PHARMACEUTICALS

This Bill Is Supposed To Cut Drug Costs for Americans Now, But Could Hurt Americans Later

The Inflation Reduction Act (IRA) might have one of the most clever names in US politics — but industry pundits fear that one of the Democrats’ crown achievements could backslide into being an Innovation Reduction Act. Passed in 2022, the IRA took aim at every facet of American life, from fuel prices to supply chain dynamics. However, its potential long-term impact on the pharmaceutical industry stands out.

Healthcare haircut: The IRA sets price caps for certain common generic drugs at $2 and limits insulin costs to $35 per month, aiming to reduce out-of-pocket expenses for Medicare enrollees. But the IRA’s biggest opportunity is at the negotiating table — where the government could finally target prescription drug prices for the first time. GoodRx reports a 37% increase in branded drug prices since 2014, prompting the Department of Health and Human Services (HHS) to initiate negotiations for the “most widely used and expensive drugs” available to Medicare patients.

• In August, HHS began negotiating prices for the top ten most-used drugs — with new prices expected to take effect in 2026.

• The agency plans to negotiate prices for at least 20 popular drugs every year, potentially saving billions annually for both Americans and the government.

Rx for the Problem

The IRA could offer Americans reprieve from expensive drugs, but there’s no such thing as a free lunch. Analysts warn that cost controls may limit pharma companies’ ability to recoup the billions in R&D spending that it takes to bring new drugs to market — which could have adverse side effects.

• Researchers at USC’s Health Policy & Economic Center say that the IRA could lower pharma revenues by 31% through 2039 — potentially leading to 135 fewer new drug approvals.

• Legal experts at Kramer Levin warn that the IRA could “discourage companies from pursuing” lesser-known or rare diseases.

Cost-cutting, government edition: As HHS continues its first round of drug price negotiations, the full impact on pharmaceutical revenues remains uncertain. Drugs on the initial negotiation list, such as Bristol Myers Squibb’s Eliquis, Eli Lilly and Boehringer-Ingelheim's Jardiance, and Jannsen’s Xarelto, cost Medicare over $50B from Jun. 2022 to May 2023. But by 2026, the industry could be waking up to a new reality.

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LARGECAP RECAP

🏘️ More Young People Are Rejecting Homeownership for Renting, Citing Financial and Lifestyle Benefits

The American Dream once meant owning a single-family house with a white picket fence and a fancy car out front. Today, a rising crop of young people are rejecting this tradition (buying real estate) and embracing modernity (renting real estate) instead. Contrary to what real estate gurus preach, young people say it’s because they’ll be better off doing the latter.

• According to FT, a growing volume of millennials — who fled urban areas during COVID-19 — are now rejecting homeownership due to lifestyle preferences and high financial costs.

• An Apartment List survey in 2022 found that nearly a quarter of millennials plan to “always rent” — a 13.3% increase from 2018.

Who’s footing the bill? In January, we calculated that the true cost of homeownership can exceed $3.5K per month for the average US homeowner. With younger people seeking amenity-rich urban areas and walkable communities, renting often becomes the only viable option. Private equity groups like Blackstone ($BX) and KKR ($KKR) have noticed — shelling out billions to expand their apartment portfolios across the country, staking bets that renting demand will keep rising for years to come. Even WeWork’s Adam Neumann is betting on the future of apartment living with his new startup. Let’s hope it doesn’t go bankrupt this time…

Natural is planning to head to the Nasdaq: Med-X’s natural, environment-friendly pesticides have driven 200% revenue growth thanks to e-commerce partnerships with companies like Walmart and Amazon. And the global pesticides market is still projected to 3x by the end of the decade. Invest in Med-X ahead of their planned Nasdaq listing.*

Markets & Economy

Supreme Court shifts power to the judiciary: In a dramatic decision, the Supreme Court struck down Chevron’s deference, changing how courts defer to regulatory agencies like the EPA or SEC for interpretation. This ruling shifts significant power away from the executive branch. [Read]

Labor shortages are the new norm: The US now has more jobs than workers. According to McKinsey, the number of open jobs per available worker has increased 7x since 2010 — and it remains unclear what will help meet labor demands. [Read]

NFL loses $4B+ antitrust case: A jury found that NFL Sunday Ticket violated antitrust laws by inflating the price of out-of-market games and limiting access to single-team TV packages. The decision could force the league to pay billions of dollars to subscribers. [Read]

Business & Wealth

US cell providers experience more outages: Providers like AT&T ($T), T-Mobile ($TMUS), and Verizon ($VZ) have faced repeated outages over the last few weeks, but a Thursday outage left international customers in the dark — making it impossible to use their service outside the country. [Read]

Gen Z and Millennials leave behind dating apps: Dating apps have declined since the pandemic, especially among young women. In turn, young people are going IRL to meet others — with event management site Eventbrite reporting a rise in speed dating and singles events. [Read]

Bankruptcy plan for Oxycontin producer rejected: A controversial bankruptcy plan for Purdue Pharma, one of the architects of the opioid epidemic, was tossed out by the Supreme Court — eliminating protections for the company’s owners, the Sacklers. [Read]

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DIGIT OF THE DAY

Many Solo Entrepreneurs Are Hitting $1M in Revenues, Fueled By The Pandemic’s Small Business Boom

Contrary to popular belief, one isn’t the loneliest number — especially when it comes with six zeros. Earlier this year, OpenAI CEO Sam Altman bet we’ll soon see a founder reach a billion-dollar valuation without any employees. With more than 58K solopreneurs hitting the $1M revenue mark between 2020 and 2021, he may just win the bet. 

• Since the pandemic, many Americans have abandoned traditional 9-to-5 jobs to start their own ventures, leading to a surge in nonemployer businesses — now nearly 28.5M strong (BI). 

• Leading this entrepreneurial rush are the professional, scientific, and technical services sectors, with 874 out of 14.45K millionaire businesses in these areas seeing revenues exceed $2.5M.

The future is solo: There hasn’t been a better time to be a solopreneur — especially since tools like AI can now manage multiple tasks that would traditionally require a team. Additionally, the costs of starting and testing business ideas have significantly decreased, reducing the need for traditional funding sources. As hybrid work and remote work models become the norm — the appeal of starting your own business has never been higher.