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Business

SEATTLE

W ith little more thana whiff of Ama-zon’s interest in anew business, the

company can crater the stocks ofpotential competitors, promptingthem to consider bold acquisi-tions and other drastic measuresin response. Just ask companiesin the home improvement, meal-kit and grocery businesses.The latest category alarmed by

the specter of competition fromAmazon is the pharmacy market.With huge amounts of consumerspending and frustrating in-

efficiencies, it is the type of busi-ness that invariably attractsAmazon’s attention. CVS Healthis now in talks to acquire Aetna,one of the nation’s largest healthinsurance providers, a moveconsidered to be partly a reactionto the footsteps of Amazon.The likelihood of Amazon’s

eventually getting into the phar-macy business is high, severalanalysts and a former employeesaid. But it is not clear when itwill make that move or howaggressive it intends to be.The near-term threat may be

somewhat overstated. Amazonhas received wholesale pharma-cy licenses in at least a dozenstates, as The St. Louis Post-Dispatch reported Thursday. But

the licenses permit the companyto sell other kinds of productstoo. In Connecticut, for example,the license is for “wholesale ofdrugs, cosmetics and medicaldevices,”while in Louisiana itwas granted to a “drug or devicedistributor.”Brian Tanquilut, an analyst for

Jefferies, noted that the companyacquired many of the wholesalepharmacy licenses between fallof last year and early this year,around when the company start-ed selling medical supplies tobusinesses. “It’s not evidence ofa retail entry into the pharmacybusiness,” he said.An Amazon spokeswoman,

Lori Torgerson, refused to com-ment on “rumors or speculation”

about Amazon entering the phar-macy business, but she shared astatement that suggested othermotivations for the paperwork.“Wholesale licenses are requiredfor Amazon Business to sell pro-fessional-use only medical de-vices in certain states,” she said.There is little doubt, though,

that Amazon is interested in atleast some aspects of the phar-macy business. Brittain Ladd, asupply chain consultant whoworked at Amazon until earlierthis year on groceries and otherinitiatives, said he participated indiscussions about how Amazoncould enter the category, in-cluding through acquisitions.“The pharmacy business was

always a topic of interest when I

was with Amazon, and there wasa sincere desire on the part ofAmazon to create a better cus-tomer experience across pharma-cy and health care as a whole,”he said.While Ladd said he isn’t privy

to the company’s current strate-gy, he believes existing pharma-cy companies are right to beworried. “My advice is that exec-utives at pharmaceutical compa-nies should crush all assumptionswhen it comes to Amazon andtheir ability to enter, innovateand reimagine the pharmacybusiness and health care,” hesaid.If Amazon decides to enter the

market, it could take a variety ofavenues, analysts said.The easiest way in would be to

set up a mail-order pharmacythat focused on price-sensitivecustomers without health insur-ance or who have high-deduc-tible plans that require them topay for some drug costs upfront.To do this, Amazon would needretail pharmacy licenses in everystate – a hurdle, certainly, but notan insurmountable one, the ana-lysts said.“They can at least dip their toe

in the water with the cash-paycustomers, and learn the busi-ness,” said Ana Gupte, an analystfor Leerink Partners.She said cash-paying custom-

ers account for 5 percent to 10percent of the $560 billion pre-scription drug business.The idea could prove attractive

to customers who already go toAmazon for a wide range ofshopping items, from shoes toelectronics to diapers. Retailerslike Target andWalmart haveadded pharmacies to bring inextra business for a similar rea-son. Amazon’s recent acquisitionof Whole Foods could also pro-vide a physical location for phar-macies.“A large part of the infrastruc-

ture is already there,” said DavidMaris, an analyst for Wells Far-go.In a call with analysts this

week, Timothy C. Wentworth,chief executive of the pharmacy-benefit manager Express Scripts,indicated a willingness to workwith Amazon to reach thesecash-paying customers. “Wecertainly see that as somethingwhere if they wanted to moveinto a space, we could be a verynatural collaborator,” he said.If Amazon wanted to go big-

ger, Gupte and others said itcould sell to insured customers

JOHN ZEEDICK AP file photo

A box containing an order from Amazon.com is shown after it was delivered to a house in Etters, Pa.

Hearing Amazon’s footsteps,health care industry shuddersBY NICKWINGFIELDAND KATIE THOMASNew York Times

SEE AMAZON, 2D

Charles Schwab, Fidelity andeTrade offer 500 commission-free trades for new accounts.They want you to treat yourfinancial security like a videogame.That is, keep constant watch

on the screen, respond to signals(red down arrow, sell … green uparrow, buy). Let your intuitionguide you and respond frequent-

ly with an absurd amount oftrading to stay a step ahead ofchanging investment opportuni-ties.More likely this will leave you

a step behind.These accounts come with a

two-year window to utilize thefree trading on stocks, ex-change-traded funds and op-tions contracts. The incentivesare positioned to help you profitwhen the brokerage firms willlikely profit more over time.Brokerages are willing to offer

these deals because they hopethe offer will establish a highlyactive investment style that willcontinue well beyond the two-year window. They want you tospeculate on every seeminglycompelling blip on the invest-ment radar to eventually in-crease their revenue from trans-action fees.Even if you were making

monthly contributions to youraccounts, investing that newmoney and rebalancing yourholdings periodically, I can’t

envision a scenario whereanyone would need to make 50trades over two years, let alone500.For people who aren’t making

frequent contributions or with-drawals, it might not be neces-sary for trading activity to evenreach double digits most years.“The stock market is designed

to transfer money from the ac-tive to the patient” is one ofWarren Buffet’s most quotedlines. Most investors would bewise to follow another sugges-tion of Buffett’s.Whenever he is asked to give

young people advice, he saysthey should think about theirinvestment opportunities as ifthey have a punch card with

only 20 spots on it representingthe number of buys they get tomake in their lifetime.With such limits, you would

make fewer and larger invest-ments. You would invest onlywhen you had high confidencein the margin of safety an in-vestment provided along withpotential to profit.Following this line of thinking,

it would be better for investorsto have higher trading costsrather than low or no tradingcost. Perhaps this would makepeople pause and think moredeeply about an opportunityrather than respond impulsivelyto the daily ups and downs of

Making fewer, thoughtful trades usuallybetter than rushing from deal to dealBY GARY BROOKSContributing writer

SEE BROOKS, 2D

ing.The billions to be spent on

cybersecurity is necessary andwill provide jobs and terrificeconomic opportunity for some,but they do not create wealth orbuild a better life; they merelyhope to preserve what we’ve gotand prevent life from becomingworse.About the best economic tra-

deoff buyers of security productsand services can hope for is thatlosses to crime would have ex-ceeded the cost of such preven-tative measures had they notbeen used.This isn’t new for business, or

the economy, of course. Theproblem of the cost of crime hasbeen around as long as there’sbeen something someone elsewanted to steal.Nor is the issue of liability for

use of their products and serv-ices an unfamiliar topic for busi-ness owners and operators.

They’ve long had to be con-cerned about the consequencesof poorly designed or madeproducts that fail, or the harmcaused by someone who is im-properly using the product, how-ever unintentionally.Even the intentional misuse of

a product, service or technologyin the pursuit of theft isn’t exact-ly a recent development.In the week this column was

written, the columnist’s phonehas been ringing regularly withcalls from “computer securitycenters” offering to “fix” prob-lems. The email spam filter fillsdaily with an Augean stables’worth of scams and phishingexpeditions. The telephone, thecomputer, even the internet arenot new.But the use of a company’s

product or service to wreak notproperty crime but physical

Fertilizer companies makechemicals to aid production ofthe food we eat.Those products and services

were never intended to be usedas weapons.But that’s what happened in

Oklahoma City in 1995, on 9/11in 2001 and last week in NewYork — and could well happenagain.Among the many unhappy

repercussions of the attack oncyclists and pedestrians in Man-hattan is this: Businesses willhave one more layer of liabilityto worry about, consumers andcustomers will have one more

Boeing makes commercialpassenger jets to take us on tripsfor business, vacation or familymatters. Home Depot rentstrucks to customers to make iteasier to move big, heavy items.

threat to consider and morehassles and inconvenience, evenif nothing happens, and theeconomy will have the increaseddrag of non-productive costs tocarry.The cost of crime is a huge but

under-appreciated economicburden. Crime might createbusiness opportunities for some— the makers and sellers ofsecurity systems and products,for example — but the moneyindividuals and businessesspend to deter theft could havebeen spent on product devel-opment, or more efficient ma-chinery, or an expanded build-

COMMENTARY

There are hidden costs of crimewhen products become weapons

BY BILL VIRGINContributing writer

SEE VIRGIN, 2D

The News Tribune, 2017-11-05 Cropped page Page: 2D

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2D SUNDAY NOVEMBER 5 2017Business THENEWSTRIBUNE.COM

After 18 months of re-view by his department,VA Secretary David J.Shulkin awkwardly an-nounced Wednesday thathe plans to “further ex-plore” adding ailments tothe list of compensableconditions VA presumeswere caused by exposureto Agent Orange and otherherbicides used during theVietnam War.The decision to punt

long-anticipated decisionson Agent Orange-relatedailments will disappoint-ment thousands of agingveterans with bladdercancer, hypothyroidism,Parkinson-like tremorsand hypertension (highblood pressure).Veterans and survivors

were hopeful some or allof those conditions wouldbe added to VA’s pre-sumptive list of ailmentslinked to wartime herbi-cides, based on the latestand final review of med-ical and scientific litera-

ture on Agent Orangefrom the National Acade-my of Medicine (formerlyknown as the Institute ofMedicine).Instead, on the Nov. 1

deadline date that VAitself had set for this pack-et of decisions, Shulkinissued a brief statement at6 p.m. promising onlymore delay.“After thoroughly re-

viewing the NationalAcademy of Medicine(NAM)’s latest reportregarding veterans andAgent Orange, and associ-ated data and recommen-dations from (VA’s) NAMTask Force, I have made adecision to further explorenew presumptive condi-tions for service connec-tion that may ultimatelyqualify for disability com-pensation. I appreciateNAM’s work and the com-mitment and expertise of(my) Task Force, and lookforward to working withthe (Trump) adminis-tration on the next steps inthe process.”A last sentence, not

attributed to Shulkin,

explained that the VA“will begin work with theadministration to concur-rently conduct a legal andregulatory review of thesepotential presumptiveconditions for awardingdisability compensation toeligible veterans.”In the past, VA began a

regulatory review onlyafter the Secretary ap-proved new ailments forthe list. Shulkin hasn’tname any new illnesses. Inconceding that VA expertsalready had “thoroughly”reviewed the latest sci-ence, however, Shulkinseemed to signal thatparties elsewhere in theTrump administrationdidn’t want a VA an-nouncement at this timerejecting or embracingnew conditions.“We thought we were

going to get a decisionsometime today,” saidRick Weidman, executivedirector for policy andgovernment affairs forVietnam Veterans ofAmerica. “Obviously wewere mistaken. What theyissued, to quote Sarah

Huckabee Sanders (WhiteHouse press secretary), isa Nothing Burger.”“I am shocked and dis-

mayed if this is the VASecretary’s decision, tocontinue to delay,”emailed Carla Dean, wholost her husband, a Viet-nam veteran, to bladdercancer last year. Nowpresident of the BladderCancer Foundation ofFlorida, Dean said sheremained hopeful thatShulkin will do the “rightthing soon.”One Vietnam veteran

from Wisconsin who hasfought bladder cancersince 2006 expressed“complete disappoint-ment” with Shulkin’sstatement. Asking that hisname be withheld, he saidhe served at a “heavilysprayed” combat base inQuang Tri province. Life-long residual effects ofbladder cancer surgery, hesaid, include incontinence,impotence, severe weightloss and fatigue. He twicehas been denied VA dis-ability compensation be-cause his cancer is not“presumptive.” list.“I have talked to many

other vets and the generalfeeling is that if the VAdelays long enough, therewon't be any veterans leftto worry about compensat-ing for Agent Orange,because we will all havepassed,” he said.A spokesman for Rep.

Phil Roe (R-Tenn.), chair-man of the House Veter-ans Affairs Committee,said he is reviewing VA’sannouncement. But Roe“believes veterans waitingfor a final decision deservecertainty, and (he) hopesSecretary Shulkin willwork quickly to finish thelegal and regulatory re-views.”Dr. Kenneth S. Ramos,

associate vice presidentfor Precision Health Sci-ences and a professor ofmedicine at the Universityof Arizona, chaired thecommittee of medicalexperts that produced theNAM report that Shulkinhas deferred acting on.Ramos said his “gut

reaction” to the statement“is that it’s positive. It’svery encouraging that therecommendations broughtforth by the committeewere thoroughly evaluatedand are being consideredfor reevaluation by thedepartment.” Ramos add-ed, “The tone suggestsreceptivity to the seed thatthe National Academy hasprovided. …When you lookat past experience, anychange in compensationpolicies seems to take timemoving through the sys-tem.”NAM delivered its re-

port, Veterans and AgentOrange: Update 2014, toVA in March last year,after reviewing medicaland scientific literature

published from Oct. 1,2012, through Sept. 30,2014. NAM found evi-dence to support changingthe strength of associationbetween herbicide expo-sure and several ailments.For bladder cancer and

hypothyroidism, it found“limited or suggestive”evidence of an associationto herbicide exposure, anupgrade from “inadequateor insufficient” evidencefound earlier. For someailments, including Par-kinson’s and ischemicheart disease, limited orsuggestive evidence hasbeen judged strongenough to add the illness-es to the presumptive list.For other diseases, in-cluding hypertension,which is common in anaging population, it hasn’tbeen enough.The NAM review also

looked again at cardio-vascular conditions andherbicide exposure. Itdidn’t upgrade the link toheart ailments but it didaffirm limited or sugges-tive evidence that hyper-tension is linked to herbi-cide exposure.

To comment, write MilitaryUpdate, P.O. Box 231111,Centreville, VA, 20120 oremail milupdate@aol.comor twitter:@Military_Update.

COMMENTARY

VA still undecided onAgent Orange illnessesBY TOM PHILPOTTMilitary Update

A Michael McCannahas recently been hired asa new project managerwith Absher ConstructionCompany in Puyallup. Hehas seven years of projectmanagement experienceand is a LEED Green As-sociate. He will be workingon the team for the newSalish Coast ElementarySchool project in PortTownsend.

A Jennifer Jefferieshas joined the law firm ofDavies Pearson, Tacoma,as an associate attorneyand will practice in the

areas of general business,real estate, commerciallitigation and probate. Sheearned her law degreefrom Willamette Uni-versity College of Law andreceived her bachelor’sdegree from the University

of Portland.— COMPILED BYMARY

ANDERSON, STAFFWRITERThe News Tribune pub-

lishes hires and promotionsat the professional andmanagement levels. It recog-nizes honors at the state ornational level awarded byindependent professional ortrade associations andappointments to corporateor civic boards. To submitinformation emailmary.anderson@thenew-stribune.com. All submis-sions become the property ofThe News Tribune and maybe published in any form.

SOUTH SOUND BUSINESS PEOPLE

MichaelMcCanna

JenniferJefferies

DEBBIE COCKRELL:253-597-8364,dcockrell@thenewstribune.com

KATE MARTIN:253-597-8542,kmartin@thenewstribune.com

HOW TO REACH USFriday 1 year ago

Prime rate 4.25 3.50Federal Target Rate 1.25 0.503-month Treasury bills 1.18 0.386-month Treasury bills 1.31 0.5210-year Treasury notes 2.34 1.8230-year Treasury bonds 2.82 2.60

— BLOOMBERG.COM AND U.S. TREASURY

KEY RATES

Here is what Puget Sound-area banks and thrifts were offering on key consumer-loan and depositinstruments on Friday. All yields are annual.

DEPOSITS MMA:Rates and yields on money-marketaccounts with a balance of $2,500.CD: Fixed rates and yields on one-yearcertificates of deposit of $5,000.IRA: Fixed rates and yields on 18-month ac-

counts.

LOANSAuto: Fixed rate for a $10,000, 60-month,

new-car loan and for a $7,000, 48-month, used-carloan for a 1- to 3-year-old model. Actual ratesmight change with variations from the scenario,and fees and other costs at loan initiation.

DEPOSITS AUTO LOANSInstitution MMA CD IRA New UsedAmerica's CU 0.20/0.20 0.35/0.35 0.45/0.45 4.990 4.990Chase 0.01/0.01 0.01/0.01 NO/NO 3.090 3.540Columbia Bank 0.03/0.03 0.06/0.06 0.07/0.07 3.250 3.125HomeStreet Bank - West-ern

0.45/0.45 0.35/0.35 0.35/0.35 NO NO

KeyBank 0.04/0.04 0.15/0.15 0.10/0.10 3.740 4.390Qualstar C.U. 0.25/0.25 0.50/0.50 0.50/0.50 2.740 2.490Sound Credit Union 0.10/0.10 0.35/0.35 0.55/0.55 2.990 2.690Tapco Credit Union 0.03/0.03 NO/NO NO/NO 2.990 2.740U.S. Bank 0.04/0.04 0.10/0.10 0.15/0.15 4.210 3.620Verity C.U. 0.10/0.10 0.35/0.35 0.43/0.43 3.040 2.890Washington average 0.13/0.13 0.25/0.25 0.33/0.33 3.449 3.381NA: Not available NO: Not offered

Source: Informa Research Services 818-880-8877 Ext. 266**Do not have a bank, thrift or credit union charter; all products are FDIC insured

MONEY RATES

and even serve as a phar-macy-benefit manager,overseeing drug coveragefor people on behalf ofinsurers and large employ-ers.This would be far more

complex. It would likelyrequire Amazon to eitheracquire a pharmacy-benefitmanager or enter into apartnership with an exist-ing one. Expanding thepharmacy business withoutthe aid of a major pharma-cy-benefit manager wouldbe tough, because the ben-efit managers serve asgatekeepers to insuredpatients, deciding whichpharmacies they can and

cannot use. The benefitmanagers also operatetheir ownmail-order phar-macies, which might makethem less willing to accom-modate Amazon.Some said they expect

that if Amazon chooses toenter the health care busi-ness, it would do so in a bigway. The company couldattempt to provide compre-hensive services to pa-tients, doctors and others,far beyond selling drugs.Nadina J. Rosier, health

and group benefits phar-macy practice leader atWillis Towers Watson, saidother areas the companycould explore include of-

fering virtual doctor con-sults, or using the AmazonEcho, its voice-controlledsmart device, for healthcare applications.No matter the short-term

steps Amazon is taking,Rosier said, her researchhas demonstrated that it is“clearly looking to revolu-tionize how health care isdelivered in some way.”But while Amazon has a

track record for upendingmajor industries, frombooks to groceries, she saidhealth care is complicatedand there would be intensepressure to get it right. “Itis just a sensitive topic,”she said. “We don’t have asmuch scrutiny of howmuch you paid for yourjeans, or your shoes.”

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AMAZON

harm adds an entirely newdimension to the problem.“As an airplane design-

er, in my wildest dreams Inever thought that a com-mercial airplane would beused as a weapon,” formerBoeing and Ford executiveAlan Mulally once told aninterviewer. But that is thereality we live in, andbusiness owners and oper-ators need to be aware ofit.Want to develop a new

product? Now you’ve gotto worry not only aboutthose who don’t read themanual or don’t have the

skills to use it safely,you’ve also got to considerwhat sort of mayhemmight be created by thedeliberate weaponizationof it.That’s just the start of it.

The New York attack oflast week, as bad as it was,could have been far worsehad the perpetrator target-ed a large concentration ofpeople — such as a Hallo-ween parade scheduledlater the same day.Community organiza-

tions and businesses reg-ularly stage events thatdraw lots of people. Secu-

rity has long been an agen-da item on the planninglist for those events. Formany, it moves to the top.That will carry effects

and consequences foreveryone. There will bemore paperwork. Therewill be more inconve-niences, as anyone stand-ing in a line to get into aconcert, a sporting eventor to an airport gate canattest.There will be decisions

made to forgo or withdrawsome products, servicesand events as not worththe risk. There might evenbe a law or regulation ortwo, although the likeli-hood of an individualintent on committing amalevolent act being de-terred by that is negligible.And there will be more

cost. You’ll never get anitemized bill for it. Youmight not even notice it,since it’s broken up inminuscule bites of everyfinancial transaction youpartake of.But you’re paying it, and

so is your economy — andthe bill is getting bigger.

Bill Virgin is editor andpublisher of WashingtonManufacturing Alert andPacific Northwest RailNews. He can be reached atbill.virgin@yahoo.com.

MARK LENNIHAN AP

A Home Depot rental truck became an image of terrorafter it was used Tuesday to mow down cyclists andpedestrians in New York, killing eight people.

FROM PAGE 1D

VIRGIN

the market.In the encyclopedia of

successful investing, you’llnever find a reference tofree trades or how to cap-italize on short-term mar-ket movements. As Van-guard founder Jack Boglehas long professed, “Thestock market is a giantdistraction to the businessof investing.”Most successful in-

vestors understand thattime in the market is moreprofitable than timing themarket. Devising strate-gies, or “nudges,” to helppeople improve their beha-vior as investors and con-sumers is largely whyRichard Thaler was re-cently named winner ofthe Nobel Prize in Eco-nomic Sciences.In many cases, rather

than picking the rightinvestments at the righttime, it’s simply managingyour behavior aroundmarket events — the tug-o-war between fear andgreed — that leads to fi-

nancial independence.If you spend the time to

devise an investmentstrategy that is globallybalanced and aligned withyour goals, there aren’tvery many reasons totrade.Occasionally:AYou might have a cash

flow event that requiresbuying or selling (a needfor withdrawals in retire-ment to supplement yourincome or new contribu-tions if you are still sav-ing.)

A If you intend to bedisciplined about the de-sired level of risk in yourportfolio, you’ll need torebalance from time totime to shift the weight ofstocks and bonds back tothe pre-defined target.

A Something might trulygo wrong with an invest-ment and reduce its futureprospects. If you wouldnot buy it again, givenwhat you now know, it’sOK to trade.

AA worthy new invest-

ment opportunity mightpresent itself infrequently.

AYou might have atax-related reason forselling a position that hasa capital loss to be used tooffset capital gains andreduce taxes owed.

AYou might inheritaccounts with positionsthat don’t fit your invest-ment preferences. It’sbetter to revise the port-folio than hold what yourparents or grandparentsdid.All told, the fewer deci-

sions you have to make,the less likely you will beto make one that is harm-ful.Sometimes, you’ll have

to overcome temptationand human nature to act,but you’ll probably end upbetter off if you investyour time in somethingyou enjoy rather thantrading in search of thenext big thing.

Gary Brooks is a certifiedfinancial planner and thepresident of BHJ WealthAdvisors, a registeredinvestment adviser in GigHarbor. Reach him atgary@bhjadvisors.com.

FROM PAGE 1D

BROOKS