Monthly Archives: October 2019

Drugs, Health

Over 700 Doctors Who Were Paid More Than a Million Dollars by Drug and Medical Device Companies

Back in 2013, ProPublica detailed what seemed a stunning development in the pharmaceutical industry’s drive to win the prescription pads of the nation’s doctors: In just four years, one doctor had earned $1 million giving promotional talks and consulting for drug companies; 21 others had made more than $500,000.

Six years later — despite often damning scrutiny from prosecutors and academics — such high earnings have become commonplace.

More than 2,500 physicians have received at least half a million dollars apiece from drugmakers and medical device companies in the past five years alone, a new ProPublica analysis of payment data shows. And that doesn’t include money for research or royalties from inventions.

More than 700 of those doctors received at least $1 million.

“Holy smokes,” said Dr. Walid Gellad, an associate professor of medicine and health policy at the University of Pittsburgh, where he leads the Center for Pharmaceutical Policy and Prescribing. It is “quite striking” how much money doctors were earning from “other activities aside from patient care,” he said.

To identify the latest pharma millionaires and other spending trends, ProPublica analyzed more than 56 million payments made from 2014 to 2018 — the first five full years of the federal Open Payments initiative, which requires companies to publicly disclose the payments as part of the 2010 Affordable Care Act.

Prescription Drugs With Top Spending on Doctor Payments

Here are the drugs for which pharmaceutical companies spent the most money paying doctors, per year, excluding research and royalty payments. The list does not include payments to teaching hospitals. Data for 2014-2016 is from a prior release of Dollars for Docs and any subsequent updates are not reflected.

Credit: Moiz Syed/ProPublica. Source: ProPublica analysis of Open Payments data from the Centers for Medicare and Medicaid Services.

Some academics and physicians predicted that the exposure might cause companies to rethink making payments and doctors to rethink taking them. A flurry of studies matched the payment data with doctors’ prescribing choices and found links between the payments and the products doctors chose.

But ProPublica’s new analysis shows that the public reporting has not dampened the enthusiasm of the drug and medical device industry for having doctors deliver paid dinner talks and sponsored speeches or paying them to consult on products.

In fact, there has been almost no change in how much the industry is spending. Each year from 2014 to 2018, drug and medical device companies spent between $2.1 billion and $2.2 billion paying doctors for speaking and consulting, as well as on meals, travel and gifts for them. (These figures do not include research spending, but they do include royalties.)

Roughly the same number of doctors — more than 600,000 — received payments in any given year.

That consistency, some academics say, is conspicuous.

“It makes me wonder whether patients are using this information or whether physicians are even aware this information is out there,” said Dr. Joseph Ross, a professor of medicine and public health at Yale who has studied pharmaceutical marketing. “It’s almost like it’s not happening.”

Holly Campbell, a spokeswoman for the Pharmaceutical Research and Manufacturers of America, defended company payments to doctors. “It is not necessarily a negative that the numbers have remained generally flat over the past five years,” she wrote in an email. “That statistic appears to be consistent with companies’ belief that their interactions with physicians have been and remain legitimate, even when subjected to sunshine.”

ProPublica first delved into the world of drug company promotional campaigns in 2010 when it gathered the payments made by seven companies that were required to make them public as part of settlements in whistleblower lawsuits. The payments were published in a database called Dollars for Docs, which allowed anyone to look up a doctor and see if he or she received a payment.

ProPublica updated Dollars for Docs with the latest data from the federal government on all payments.

Among their findings:

Consistency Breeds Familiarity

Over the course of five years, 1 million doctors, dentists, optometrists, chiropractors and podiatrists received at least one payment, most often a meal, from a company. Of those practitioners, more than 323,000 received at least one payment every year. About 240,000 received a payment in only one year. And the rest received payments in more than one year but in fewer than five.

For context, there are about 1.1 million doctors in the United States.

Dr. Aaron P. Mitchell, a medical oncologist and health services researcher at Memorial Sloan Kettering Cancer Center, said his research has shown that when doctors interact more consistently with a drug company they are more likely to prescribe that company’s cancer drug. The drug industry, Mitchell said, “knows that they need to cultivate relationships over more time, so that’s what they’re really trying to do. It’s not just one drug meal. It’s consistency.”

Some Drugs Are Promoted Heavily Year After Year

Of the top 20 drugs with the most annual spending on doctors from 2014 to 2018, six made the list in each of the years: Invokana to treat type 2 diabetes, the blood thinners Xarelto and Eliquis, the antipsychotic Latuda, the immunosuppressive drug Humira and the multiple sclerosis drug Aubagio. Another three drugs were on the list for four years: Victoza to treat type 2 diabetes, psoriasis treatment Otezla and the cholesterol-lowering drug Repatha. (Research funding and royalties are not included.)

Xarelto topped the list in spending for four years, totaling more than $123 million in payments from 2014 to 2018. In March, its makers, Johnson & Johnson and Bayer AG, agreed to pay $775 million to settle about 25,000 lawsuits claiming that the companies had failed to warn patients that Xarelto could cause fatal bleeding.

In statements, J&J and Bayer have said that the allegations lacked merit and that Xarelto is safe and effective. They noted that six cases that went to trial were decided in their favor.

Many drugs on the list are in categories where there is fierce competition. For example, seven of the top 20 in 2018 treat diabetes. And in most of the drug classes on the list, “there are more than one available drug — sometimes all with the same mechanism of action — indicated for the same condition selling for very high prices,” Dr. Aaron Kesselheim, a professor of medicine at Harvard Medical School, said in an email.

According to GoodRx, a drug discount website, the average cash price of a month’s supply of diabetes drugs Invokana, Jardiance and Farxiga is more than $600.

“Promotional spending is a major way that manufacturers in these situations distinguish themselves from each other — not by conducting comparative studies or by engaging in substantial price reductions,” Kesselheim said.

ProPublica and a number of researchers have examined the types of drugs that prompt the highest payments. Ross, of Yale, and a colleague published an analysis in the British Medical Journal in 2017 that found that the “top promoted drugs were less likely than top selling and top prescribed drugs to be effective, safe, affordable, novel, and represent a genuine advance in treating a disease.”

“Our findings suggest that pharmaceutical promotion should be met with healthy skepticism,” the analysis concludes.

Prosecutors Say the Payments by Some Drug Companies Are Kickbacks, Despite the Transparency of Open Payments

There is a perception among many physicians, including some in academia, that drug company payments are fairly benign — a moonlighting gig that educates other doctors about important medications. But since ProPublica began looking at physician payments, one drugmaker after another has paid tens, or even hundreds, of millions of dollars to resolve allegations of improper, or illegal, marketing tactics.

In fact, drug company whistleblowers and federal prosecutors have said explicitly that in some cases the payments were actually bribes and kickbacks. And this behavior has continued despite tools like Dollars for Docs.

Here are some recent examples:

  • Insys Therapeutics

    Spending: In 2014, the payment data shows, Insys Therapeutics spent $7.5 million promoting Subsys, a fentanyl spray for advanced cancer pain, making it one of the drugs with the most spending that year. Through 2018, the company’s total spending on the drug had reached $17.6 million.

    Prosecutors say: Insys paid doctors to speak about Subsys to other physicians during “educational lunches and dinners,” according to a Justice Department press release, from August 2012 to June 2015. The meals “were actually used as a vehicle to pay bribes and kickbacks to targeted practitioners in exchange for increased Subsys prescriptions to patients and for increased dosage of those prescriptions.”

    Penalty: This June, Insys agreed to plead guilty to five counts of mail fraud, pay a $2 million fine and forfeit $28 million. It also agreed to pay $195 million to settle a separate whistleblower case. At least eight company executives have now been convicted of crimes relating to the illegal marketing of the drug. Insys has said it completely restructured its operations, hired new leaders and has filed for bankruptcy protection.

  • Avanir Pharmaceuticals

    Spending: From 2014 to 2018, Avanir spent nearly $22 million on its drug Nuedexta, which treats pseudobulbar affect, or uncontrollable laughing or crying.

    Prosecutors say: An Avanir employee reported that one doctor at a long-term care facility, who was also a paid speaker for Nuedexta, put “entire units” of patients on Nuedexta. Another doctor at the facility, which had a number of dementia patients, routinely stopped the Nuedexta, only to have the first doctor restart it, according to a Department of Justice press release.

    Penalty: In September, the company agreed to pay more than $108 million to resolve criminal and civil allegations that it paid kickbacks to doctors and marketed the drug for unapproved uses, including behaviors associated with dementia. In a statement, Avanir said it fully cooperated with investigators “and engaged in extensive remedial measures. The individuals listed in the resolution agreements are no longer Avanir employees.”

Though relationships between drug companies and doctors continue, seemingly with little change, Kesselheim, of Harvard, said that the transparency “helps bring into light an area of the field that was in the shadows.

“Now we need to figure out what to do with this.”

Republished with permission under license from ProPublica.

Police, Race

Cities with more black residents rely more on traffic tickets and fines for revenue

By Akheil Singla, Arizona State University 

I’ve been thinking a lot lately about the last time I got a speeding ticket. It was nearly a decade ago and it’s a pretty unremarkable story: I was on my way back to Columbus, Ohio, from a friend’s wedding and was going something like 15 mph over the speed limit. An officer pulled me over, asked me if I knew why he did, walked back to his squad car and returned with a ticket for US$90.

At the time, I didn’t think much about it. I was 22, I was speeding, and that is what happened when you got caught. I didn’t consider the motives of the officer, his law enforcement agency or the financial status of the city he worked for. And I definitely didn’t consider the fact that I was a brown man driving through rural Ohio.

But now that I’m a scholar of public finance, it’s all I can think about. My recent research – and that of others – shows that communities with more residents of color are more likely to rely on revenue coming from traffic tickets and other minor fines.

Fines as revenue

Local governments on average don’t rely all that much on revenue from things like traffic citations, termed fines and forfeitures.

According to data from the Census of Governments, the average city generated about $21 per person from fines in 2012, the last year for which there is national data. For reference, the average city generated about $150 per person from sales taxes at the time.

But there is a lot of variation: Some cities get more than 10% or 20% of their revenue from fines.

Why might some communities rely on fines way more than others do? One reason could be higher incidences of crime. Another might be that certain governments make a strategic choice to target passersby via speed traps. It could be a response to budgetary shortfalls or fiscal stress. And still another might be the race of the population or law enforcement agency.

If it’s not clear how or why this could involve race, you should take a look at the Department of Justice report on in Ferguson, Missouri. After Michael Brown, a black man living in a majority-black community, was shot and killed by a white police officer serving in a majority-white police force, the department investigated.

It found that officers in Ferguson were focused on revenue generation, a practice known as “policing for profit.” Police aggressively fined residents, primarily black residents, without much consideration of whether doing so enhanced public trust or safety.

According to the report, “The harms of Ferguson’s police and court practices are borne disproportionately by African Americans, and there is evidence that this is due in part to intentional discrimination on the basis of race.”

But was Ferguson an isolated case? And, more generally, what explains the variation in city use of fines? My colleagues – Charlotte Kirschner and Samuel B. Stone, also scholars of public finance – and I set out to find out.

Who relies on fines

In our study, we looked at a representative sample of 93 California cities from 2009 to 2014 to determine what affects how much cities fine residents and rely on fines for revenue.

We examined how fines were affected by levels of crime and public safety, city financial health and budgetary stress, and the racial composition of both the population and the law enforcement agency serving it.

We found no relationship between crime or budgetary stress and fines. However, we did find that cities with larger black populations fine residents more on a per capita basis and are more reliant on fines.

All else equal, our results showed that a 1% increase in black population is associated with a 5% increase in per capita revenue from fines and a 1% increase in share of total revenue from fines.

Furthermore, the cities seemingly most reliant on fines are the ones with the highest percentages of black residents being served by law enforcement that is whiter than its community.

Take Inglewood: In 2010, it was 43% black and 23% white, but its law enforcement agency was flipped, at nearly 40% white and 16% black. The city generated nearly 5% of its revenues from fines, more than double the average city in California.

Despite the similarities to Ferguson, it is really important for me to emphasize that our research isn’t accusing anyone of being racist or intentionally discriminating against minorities – though, to be fair, our results don’t preclude this explanation either. Rather, I’m just highlighting that even seemingly colorblind policies, like a $90 traffic citation for speeding, can have outcomes that are very much not colorblind.

Fixing the problem

Unfortunately, I wasn’t very surprised by our results. Even setting aside the Ferguson case, there’s a lot of research that points in this direction.

First, policing for profit via civil asset forfeiture and traffic tickets is, unfortunately, a documented phenomenon that alters police behavior.

Second, studies persistently find that minority residents and communities of color are more common recipients of law enforcement action and punishment.

And third, government agencies that are more representative of their communities along gender and racial dimensions have been demonstrated to reduce unfavorable outcomes for minority groups across many studies. The only thing we did was show that these things are all connected.

So, how can Americans solve this issue? I think we should start by eliminating the incentives governments might have to fine for revenue generation. Do this by pooling money from fines at the state level and redistributing it evenly instead of letting local governments make their own decisions.

Then, elect more ethnic and racial minorities to be mayors or serve on city councils and proactively focus on ensuring meaningful representation in the unelected bureaucracy. Our research demonstrates these changes should alter the distribution of fines, but making them so would probably have other beneficial effects for underserved communities as well.

If nothing else, the next time you get pulled over for speeding – especially if it’s for doing 55 in a 54 – you should ask yourself why it’s happening. It might be a lot less about how fast you were going than you’d think.

Republished with permission under license from The Conversation.

Poverty, Taxes

IRS: Sorry, But It’s Just Easier and Cheaper to Audit the Poor

Congress asked the IRS to report on why it audits the poor more than the affluent. Its response is that it doesn’t have enough money and people to audit the wealthy properly. So it’s not going to.

by Paul Kiel​

The IRS audits the working poor at about the same rate as the wealthiest 1%. Now, in response to questions from a U.S. senator, the IRS has acknowledged that’s true but professes it can’t change anything unless it is given more money.

ProPublica reported the disproportionate audit focus on lower-income families in April. Lawmakers confronted IRS Commissioner Charles Rettig about the emphasis, citing our stories, and Sen. Ron Wyden, D-Ore., asked Rettig for a plan to fix the imbalance. Rettig readily agreed.

Last month, Rettig replied with a report, but it said the IRS has no plan and won’t have one until Congress agrees to restore the funding it slashed from the agency over the past nine years — something lawmakers have shown little inclination to do.

On the one hand, the IRS said, auditing poor taxpayers is a lot easier: The agency uses relatively low-level employees to audit returns for low-income taxpayers who claim the earned income tax credit. The audits — of which there were about 380,000 last year, accounting for 39% of the total the IRS conducted—are done by mail and don’t take too much staff time, either. They are “the most efficient use of available IRS examination resources,” Rettig’s report says.

IRS Commissioner Charles Rettig at the Capitol on May 15, 2019, in Washington. Rettig says increasing audit rates of the wealthy depends on whether the IRS budget grows.

On the other hand, auditing the rich is hard. It takes senior auditors hours upon hours to complete an exam. What’s more, the letter says, “the rate of attrition is significantly higher among these more experienced examiners.” As a result, the budget cuts have hit this part of the IRS particularly hard.

For now, the IRS says, while it agrees auditing more wealthy taxpayers would be a good idea, without adequate funding there’s nothing it can do. “Congress must fund and the IRS must hire and train appropriate numbers of [auditors] to have appropriately balanced coverage across all income levels,” the report said.

Since 2011, Republicans in Congress have driven cuts to the IRS enforcement budget; it’s more than a quarter lower than its 2010 level, adjusting for inflation.

Recently, bipartisan support has emerged in both the House and Senate for increasing enforcement spending, but the proposals on the table are relatively modest and would not restore the budget to pre-cut levels. However, even a proposed small increase might not come to pass, because it’s unclear whether Congress will actually pass any appropriations bills this year.

In response to Rettig’s letter, Wyden agreed in a statement that the IRS needs more money, “but that does not eliminate the need for the agency to begin reversing the alarming trend of plummeting audit rates of the wealthy within its current budget.”

Republished with permission under license from CommonDreams.

Health, Race

Racism shortens lives and hurts health of blacks by promoting genes that lead to inflammation and illness

By April Thames, University of Southern California 

Negative social attitudes, such as racism and discrimination, damage the health of those who are targeted by triggering a cascade of aberrant biological responses, including abnormal gene activity. It is not surprising that reports documenting lifespan and causes of mortality have demonstrated a clear pattern: African Americans die sooner and bear a heavier burden of many diseases, including hypertension, heart disease, dementia and late-stage breast cancer.

Scientists have searched for genetic causes to health disparities between blacks and whites but have had limited success. The strongest evidence to date points to social-environmental factors such as poverty, health care inequities and racism.

Our society is plagued by racism and racial inequality which is not fully recognized by all, according to a recent study showing that many Americans overestimate our progress in fixing racial inequality. On the other hand, more Americans (65%) are aware that it has become more common for people to express racist or racially insensitive views, according to a U.S. survey.

Racism is not merely negative attitudes or treatment from one person to another. Racism has deep historical roots in American society, sustained through institutional policies and practices, whereby people of color are routinely and systematically treated differently than whites.

As an African American/white individual, I often experienced comments growing up like “You don’t sound black,” and “What are you?” that made me cringe. In college, I became intrigued by the field of psychology as it was a field that explained how prejudices, stereotyping and racism arise. My research as a clinical psychologist at USC is focused on understanding how societal factors interact with biology to create disparities in health outcomes. A recent study I co-authored showed that racism promotes genes that turn on inflammation, one of the major drivers of disease.

Less overt, but entrenched

Although racism may be less overt today than during the early 20th century, government policies and norms, unfair treatment by social institutions, stereotypes and discriminatory behaviors are sobering reminders that racism is still alive – and contribute to earlier deaths in addition to poorer quality of life.

For example, blacks are more likely than whites to receive drug testing when prescribed long-term opiates even though whites show higher rates of overdose. African Americans have shouldered the burden of racism for decades, creating a level of mistrust for societal systems, be it health care or law enforcement.

Terms such as “driving while black” illustrate how racism and discrimination have been deeply embedded in African American cultural experience. Just imagine trying to buy a home and being turned down because of your race. This is too common of an experience for African Americans. Nearly half (45%) reported experiencing discrimination when trying to find a home and in receiving health care, according to a Robert Wood Johnson survey that was developed by the Harvard T.H. Chan School of Public Health, Robert Wood Johnson Foundation and National Public Radio.

From macro to micro, the effect is widespread

Blacks’ exposure to chronic stress has often been cited as a reason for worse health outcomes. 

Until recently, we scientists did not know the mechanism linking racism to health. The new study from my lab here at USC and colleagues at UCLA shows that the function of genes may explain this relationship. As it turns out, our study showed that genes that promote inflammation are expressed more often in blacks than in whites. We believe that exposure to racism is why.

We previously showed how activating racism, such as asking people to write down their race before taking an exam, in the form of stereotyping impairs brain functions such as learning and memory and problem-solving in African Americans. This may partly explain the higher rates of dementia in African Americans compared to whites.

Researchers have well documented that chronic stress alters the function of brain regions, such as the hippocampus, that are targeted in brain diseases such as Alzheimer’s disease. This work has been expanded through the field of social genomics, largely pioneered by my colleague Steve Cole at UCLA. A relatively new field called social genomics demonstrates how the function of genes – termed gene expression – is influenced by social conditions.

Genes are programmed to turn off and on in a certain manner. But those patterns of activity can shift depending on environmental exposures.

Certain marginalized groups demonstrate abnormal patterns of gene activity in genes responsible for innate immunity. Innate immunity is how the body fights off and responds to foreign pathogens. Dr. Cole named this pattern/sequence of gene activity the Conserved Transcriptional Response to Adversity. It refers to the how genes controlling innate immunity behave under positive or negative environmental conditions.

When environmental stresses like socioeconomic disadvantage or racism trigger the sympathetic nervous system, which controls our fight-or-flight responses, the behavior of our genes is altered. This leads to complex biochemical events that turn on genes, which may result in poor health outcomes.

The Conserved Transcriptional Response to Adversity profile is characterized by increased activity of genes that play a role in inflammation, and decreased activity of genes involved in protecting the body from viruses.

We found that blacks and whites differed in the pattern of which pro-inflammatory and stress signaling genes were turned on. Our findings are particularly important because chronic inflammation ages the body and causes organ damage.

As my colleagues and I pulled this study together, we took into consideration the health disparities such as socioeconomic status, social stress, and health care access. For example, we recruited African Americans and whites with similar socioeconomic status. We also examined racial differences in reports of other types of stress events. Both groups reported similar levels of social stress.

For this particular study, none of these traditional factors explained why African Americans had greater expression in pro-inflammatory genes than whites. However, we found that experiences with racism and discrimination accounted for more than 50% of the black/white difference in the activity of genes that increase inflammation.

So what do these results mean for future health? I believe racism and discrimination should be treated as a health risk factor – just like smoking. It is toxic to health by damaging the natural defenses our bodies use to fight off infection and disease. Interventions tailored toward reducing racism-associated stress may mitigate some of its adverse effects on health. As a society we cannot afford to perpetuate health inequities by undermining or disguising the biological impact of racism.

Republished with permission under license from The Conversation.

Education, Race

HBCUs pay higher fees to borrow money. Research links that premium to racism.

by Clark Merrefield

Historically black colleges and universities looking to raise money for major projects face higher fees than their non-HBCU counterparts, even when agencies that rate credit risk give HBCU-issued bonds their highest scores, according to research recently published in the Journal of Financial Economics.

There’s one big reason for the additional cost, according to the authors: racial discrimination.

Colleges and universities typically issue bonds to pay for big-ticket items, like a new dorm or athletic facility. Bonds are loans, paid back over time with interest. Multimillion dollar bonds are usually split across different investors, but schools don’t track down those investors. Instead, they pay underwriters. An underwriter buys an entire bond and then finds investors to buy chunks of it.

Out of the pool of bonds the authors studied, non-HBCUs pay on average 81 cents of every $100 raised to underwriters. For a $10 million non-HBCU bond, that’s $81,000 in fees going to an underwriter.

But HBCUs pay on average 92 cents per $100 raised to underwriters — about 14% more, the paper finds.

That’s $92,000 in underwriting fees on a $10 million HBCU bond. HBCUs are higher education institutions founded before 1964 primarily to educate black students, many of whom were barred from predominantly white institutions.

“The underlying notion is it’s harder for an [HBCU] underwriter to find a buyer and they pass the cost on to the schools,” says Bill Mayew, professor of accounting at Duke University and one of the paper’s authors. “That’s where the difference comes from.”

The financial premium is even higher for HBCUs in Alabama, Louisiana and Mississippi, where racial animus runs higher than in other states, according to data the authors analyze. In those three states, the cost to HBCUs for bond underwriting is 106 cents per $100 raised. That’s $106,000 going to an underwriter on a $10 million HBCU bond.

Understanding two types of discrimination

Economists point to two things that typically underlie actions a reasonable person could perceive as racist: statistical discrimination and taste-based discrimination.

Statistical discrimination happens when people take actual or perceived aggregate information and apply it to a specific situation. This happens sometimes in labor markets. A hiring manager considering two candidates from two different demographic groups might believe people from one group are less productive on average than people from the other. The hiring manager might argue they are not being racist in relying on stereotypes. They might say they are simply considering the company’s bottom line productivity.

Taste-based discrimination is discrimination based on personal taste. Someone, “simply has a preference for working with one type over the other,” as economists William Neilson and Shanshan Ying wrote in 2016 in a paper on the relationship between these types of discrimination. The hiring manager’s decision is based purely on distaste or preference for a candidate’s skin color.

“When you think of the notion of race discrimination, that’s a taste-based preference,” Mayew says.

Differentiating between statistical and taste-based discrimination is difficult to do, but important toward understanding why people make decisions that might appear discriminatory.

Credit ratings and insurance: disentangling HBCU discrimination

The authors look at a sample of 4,145 tax-exempt bonds issued from 1988 to 2010 from 965 four-year colleges totaling $150 billion. HBCUs, both public and private, issued 102 of those bonds.

Creditworthiness scores make it possible to parse the two types of discrimination. Ratings agencies like Moody’s and Standard & Poor’s rate higher education institutions’ credit risk. They provide a score that tells investors how likely the school is to default on its bond payments. A triple-A rating, the highest possible, means the college or university is practically assured to make their payments on time.

“You might say it’s not that buyers of bonds are racist, it’s they think those bonds are more likely to default,” Mayew says. “It’s really hard in most settings to disentangle those indications. But in the bond market, we can measure that really well with the credit rating so we can dig into and isolate race effects.”

Insurance is another way the authors rule out statistical discrimination. Universities can get bond insurance, so if they default the bond financer still gets paid back. Credit ratings and bond insurance give financers a sense of an institution’s likelihood of defaulting.

Still, the authors find that “identical [fee] differences are observed between HBCU and non-HBCUs with AAA ratings or when insured by the same company, even before the 2007–2009 financial crisis.”

HBCU bonds also take longer and cost more to offload in secondary markets. Those are markets where investors trade bonds that have already been financed. The authors find that HBCU bonds are 20% pricier than non-HBCU bonds to trade in secondary markets. Larger bonds — those over $50,000 — face a 60% premium. HBCU bonds overall linger 25% longer on secondary markets.

“If you’re going to say you’re talking about race discrimination you’ve got to provide a lot of evidence to make that case," Mayew says. "That’s a tough piece of evidence to refute.”

Premiums are much higher in parts of the Deep South

If racism were the main driving factor behind higher HBCU bond fees, then HBCUs in states that are more racist should face even higher fees, according to the authors. Broadly capturing racism is not necessarily straightforward. The authors try to do it using a variety of data to rank racial animosity in the 50 states plus the District of Columbia.

They use survey responses capturing resentment and opposition to affirmative action from the Cooperative Congressional Election Study, a large yearly survey of American adults by county. They also turn to state-level data on racist Google searches, and the percentage of white voters in each state who voted for Barack Obama in 2008 compared with the share of white voters who chose John Kerry in 2004. And they consider geocoded racist tweets just after Obama was reelected in 2012.

Alabama, Louisiana and Mississippi scored highest for racial animosity. Georgia was next, but with a sharp drop-off. Those top-three states for racial animosity account for 4.7% of all bond issuances in the sample studied — but 26% of HBCU issuances. In those states, HBCUs pay about three times as much in bond underwriting fees as non-HBCUs, the authors find.

Tax exemptions limit the size of the market

The U.S. municipal bond market is worth almost $4 trillion. Though higher education bonds are a fraction of the total, that submarket is still big enough that taste-based discrimination shouldn’t matter. Anyone can finance a university bond issuance. If a racist investor doesn’t want to finance an HBCU project, there should be plenty of other investors to pony up capital.

But tax exemptions tend to limit university bond markets to the state a school is in. Interest payments are tax exempt if the bond is issued by an entity in the state where the financer is based. Someone living in Louisiana would receive tax-free interest payments by financing a Xavier University of Louisiana bond but not an Alabama State University bond.

The authors argue that a triple tax exemption — with interest payments on university bonds exempt from federal, state and local taxes — could take racism out of the equation. Triple tax exemption would allow HBCUs to, “tap into a larger market where racial preferences are different,” Mayew says.

Barriers to bonds

There’s no good way to quantify how much higher education institutions pay insurers and credit rating agencies, Mayew says, but those entities need to be paid in addition to underwriters. So there are costs to entering bond markets — and when it comes to underwriting, those costs are higher for HBCUs. That may mean some HBCUs pass up raising money through bonds, potentially forgoing major campus improvements.

“Bond markets should be one of the cheapest forms of capital,” Mayew says. “It’s many individual investors, and schools should be able to raise lots of money. And maybe 25 years ago, an HBCU passed up renovating a dorm. These are the opportunity costs schools face.”

Republish with permission under license from Journalist's Resource.

Education, Employment

For male students, technical education in high school boosts earnings after graduation

By Shaun M. Dougherty, Vanderbilt University

Job prospects for young men who only have a high school diploma are particularly bleak. They are even worse for those who have less education. When young men experience joblessness, it not only threatens their financial well-being but their overall well-being and physical health.

Could a high quality and specialized technical education in high school make a difference?

Based on a study I co-authored with 60,000 students who applied to the Connecticut Technical High School System, the answer is: yes.

Students in the electrical program at H.C. Wilcox Technical High School in Meriden, Connecticut practice their skills. Connecticut Technical Education and Career System

To reach this conclusion, we studied two groups of similar students: Those who barely were admitted to the Connecticut Technical High School System and those who just missed getting in. Students apply to these high schools and submit things such as test scores, attendance and discipline records from middle school. Then, applicants are ranked on their score and admitted in descending order until all seats are filled. We compared those whose score helped them get the last space in a school, to those who just missed being admitted because the school was out of space.

This enabled us to determine whether there was something special about Connecticut’s Technical High School System education that gave students an advantage over peers who also applied, but didn’t get into one of the system’s 16 technical schools across the state.

Widespread appeal

Connecticut Technical High School System is a popular choice for students – about 50% more students apply than can be admitted.

Students in the Precision Machining program at Vinal Technical High School in Middletown, Conn., gather around their teacher for instruction. Connecticut Technical Education and Career System

The system functions such that students can apply to attend a school in the tech system instead of their assigned public school. Statewide, the system schools – which offer specialized instruction in a variety of career fields – serve about 10% of the high school students. Most students who don’t get into the tech schools stay in their public high school.

What we found is that students who were admitted to the Connecticut Technical High School System went on to earn 30% more than those who didn’t get admitted. We also found that the tech school students were 10 percentage points more likely to graduate from high school than applicants who didn’t get in – a statistically significant finding.

Our research suggests that expanding a technical high school system like the one in Connecticut would benefit more students. I make this observation as one who examines outcomes associated with career and technical education.

The track record

Career and technical education has already been shown – at least on an individual or small scale level – to positively impact earnings and high school graduation rates.

Career and technical education does this without taking away from general learning in traditional subjects like math and English. But based on my experience, it has never been clear as to whether career and technical education makes a difference on a system-wide level rather than at just one or among a few select schools.

Our recent study finally answers that question because we studied an entire state technical high school system. Specifically, it shows that, yes, career and technical education can give students the same benefits that it has already been shown to give on a smaller level even if it’s scaled up. This has implications for school districts and states, especially as growing interest in what works in career and technical education.

The appeal of technical education in Connecticut

Once admitted into the Connecticut technical high school system, all students take career and technical education coursework instead of other electives, such as world languages, art or music. Typically, coursework is grouped into one of 10 to 17 programs of study, such as information technology, health services, cosmetology, heating ventilation and air conditioning, and production processes, among others. Traditional public high schools in the state, on the other hand, tend to offer at most four career and technical programs through elective courses.

In the Technical High School System schools in Connecticut, students explore various programs of study during their first year. Then – with help from an adviser – students select a program of study. Within these programs, students take at least three aligned courses and often more. They also have more opportunity to align academic and technical coursework materials, so that math and English content can often be integrated into technical courses. Chances for work-based learning and job exposure can also be enhanced in these settings, which may contribute to their impact.

Better outcomes

To figure out if these technical schools were making a difference, we looked at admissions from 2006-2007 through 2013-2014 for 60,000 students.

We found that – compared to students who just missed being admitted – technical high school students had:

• Better 9th grade attendance rates; absenteeism rates fell by 14%

• Higher 10th grade test scores (like moving from the 50th to the 57th percentile, which is a significant jump for high school test scores)

• A greater likelihood of graduating from high school, about 85% versus 75% for those who just missed being admitted

• Higher quarterly earnings, over 30% higher

• While we found a lower likelihood of attending college initially, no differences were seen by age 23

As educators, elected officials and parents search for more effective ways to give young men in high school a better shot at being able to earn a living, our study suggests that Connecticut might have already figured it out.

Republished with permission under license from The Conversation.