Wednesday, March 14, 2012

California Dreamin'

For a truly outstanding example of wishful thinking, check out this article on pension fund behemoth Calpers. Faced with pathetic returns on its investments, the California fund appears poised to do what many other pension funds have already (grudgingly) done: lower the expected rate of return it receives on its investments.

Despite record-low interest rates, the median state pension plan in the U.S. still assumes an annual rate of return near 8%, which is a bit like the median American housewife assuming a date with George Clooney; it ain’t gonna happen.

So, ever so slightly, public pension plans have been trimming their expected rates of return. Calpers’s pension and health benefits committee has recommended an assumed annual rate of 7.5% -- just a smidgen below its current level of 7.75%.

And how, you might ask, does that compare to Calpers’s actual rate of return?

For the year ended Dec. 31, Calpers earned a whopping return of just 1.1%.

Nevertheless, Calpers’s chief actuary said the 7.5% rate was prudent, and said Calpers has a 50-50 chance of meeting that goal.


So years from now, if there is a gigantic shortfall in California’s pension funds and retirees go begging, many excuses will be offered - but remember: it all started with wishful thinking.

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Wednesday, November 9, 2011

Another Thing That Doesn't Work

To the growing list of bright ideas that don’t work we can now add another: a bypass surgery to prevent strokes. Until yesterday, many doctors thought that if they connected an artery in the scalp to a deeper vessel to improve blood flow to the brain, they could help patients with poor circulation avoid strokes.

But no. It turns out that the surgery itself actually caused strokes! According to a $20-million government-funded study published on Tuesday, 14.4 percent of the patients who had the surgery had a stroke within a month of the operation. By comparison, the stroke rate for the group that did not have surgery was only 2 percent.

The evidence was so overwhelming that the study was stopped early. As the New York Times noted, “What had seemed to make sense medically did not work out in fact.”

This is becoming a troubling refrain for medical “cures.” A few weeks ago we got a nearly identical report on the use of brain stents to prevent strokes. (Those who got the device actually had so many more strokes than those assigned to control groups that that study, too, was stopped early.)

And a few weeks before the stent study came out we got a similar report regarding the drug niacin. Doctors had hoped that it would prevent heart attacks by raising the levels of “good” cholesterol in a patient’s blood. But that, too, didn’t pan out. According to that study, niacin provided no benefit over simple statin therapy.

What’s the lesson here? Just because you think a thing should work is no guarantee that it will work. And you never know whether it will work until it has been independently tested.

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Thursday, October 13, 2011

Left to Our Own Devices...

In case you missed it, let me direct your attention to a recent page-one story in The Wall Street Journal. The article documents a growing trend among surgeons to implant their own medical devices into the bodies of their patients. As a result, the surgeons stand to profit twice: once from the surgery and again from the sale of the device.

The surgeons, as you might suspect, say the prospect of making money (even lots of money) doesn't influence their medical decisions. A lawyer for one of the surgeons is quoted in the article as saying the surgeon used his own devices because they "were the best on the market for the procedure" and not because he stood to profit from them.

Perhaps. But nearly every piece of research on the subject points the opposite way.

First of all, most of us don't like to admit we're biased. Our colleagues? Oh sure, we're happy to admit they might be influenced by such things as money. But not us. A 2001 study of medical residents, for instance, found that 84 percent thought that their colleagues were influenced by gifts from pharmaceutical companies...but only 16 percent thought that they were similarly influenced.

The interesting thing is that bias is seldom a matter of deliberate choice.It is typically unconscious and unintentional. Research has shown that professionals who sincerely believe that their decisions are “not for sale”(such as physicians) are still biased in the direction of self-interest.

Even those who are purportedly neutral have been shown to be biased. A 2005 study of psychiatric drug trials found that when academic researchers were funded by a drug company, they were nearly five times as likely to report that the treatment was effective.

Likewise, a 2003 study by economists at Carnegie Mellon and Harvard found that independent auditors were significantly more likely to approve questionable accounting practices when those practices were done by the firm paying their bills.

And it doesn’t take much to bias someone’s judgment – even a coffee mug will do. Students at a medical school where gifts such as coffee mugs and pens are permitted from drug companies had a more favorable attitude toward a cholesterol drug than did students at a medical school where such gifts were banned.

So if you're due for surgery any time soon, ask your surgeon about his or her financial interests in the surgery. As the Journal article pointed out, doctors don't always disclose these. One man died shortly after receiving implants from a doctor who stood to profit from them. His widow says she would have liked to have known this before the surgery.

"It might have caused me to ask: Is the surgery really necessary, or is he out to make more money?"

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Thursday, June 23, 2011

A Rigged System

If you want to see a good example of how bias warps decision-making, check out this article in The Wall Street Journal, which has been reporting on developments regarding medical device giant Medtronic Inc. (Disclosure: I have friends and family who work for medical device makers.)

According to the Journal, the Senate Finance Committee is investigating whether surgeons who received lots of money from Medtronic for consulting and other work failed to note complications associated with a Medtronic product that has become widely used in spinal surgery.

Medtronic would have us believe the answer is no. It says it provides data about adverse events that occur in clinical trials of its products “irrespective of any financial relationship” between the company and those involved in the studies.

But academic research suggests otherwise. As Princeton professor and Nobel Laureate Daniel Kahneman and colleagues note in a recent article in the Harvard Business Review, “Research has shown that professionals who sincerely believe that their decisions are “not for sale” (such as physicians) are still biased in the direction of their own interests.”

And in the case of Medtronic, those are quite some interests. According to the Journal, Medtronic paid one Wisconsin surgeon involved in one of its trials $19 million from 2003 to 2007. Another doctor involved in a trial received more than $1.5 million between 2001 and 2006.

The Senate committee’s investigation was triggered in part by a forthcoming study in a medical journal. That study shows that numerous complications – including potentially fatal ones -- associated with Medtronic’s Infuse Bone Graft occurred in clinical trials.

But – and this is an important but – those complications went unreported in a dozen research papers about those trials that Medtronic sponsored between 2000 and 2009. (Italic mine.)

Here you have the nub of the problem: industry money typically funds these trials.

As the old adage says, he who pays the piper calls the tune. And if you have any doubts, we got a great lesson during the recent financial crisis. We know now that many of the allegedly objective ratings agencies gave high ratings to mortgage securities that later turned out to be junk. Those rosy ratings, of course, favored the ratings agencies’ clients.

And we have much the same situation with medical trials. They are paid for, in whole or in part, by the companies that make the products being tested. Imagine if we conducted, say, civil trials the same way: the evidence used in court would be paid for by one of the two parties. Which party do you think the evidence would favor?

The answer here is obvious: we need a system where companies do not directly pay for the evidence used to determine whether their products are safe. Anything else is a rigged system.

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Friday, May 27, 2011

Darwin Was Right (and the Doctors Were Wrong)

Among the many astute observations made by Charles Darwin is this gem: “Ignorance more frequently begets confidence than does knowledge.”

For real-world proof of this claim, look no farther than today’s papers. There, on the front page, are the results of a study that undermines the way physicians have treated heart disease.

As the New York Times put it: “The results are part of a string of studies that suggest that what doctors thought they knew about cholesterol may be wrong.”

In short, raising the level of their patients’ HDL, or “good” cholesterol, does not matter. For years, doctors have thought the opposite was true. They assumed (without proof, apparently) that raising the levels of good cholesterol – typically by prescribing niacin – would benefit their patients.

Now, it’s egg-on-the-face time.

“We were stunned, to say the least,” said Dr. William E. Boden, one of the study’s lead investigators.

“It’s a shocker,” Steven Nissen, chief of cardiovascular medicine at the Cleveland Clinic, told The Wall Street Journal. “Most of us in the medical community, if we were going to bet on anything, we would have bet on niacin.”


Tuesday, April 26, 2011


In Why We Make Mistakes , I have a little fun pointing out how often people fail to follow the instructions that come with a variety of products, from nail guns to car seats. But if you want an even scarier example, check out today's story in The Wall Street Journal on drug labeling.

Drug labels are notoriously hard to read -- and often confusing for those who do read them. Not surprisingly, as many as three in four Americans say they don't take prescription medicine as directed. And in recent studies, more than half of adults misunderstood one or more common prescription warnings and precautions.

Often, this leads to a trip to the hospital. Nearly 1.9 million people were treated in hospitals for illnesses and injuries from taking medicines -- a 52% increase from 2004 to 2008.

One cure for confusion, of course, is simplicity. And one study shows -- what a shock! -- that patients better understood simple, explicit language. For example, "use only on your skin" is better understood than "for external use only."

So before you grab that bottle of pills, take some time to check the label.

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Tuesday, March 15, 2011

A Tip 'o the Hat...

...goes to Joe Stirt,for passing along this interview of mountaineering legend Ed Viesturs by author Kathryn Schulz. It's well worth the read, especially the part where he describes his biggest mistake. I won't spoil it for you, but Schulz tells him the mistake doesn't sound so bad. "You made it down safely, after all."

"Yeah," says Viesturs, "but a mistake is a mistake even if you get away with it."

I couldn't have put it better.

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