Good Tuesday evening. Seven more states are holding primary elections today: California, Iowa, Mississippi, Montana, New Jersey, New Mexico and South Dakota. The most closely watched contests may be local ones in California, where Democratic Rep. Karen Bass is running against big-spending billionaire Rick Caruso in the race to become the next mayor of Los Angeles and San Francisco District Attorney Chesa Boudin faces a recall vote.
Here’s what else is going on:
The Price of New Prescription Drugs Is Skyrocketing
Warning: The prescription drug data below may be hard to swallow and could cause nausea, heartburn and indigestion.
The median launch price of new prescription drugs skyrocketed from about $2,000 a year in 2008 to more than $180,000 in 2021, according to a new study published in the medical journal JAMA.
The increase amounts to a 20% annual rate of inflation, according to the researchers at Brigham and Women’s Hospital in Boston. “Prices increased by 11% per year even after adjusting for estimated manufacturer discounts and changes in certain drug characteristics, such as more oncology and specialty drugs (eg, injectables, biologics) introduced in recent years,” the study says.
In 2020 and 2021, 47% of new drugs had initial prices set above $150,000 a year, up from 9% from 2008 to 2013, the study found.
The researchers looked at 548 brand-name drugs introduced between 2008 and 2021 using price data from the firm SSR Health. The analysis of discounted prices used a subset of 305 drugs for which estimated net prices were available.
Why it matters: The study notes that the trend in prices for new drugs outpaces increases in other health care services. “While public attention has focused on year-to-year price hikes for existing prescription medicines, the study indicates that soaring launch prices also contribute to rising costs,” Bloomberg’s Robert Langreth writes.
“These data demonstrate why we DESPERATELY need drug pricing reform,” Dr. Benjamin Rome, a health policy researcher and lead author of the study, wrote on Twitter. “But existing Congressional proposals (eg, Build Back Better) would do NOTHING to control prices for new drugs. The BBB Medicare negotiation provisions specifically EXCLUDE new drugs for 9-13yrs.”
What’s the solution? Rome wrote that the price increases come about because the United States lets drugmakers “set prices as high as they choose” and then allows them an average of 12 to 17 years on the market without direct competition. “Why not negotiate prices of newly approved drugs based on evidence of clinical benefit? In fact, the US is the only high-income country that DOESN’T evaluate and negotiate prices for new drugs.”
World Bank Warns of Global Stagflation Risk
The global economy is facing a threat of low growth and high inflation that could last for years, the World Bank announced Tuesday. Weighing the effects of rising energy and food prices, as well as the campaign by central banks to raise interest rates, the Washington-based financial institution slashed its global growth estimate for 2022 to 2.9%, down from 4.1% in January.
“Just over two years after COVID-19 caused the deepest global recession since World War II, the world economy is again in danger,” President David Malpass said in the latest Global Economic Prospects report. “This time it is facing high inflation and slow growth at the same time. Even if a global recession is averted, the pain of stagflation could persist for several years — unless major supply increases are set in motion.”
The U.S. economy will do better than most thanks to a strong dollar and healthy financial institutions, the bank said, with an estimated growth rate of 2.5% this year. But many low-income countries will face more difficult conditions, as lower-than-expected growth and rising borrowing costs sharply increase the risk of financial crises.
Quote of the Day: Yellen Says American Rescue Plan Isn’t Major Driver of Inflation
"We're seeing high inflation in almost all the developed countries around the world. And they have very different fiscal policies. So it can't be the case that the bulk of the inflation that we're experiencing reflects the impact of the ARP."
– Treasury Secretary Janet Yellen, at a Senate Finance Committee hearing Tuesday, responding to a question from Sen. Steve Daines (R-MT) about whether the $1.9 trillion American Rescue Plan enacted by Democrats in 2021 has caused inflation.
Yellen told lawmakers that inflation is at “unacceptable levels” and that bringing down price increases is the administration’s top priority. But she defended the American Rescue Plan, saying that the “overwhelming risk” of the pandemic recession was that “Americans would be scarred by a deep and long recession and that they would lose the roofs over their heads and not be able to feed their families.” The main drivers of inflation, she said, are supply chain disruptions and ongoing mismatches between supply and demand as well as Russia's invasion of Ukraine, which has driven food and energy prices higher. “Given the global nature of these markets, it’s virtually impossible for us to insulate ourselves from shocks like the ones that are occurring in Russia that move global oil prices,” Yellen said.
Yellen released a statement this weekend disputing a published excerpt from an upcoming biography that said she had privately sought to scale back the $1.9 trillion law. “I never urged adoption of a smaller American Rescue Plan package,” she said in the statement, “and I believe that ARP played a central role in driving strong growth throughout 2021 and afterwards, with the United States real GDP growth outpacing other advanced economies and our labor market recovering faster relative to historical experience.”
Chart of the Day: Fat Wallet, Bad Economy?
Pollsters have noticed that Americans are saying very different things about the state of their personal finances compared to how they see the economy doing. “We think things are going fine for us, but terribly for America,” writes Erica Pandey of Axios. “78% of Americans are confident in their personal financial well-being, but just 24% are confident in the U.S.' financial well-being, per Federal Reserve data reported by the Atlantic's Derek Thompson.”
Although some notable CEOs have warned of difficult times ahead, for millions of Americans, economic conditions including wages and job availability have rarely been this good, despite persistent inflation. “Maybe it’s easier to focus on the negative, but a huge number of people, maybe 40 million households, have been doing pretty well,” economist Dean Baker told The New York Times in May. “You’d have to go back to the late 1990s to find a similar era. Before that, the 1960s.”
Afghan President Didn’t Steal $150 Million: Watchdog
Although there were reports circulating that former Afghan President Ashraf Ghani and his associates fled Afghanistan with $150 million in cash in August of 2021 as the country’s government collapsed, the Special Inspector General for Afghanistan Reconstruction says that is highly unlikely.
“Although SIGAR found that some cash was taken from the grounds of the palace and loaded onto these helicopters [that carried Ghani to Uzbekistan], evidence indicates that this number did not exceed $1 million and may have been closer in value to $500,000,” Inspector General John F. Sopko wrote in a report for lawmakers. “Most of this money was believed to have come from several Afghan government operating budgets normally managed at the palace.”
The reason to doubt the rumors of a massive theft is simple: It would be hard to hide and carry all that money, which no witnesses recall seeing. “This amount of cash would have been difficult to conceal,” Sopko said. “It would be quite substantial in terms of bulk and heft: $169 million in hundred dollar bills, stacked end to end, would form a block 7.5 feet long, 3 feet wide, and 3 feet tall. In other words, it would be somewhat larger than a standard American three-seater couch. This block would have weighed 3,722 pounds, or nearly two tons.”
Still, millions of dollars from Afghan accounts remain unaccounted for. But it’s unlikely we’ll know who made off with it. “With Afghan government records and surveillance videos from those final days likely in Taliban hands, SIGAR is currently unable to determine how much money was ultimately stolen, and by whom,” the report concluded.
- Fed GDP Tracker Shows the Economy Could Be on the Brink of a Recession – CNBC
- Commerce Secretary Says the 'Brutal Reality' Is That There 'Isn't Very Much More to Be Done' on Gas Prices – CNN
- Housing Affordability Collapses to Lowest Level on Record – Axios
- Prices of New Drugs Have Soared. Will Legislation Be Able to Stop It? – NBC News
- Warnock Presses Schumer to Hold Vote on Bill to Lower Insulin Costs – The Hill
- US Nursing Homes Face Closure Risks From Staffing Shortages – Bloomberg
- Kamala Harris Announces $2 Billion Central America Investment Amid Migration Crisis – Washington Examiner
- IRS Warns Scammers Still Using Pandemic to Steal Americans’ Money, Identities – The Hill
- Watchdog Presses NIH Over Foreign Funding Disclosures – The Hill
- Biden Administration Seeks to Suppress Hospital Safety Data – Axios
- The Latest Virus Wave Shows Signs of Abating in the Northeast – New York Times
Views and Analysis
- Inflation Is Poised to Ease According to These Three Key Indicators – Michelle Jamrisko, Bloomberg
- Bezos Was Wrong, and Biden Was Right: Taxing the Wealthy Will Help Tame Inflation – Timothy Noah, The New Republic
- What Inflation Struggles of the Past Can Tell the Fed Right Now – Sebastian Mallaby, Washington Post
- How COVID Threatens the Left’s Win at the Fed – Victoria Guida, Politico
- The Case for Price Controls – Harold Meyerson, American Prospect
- How Well Is Joe Biden Actually Doing? – Jonathan Bernstein, Bloomberg
- Why Is Trust in Government So Low? There’s Blame to Go Around – Jennifer Rubin, Washington Post
- Thomas Piketty’s Case for ‘Participatory Socialism’ – Ezra Klein, New York Times (podcast)
- Headwinds for High Earners Are About to Get Worse – Alexis Leondis, Bloomberg
- The Pentagon Has a Supply-Chain Problem – Bloomberg Editors
- The Republican Climate Plan Forgets About the Climate – Liam Denning, Bloomberg
- My Family Got Covid. So Why Did We Test Negative? – Melinda Wenner Moyer, New York Times