Cigna Corp. confirmed Thursday that it will keep its pharmacy-benefits management business, after considering a possible sale earlier this year.

Responding to a question from Goldman Sachs Group Inc. analyst Matthew Borsh, Cigna president David M. Cordani said the firm decided its PBM was “important strategically to us as we go forward.”

PBMs administer prescription-drug benefits for health-plan operators and often run mail-order pharmacies.

Many big health insurers began looking at selling their PBM units after WellPoint Inc. struck a deal with Express Scripts Inc. to unload its PBM for $4.68 billion.

Solution Saturday

April 15 is months away, but that’s not keeping the IRS from holding “Solution Saturday” tomorrow to help individuals and small-business owners with tax problems.

People can go to the IRS office at Sixth and Arch Streets, Philadelphia, between 9 a.m. and 2 p.m., and meet face-to-face with tax experts to address their specific issues, said spokesman David D. Stewart.

I can’t imagine someone who hasn’t paid his or her taxes in a few years strolling into the IRS to try to make it right, but that’s what the IRS is hoping will happen.

The goal is to get those who’ve dropped out of the system back in and help those in danger of falling behind because of financial challenges, he said.

Testing, testing

Rosetta Genomics Ltd. , based in Israel with a big lab in West Philadelphia, named a former Johnson & Johnson executive as its new president and chief executive officer this week.

Kenneth A. Berlin, 45, succeeds Amir Avniel, who’d announced in September that he would step down.

Berlin had been general manager of Veridex L.L.C., a J&J unit in Raritan, N.J., that employs about 100 people. Veridex bought the assets of Immunicon Corp., a cancer-diagnostics firm in Huntingdon Valley that went bankrupt in summer 2008.

The Nasdaq-listed Rosetta Genomics is developing medical diagnostic tools based on microRNA technology. Its Philadelphia lab is in the University City Science Center.

Few phrases make me cringe more than “economic impact.”

Calculating the economic impact of anything, whether it’s hosting World Series games or the presence of a certain business sector, is fraught with fudging.

Sure, you can count the number of New York Yankees players, coaches and staff who worked and paid wage taxes in Philadelphia for the three games here. Those are direct benefits, while paying for police overtime for crowd control would be direct costs.

But it’s the indirect costs and benefits where economic impact gets murky.

And Drexel University economics professor Roger McCain reminded me of that when I asked about figuring out what the two-day-old SEPTA strike is costing the region.

The biggest direct cost we all experience is time lost. McCain, who said it took him 25 minutes to drive from 30th to 34th Streets on Market Wednesday morning, said time is the ultimate scarce resource. Scarcity is what economics is all about.

I’ve been reading Thomas Sowell’s Basic Economics, which begins with the classic definition of the dismal science: Economics is the study of the use of scarce resources that have alternative uses.

When our commute doubles because we can’t catch the Market-Frankford El and must drive instead, we have traded time at work or at home for time spent in transit. Employers, many of whom are trying to be flexible under the circumstances, still expect a full day’s work, so we are all really paying for longer commutes with less personal time.

The bugaboo comes in trying to put that loss of time in terms of money. Tempted as we might be to multiply our hourly wage rate by our extra commuting time, it would overstate the cost, McCain said. Studies have asked what people would pay to reduce their commute and it tends to be less than their wage rate.

Indirect costs related to the SEPTA strike might come from fewer people traveling into Center City to shop or eat out. But if they stay in the suburbs and wind up shopping or eating out there, what’s the result? Consumer spending still occurred in the region.

While dining at a suburban Applebee’s rather than Table 31 represents a trade-off, is it really fair to take the difference between average checks at each restaurant and count it as a negative impact on Philadelphia?

Even if you just zoom in on the direct impact on SEPTA, there’s some guesswork involved. The City and Frontier Divisions handle 928,000 trips each weekday. Most people ride round-trip, so that’s why the agency says this strike is affecting hundreds of thousands of people.

But you can’t multiply the 928,000 trips by the cost of a token ($1.45) and say that SEPTA’s losing $1.35 million in revenue a day. Why? Because many passengers have migrated to the Regional Rail lines that are still running and are more expensive.

SEPTA spokesman Andrew Busch said while the agency is losing ridership revenue, its costs are lower because it isn’t paying the 5,100 striking members of the Transport Workers Union. “As of now, it’s about a wash,” he said.

But the longer a strike lasts, the more negative the impact will be on SEPTA’s finances. Lost revenue would begin to outstrip the benefit of lower labor costs. Inconvenience could chase customers away.

Once the strike ends, it may take a long time for ridership to return to pre-strike levels.

The bottom line is that economic impact numbers are not very reliable, McCain said.

But there’s another way to measure the strike: by the level of annoyance that builds as we sit in traffic in our vehicles, squeeze onto packed railcars, and walk extra blocks to work or school.

Again, we can’t quantify that psychic cost. We only know that we feel more annoyed, and there’s no benefit in that.

This year, the rankings of the world’s largest pharmaceutical companies have seemed to change as often as the AP college football poll.

Yesterday’s closing of the $41 billion deal between Merck & Co. Inc. and Schering-Plough Corp. made Merck the world’s second-largest drug company, behind Pfizer Inc.

IMS Health, which ranks the industry by pharmaceutical sales, lists New York-based Pfizer with 2008 sales of $43.4 billion. Pfizer only got bigger this year, having recently acquired Wyeth, which had 2008 sales of $15.7 billion. Wyeth employs about 4,500 people in the Philadelphia suburbs.

The previous No. 2 drug company had been London-based GlaxoSmithKline P.L.C., which employs more than 5,000 in the Philadelphia area. IMS Health lists GlaxoSmithKline’s 2008 sales as $36.5 billion, putting it just ahead of Novartis and its $36.2 billion in sales.

Add Merck’s $26.2 billion in sales to Schering’s $18.5 billion in sales and you get the new No. 2 company with a total of $44.7 billion.

But Merck, which employs 12,000 in Montgomery County, may not hold onto the No. 2 spot for long. Earlier this year, Roche Holding bought biotech juggernaut Genentech, creating a company with combined 2008 sales of $43.8 billion. Genentech has several blockbuster drugs, including Avastin. If sales trends hold, Roche could leap over Merck as soon as 2010.

Feeling Better

Tenet Healthcare Corp. may only have two hospitals left of the original eight it acquired in Philadelphia in 1998, but those two were bright spots in the company’s latest quarterly results.

The Dallas for-profit hospital operator noted that Philadelphia was one of only two regions in which it reported positive total admissions growth in the third quarter ended Sept. 30. The other was Tenet’s California region, which includes hospitals in Nebraska.

Total admissions at its 51 hospitals were flat at 128,652.

Tenet also noted outpatient visits grew more than 8 percent at Hahnemann University Hospital and St. Christopher’s Hospital for Children in Philadelphia as well as at hospitals in its Central and Florida regions.

Shares of Tenet closed at $5.40, up 10 cents.

The last time I wrote about savings bonds, in May, plenty of readers thought my math had to be wrong because I reported the “earnings rate” on the Series I bond would be zero percent.

But no. Had you bought a Series I bond between May 1 and Sept. 30, the Treasury Department would pay you nothing for six months after the issue date. It was equivalent to sticking $50 in a shoe box for half a year.

Zero percent came as quite a shock for some, because in the previous six months they could have bought an I bond paying 5.64 percent.

Sales of savings bonds have fallen steadily. According to the Bureau of Public Debt, sales of Series I bonds went from $180 million in April, before the rate change, to a low of $52 million in September.

For the federal fiscal year ended Sept. 30, the U.S. government sold $1.66 billion in Series I bonds, down from $1.92 billion the previous year. An all-time high of $8.12 billion in Series I bonds were sold during the 2003 fiscal year.

As an investment, savings bonds tend to appeal more to the Greatest Generation than Generation Wired. The readers who called me had different reasons for buying them, but they had a common question: “Will the rate ever go back up?”

It was a good one because Series I bonds have a rate that adjusts with inflation. Given that more economists are worried about deflation right now, that didn’t bode well for a rebound in savings-bond rates.

But Monday, the Treasury Department set the rate at 3.36 percent for a Series I bond bought between Nov. 1 and April 30, 2010.

What accounted for the shift? First, Treasury raised the fixed portion of the I-bond rate from 0.1 percent to 0.3 percent. But also, the Consumer Price Index for all urban consumers rose from 212.709 to 215.969 from March 2009 through September 2009, according to the Bureau of Labor Statistics, which tracks inflation.

For the previous six months, the CPI was negative, but you can’t have a negative earnings rate on a savings bond. So Treasury set the Series I rate at zero for bonds bought between May 1 and Oct. 31.

Yesterday, Treasury also increased the earnings rate on Series EE bonds to 1.2 percent from 0.7 percent.

Let others focus on election day tomorrow or dread the employment report coming up on Friday.

I’m looking forward to a week of events that celebrate entrepreneurship. Starting Tuesday, the two-day Mid-Atlantic Capital Conference at the Convention Center is expected to attract 1,000 people to learn about 40 area companies, including TerraCycle Inc., of Trenton, and iPipeline Inc., of Exton.

More intriguing is what’s happening on the University of Pennsylvania campus that celebrates ideas at a much earlier stage. It’s Innovation Week at the Weiss Tech House, a student-run organization that’s proof a little money, a little structure and a lot of teamwork can produce amazing things, including new companies.

We all remember that guy in college who sold dormroom carpets out of his trunk. Well, this technology-steeped generation has grander ambitions.

Begun in May 2003, the Weiss Tech House at 33d and Walnut Streets began as a 3,000-square-foot space where Penn undergraduates could pursue their ideas. The ground floor is called the lab, but it’s more like a workshop with paint sprayer, band saw, drill press and other tools.

Upstairs are conference rooms outfitted, not with cocktail napkins on which to sketch ideas, but whiteboards, including one that runs wall-to-wall and was partly filled with hieroglyphic-like scribbling in brown marker on the day I visited.

Anne Stamer manages the day-to-day activities of the Weiss Tech House, but she stressed that this is very much a bottom-up organization. Students run the six committees, including the Innovation Fund committee that decides on the merits of student ideas.

The Innovation Fund is an in-house, mini-venture capital fund that provides cash but doesn’t take equity stakes in student projects. If accepted, the student and his team receive a $1,000 grant and access to the Tech House’s technical, legal and business mentoring resources.

From the start, the goal has been to teach people how to turn an idea into a product. “We try to let people know that their ideas could be valuable,” Stamer said.

While commercialization is not mandatory, many students find they want to see how far they can push their projects, she said.

Certainly, there’s been no Google or even a MyYearbook.com that’s emerged from Weiss Tech House. But a number of companies have been formed around innovations born there. They include:

* First Flavor, now in Bala Cynwyd, which makes edible film strips that taste like a food or drink that are used in advertising campaigns. It’s worked with big companies such as Campbell Soup, Diageo and Bacardi.

* Humanistic Robots Inc. , a Bristol company developing a device to clear land mines. It was awarded a $2 million Defense Department grant in February to turn its prototype into a commercially viable product.

* Innova Materials, an advanced-materials company in West Philadelphia that is providing its IonArmour antimicrobial technology to other companies for use in health-care and consumer products.

Alexander Mittal, the CEO of Innova who will give a talk about his entrepreneurial experiences Tuesday at 7 p.m. at Huntsman Hall as part of Innovation Week, called the Weiss Tech House a “very valuable program” at Penn.

Through Weiss Tech House, he built a team that helped him develop the antimicrobial technology that helps inhibit the growth of bacteria, fungus and mold on product surfaces. Now his Innova Materials employs eight people from its offices in the University City Science Center.

What impresses Stamer the most is the youthful fearlessness of many of the Tech House participants. “They are students, but they say, ‘We can do anything,' ” she said.

Whether it’s new solar panels or a new rowing machine, that’s just what they’re doing at Weiss Tech House.
 

Even as major U.S. stock market indexes have risen more than 50 percent since their March 9 lows, few people are willing to go out on a limb and shout that they’re headed higher.

Few, that is, except Robert Froehlich, who recently joined Hartford Financial Services Group Inc. as a senior managing director. What’s he shouting? That the Dow Jones industrial average will close above 11,000 by the end of the year and rise 20 percent in 2010.

Froehlich, likely the most bullish man on Wall Street, has spent the last two days in Philadelphia talking to investment advisers, including those at Raymond James and Smith Barney. He freely admits to being “out in left field with my views.”

To Froehlich, the Dow’s climb from 6,547.05 on March 9 to close above 10,000 on Oct. 14 for the first time in more than a year represents a “taking back of an over-reaction” last fall.

He has five reasons why he thinks stocks will move higher even as others worry they’ve come too far too fast.

First, many companies are reporting revenue growth again, not just earnings growth fueled by cost-cutting.

Next, Froehlich sees global GDP in 2010 rising much faster than the current top-end projections of 5 percent.

Third, he believes “the U.S. consumer is not as bad off” as everyone else says.

Fourth, business spending will pick up in 2010 as corporations post higher earnings. And finally, most of the federal stimulus program will be spent over the next year.

There are two things that would cause the strategist who calls himself “Dr. Bob” to retreat from his bold call.

If the Federal Reserve were to begin raising interest rates before the mid-term elections next November, “that would hurt,” Froehlich said. The other X-factor is if crude oil were to spike into the triple digits again.

The Fed has kept the federal funds rate near zero for more than 10 months, but oil has risen 136 percent since dipping below $34 a barrel last December. Oil settled Thursday at $79.87.

Let’s give Froehlich some credit. In February, he wrote that the Dow would hit 10,000 by the end of ’09. His was a lonely call at the time, but I would expect nothing less from someone whose collection of essays, called A Bull for All Seasons, was published during the panic of September 2008.

The playbook for the pharmaceutical industry has always seemed to be: Think globally, but the U.S. is what really matters.

GlaxoSmithKline CEO Andrew Witty has been redirecting his company to think globally and make money globally.

“Less than 30 percent of this quarter’s sales were generated from what I call ‘white pill western markets’ compared to 38 percent in the quarter before I took over as CEO,” Witty told analysts on a conference call.

That doesn’t mean GlaxoSmithKline’s ignoring the U.S. In fact, Witty got the chance to brag a little: “I think it’s probably a rare occasion as CEO of a drug company, you can go on to a quarterly call and say that they’ve received three new molecular entity approvals in the last seven days.”

I count it as 10 days, but that’s a great run. The Food and Drug Administration approved its Cervarix cervical cancer vaccine on Oct. 16, its Votrient kidney cancer treatment on Oct. 19, and Arzerra for leukemia on Oct. 26.

What curse?

Liberty Property Trust vice president of investor relations Jeanne Leonard had her fastball working yesterday.

She brushed me back for implying in Wednesday’s column that the office and industrial property developer is “less Phillies-crazy that our fellow Philadelphia corporations.”

Far from it. If any company has taken more flak for Philadelphia’s professional sports championship drought from 1983 to 2008 than Liberty, I don’t know who it is.

It was Liberty’s founder, the late Willard G. Rouse III, who built One Liberty Place in 1980s, the first tower to soar over the William Penn statue atop City Hall. Superstition led some fans to link the city’s lack of Super Bowl wins or Stanley Cups over a 25-year stretch to a “Billy Penn curse.”

More recently, when Liberty developed Comcast Center, the company made sure a small replica of the city’s founder was glued to the roof. Just in case. And of course, the Phillies then won the World Series last year.

So that’s why Leonard picks the Phils to win in five games over the Yankees.

“Keep in mind that we’ve still got Billy Penn happily rooting for the Phillies from the top of Comcast Center,” Leonard wrote in an e-mail.

As Pfizer Inc. begins digesting Wyeth, be on the lookout for more announcements like the one made by Cephalon Inc. Tuesday.

The Frazer biopharmaceutical company said it hired Bob Repella as senior vice president for its U.S. pharmaceutical operations. He’d been executive vice president and general manager of the Biopharma Business Unit for Wyeth Pharmaceuticals.

Repella is actually taking on the responsibilities of two former Cephalon executives. Michael Mulholland, who Cephalon spokeswoman Sheryl Williams said left several months ago, had been in charge of U.S. pharmaceutical operations, except for oncology.

Elizabeth Barrett, who had been vice president and general manager for Cephalon’s oncology business unit, left in March to join Pfizer, where she is regional U.S. president for its oncology business unit.

Repella had been at Wyeth for 16 years, and one of the products he was responsible for was Enbrel, a treatment for arthritis and other immune system diseases. Cephalon, which sells the chemotherapy drug Treanda, has been building its oncology product pipeline.

Pfizer has said it expects to cut its workforce by 15 percent, or 20,000 jobs; how that will affect the 4,500 people who worked for Wyeth in the Philadelphia suburbs is still unclear.

But big mergers also prompt employees, including executives, to test the free-agent market. Consider this one of the first signings.

CEOs as fans

There’s nothing like the World Series to bring out the fan in everyone, including CEOs.

Richard C. Ill, the head of Wayne-based Triumph Group Inc., started his remarks to analysts on a conference call Tuesday, saying:

Good morning and good morning from Philadelphia, home of the steroid-free world champions who are poised and ready to repeat.

Guess Ill’s not too worried about upsetting Triumph’s biggest customer, Chicago-based Boeing Co., but his aerospace company also does a lot of work with Sikorsky Aircraft, which calls home the part of Connecticut that is definitely Yankees territory.

A bit more reserved, William P. Hankowsky, chairman and CEO of Malvern-based Liberty Property Trust, closed his conference call with:

I hope everybody enjoys the World Series. We will be watching closely.

Nothing like a World Series to bring out the fan in everyone, including CEOs.

On a conference call with analysts Tuesday morning, the head of Triumph Group Inc. started his remarks by saying:

Good morning and good morning from Philadelphia, home of the steroid-free world champions who are poised and ready to repeat.

Chairman and CEO Richard C. Ill certainly exuded confidence in the Phillies, even as he expressed concerns about conditions in the aerospace and defense businesses in which Triumph Group operates.

With Chicago-based Boeing Co. as Triumph's biggest customer, Ill probably isn't worried his Phillies pride will be bad for business. But Sikorsky Aircraft, another customer, is based in Stratford, Conn., is another story. Lots of Yankees fans in Sikorsky's home base.