The twisted maze of drug list prices.

Alright so today we’ve got:

• What’s inside the pharmaceutical drug list price?

• Binance gets sued.

• Is Times Square past its prime?

  Let’s do a scan.

The Big Picture

Pharmaceutical drug prices in the United States have witnessed a sharp increase over the past three decades. This escalation can be attributed to various factors, including rising costs associated with drug research, development, marketing, and the influence of the patent protection system which can affect the prices of generic drugs.

Add intermediaries between insurance companies, drug manufacturers, and pharmacy companies, known as Pharmacy Benefit Managers (PBMs) in the soup. PBMs negotiate prices and manage drug formularies, which determine the drugs that will have tier-based insurance coverage. They negotiate rebates on drugs, where the top-tier drugs get increased rebates. This reduces the list price of those drugs but also propels their sales. However, they have been criticized for potentially incentivizing high-cost drugs that offer more substantial rebates, thus indirectly contributing to higher drug prices.

Representative James Comer who chairs the House Oversight and Accountability Committee called for increased transparency within the PBM industry to better evaluate the overall pharmaceutical market. Simultaneously, investigations by the Federal Trade Commission and various state governments are looking into the practices of PBMs to understand their role in price dynamics.

In response to this multifaceted challenge, the oversight committee is not only seeking information about rebates and fees associated with PBMs but also probing into their relationships with group purchasing organizations. There is a clear need for a comprehensive policy overhaul and improved regulation to tackle the issue of rising drug costs effectively.

Sector Sweep

Tech

• Spotify plans to cut 2% of its staff, as it struggles to make advertiser money with podcasts. The company, however, wants to keep investing in existing agreements with Joe Rogan and Emma Chamberlain.

• SEC has filed a lawsuit over crypto exchange Binance, with allegations that the company misused customer funds and diverted them to a trading entity, CEO Changpeng Zhao controlled.

• Apple announced its mixed reality goggles - Vision Pro headset at Worldwide Developers Conference. It has opened to positive reviews and costs $3499.

• Days after the Apple event, Mark Zuckerberg unveiled the new Meta Quest 3. It’s powered by Qualcomm and is expected to price in at $499, expected to go on sale this Fall.

Automotive

• Porsche, Ferrari, along with Exxon Mobil, are looking to persuade regulators to use e-fuels that are produced with recycled CO2 extracted from organic matter or air. This is expected to not raise the amount of new CO2 in the atmosphere according to the companies. Critics argue that this will not affect the overall CO2 in the atmosphere.

Energy

• Scientists are looking into underground Green hydrogen for solving energy problems in the world. This is created by a chemical reaction between iron-rich metals and can be extracted by traditional drilling methods.

Commercial Real Estate

• Times Square foot traffic has reduced considerably compared to its 2019 levels. Several businesses like theatres and restaurants are reeling under reduced economic activity and inflation.

Natural Resources

• Mining companies are having a hard time hiring workers. Last year 4 UK universities banned mining/ oil and gas companies from attending their career fair. In a survey conducted by Mckinsey, it was found that 70% of 15-30-year-olds wouldn’t consider working in mining.

That’s all for today folks. Do keep a lookout for our weekly email about stock deep dives and personal finance strategies this weekend.

BTW, do tell us how we did. Just hit us with a reply.

Cheers!

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