Big Pharma's profitable philanthropy

Here are three of the week's top pieces of financial advice, gathered from around the web:

Big Pharma's profitable philanthropy

"Half of America's 20 largest charities are affiliated with pharmaceutical companies" that fund copayments on prescriptions for drugs that they manufacture, said The Economist. The drug companies set up the charities to defray the costs of copayments on expensive drugs, but this has "the fortunate consequence of making their customers price-insensitive." The charity run by AbbVie is the third largest in the country, while Bristol-Myers Squibb runs the fourth largest. In total, 13 companies spent $7.4 billion on these programs in 2016. Having copayments gives patients incentive to stick with the companies' drugs instead of opting for cheaper generics — ultimately helping the drugmakers' bottom line. The companies can then deduct up to twice the cost of their donations from pretax profits.

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Doing your own tune-up

Do-it-yourself auto repair shops are popping up across the U.S., said Steve Friess at The New York Times. One typical location, My Mechanics Place in Detroit, supplies the bay, the lift, and some tools for $25 an hour. For a simple task like an oil change or tire realignment, the DIY garage could save you "60 to 80 percent on the repair costs." The concept isn't entirely new — oil companies used to lease garage stalls and lifts in the 1970s for "customers to do their own work." As cars grew more durable, the practice died out. However, some "garage entrepreneurs saw the escalating cost of auto repairs and the reputation of some dishonest mechanics as an opportunity for a renaissance." The only requirement is that you know what you're doing.

More trouble at beleaguered G.E.

General Electric's shares plummeted after a whistleblower accused the company of fraud, said Thomas Gryta and Mark Maremont at The Wall Street Journal. Harry Markopolos is best known as the "accounting expert who raised red flags about Bernie Madoff's Ponzi scheme" years before it became public. Last week, he published a 170-page research report alleging that "the struggling conglomerate has masked the depth of its problems." Markopolos says G.E.'s troubled long term–care insurance business faces $30 billion in claims over the next two decades. The report says G.E. has lied about the severity of the liability and needs to boost its insurance reserves substantially more than the $15 billion it already announced in 2018. The company denies the accusations. Once beloved by the markets, G.E. now trades at a 10-year low.