany & Co.
4. http://nyti.ms/1oVp09w – NY Times Dealbook
Planning Tips
Tips for Setting up a Digital Estate Plan
E-mail accounts, digital purchases, bank and brokerage accounts, social networking profiles, and photo sharing are seamlessly integrated into our everyday lives. However, these digital assets, which can hold both sentimental and monetary value, often go unaddressed in estate planning. Without a game plan, a lifetime’s worth of online files and accounts becomes inaccessible, creating stress for already bereaved family and loved ones who are left to settle an estate. Creating a plan for digital assets depends on the individual and should take into account both the nature of the assets as well as your sensitivity to privacy. Below are tips to help transition your digital assets after death.
Identify and inventory your digital assets – Make a list of your online accounts, memberships, and subscriptions. One of the easiest methods is to create a password-protected Excel spreadsheet that includes the following information: description, Web address, user identification, password, account number, and special notes. Of course, compiling this list creates risk in and of itself, so take security into consideration.
Appoint a “trustee” – Choosing someone to entrust with this access can be a difficult decision. This person could be a spouse, a family member, or a reliable friend. It needs to be someone who would handle the responsibility of managing your digital assets after death according to your wishes. For many people, there may not be one individual with whom to share all of this data. Others may not feel comfortable distributing so much information outright, and would rather provide just enough information that their trustees would know where to find the lists in the event it becomes necessary. This is a big responsibility and not one to be taken lightly.
Provide access – A password-protected Excel spreadsheet is a good starting point, as long as your trustee has access to the document when it is needed. The obvious issue with a hard copy is choosing a secure place to store it. Nowadays, there are numerous online services for storing passwords. Be aware that even the most secure systems are vulnerable to hacking. If you are interested in going this route, investigate a service’s features, ease of use, customer support and, most importantly, its security. Examples of such sites include:
- Assetlock
- PasswordBox
- SecureSafe
- Deathswitch
Provide instructions – Many in the estate-planning community are beginning to integrate the management of digital assets into their services. It will become commonplace to provide executors of wills with instructions on where to obtain password lists and what should be done with them. Work with your estate-planning attorneys and financial advisors to better understand the laws involving digital assets, because they vary greatly from state to state.
Empower your trustee – Consider signing a statement, which can be drafted by an estate-planning lawyer, authorizing the companies that hold your online information to disclose that information to your executor, digital trustee, or other representative. The authorization may be included in your will. That way, your executor can request a copy of the contents of your online accounts, rather than trying to access the account directly and possibly running afoul of the terms of service or federal law.
Sources:
1. http://onforb.es/1gup7S1 – Forbes
2. http://bit.ly/1jTsd6v – NASDAQ
3. http://www.cnbc.com/id/101560859 – CNBC
4. http://ti.me/1jTshTH – TIME online
5. http://bit.ly/1tHkvPL – Kiplinger
6. http://zoo.mn/1h6AhSz – LegalZoom
