đź’Š Drugmakers fight discounts
Hey Snackers,
Come on down (to the ER): a contestant on "The Price Is Right" who won a Hawaiian vacay celebrated so hard he dislocated a shoulder. The price was right, but that popping sound wasn’t.
Stocks fell after the long weekend, cooling from last week’s big rally. China cut interest rates again to try to fuel its economic rebound (which isn’t rebounding so well). Meanwhile, bitcoin crossed $28K for the first time since May.
Drugmakers sue over Medicare’s new pricing rules, potentially setting the stage for a SCOTUS showdown
Bitter pill… Pharma giants are taking legal action to try to shut down a new drug-pricing law that could cost them billions. Some 65M Americans (most age 65 and older) are enrolled in Medicare, a federal health-insurance program — and the largest buyer of prescription drugs. Under President Biden’s Inflation Reduction Act, Medicare would be able to negotiate discounts of up to 60% on numerous prescription drugs. Merck says its lucrative diabetes and cancer drugs would be subject to a “sham” negotiation program, which starts in 2026 with an initial round of 10 drugs.
This month: Merck and Bristol-Myers Squibb filed suits against the gov’t, arguing the policy is unconstitutional and could hit blockbuster drugs (some of which make up a quarter of their annual sales).
Last week: Eli Lilly's CEO said the potential revenue loss could also stunt R&D of future drugs.
FYI: If companies don't comply, they’d face fines that are several times higher than their daily drug revenue and can be avoided only if they pull out of Medicare.
Refill relief… Lawmakers have fought for years to curb skyrocketing prescription costs. One study indicated that initial prices for new drugs have jumped 20% annually during the past 15 years. Last year nearly a fifth of US adults said they skipped or delayed taking medicine because of the cost. AARP said Medicare's new negotiations could save qualifying Americans an average of $800/year.
Solutions can come with side effects… By lowering drug costs for Medicare, the program could ease Rx affordability for millions and save taxpayers $102B through 2031. But as more drugmakers argue that it’s a threat to their revenue and research, the legal backlash is expected to intensify — and could end up in the Supreme Court.
From Snap to Microsoft, Big Tech hopes AI can be the wind beneath its ad-biz wings
Takin’ over the world… one ad at a time. Snap's chatbot probably isn’t in the category of AI that has experts anxious over humanity’s demise, but the app still has big plans for “My AI.” 150M Snap users have exchanged billions of messages with the feed-pinned bot, and Snap’s hoping it can mine the data to revive its flailing ad biz. Last quarter Snap reported its first sales decline ever (ads = 99% of its revenue).
MyByeBye: When My AI debuted in April, users were… not smitten. Frustrated that the bot couldn’t be removed, users blasted the app with one-star reviews — leading to an average US App Store rating of 1.7.
Target acquired: Boss Evan Spiegel said the bot could improve ad targeting, which the company has struggled with ever since Apple's privacy overhaul.
Sponsored chat: Snap started testing advertiser links in My AI convos (picture: chatting about travel plans, and then My AI dropping a link for cruise tickets).
Adpocalyspe not now?… Despite fears that AI-powered search could mean the end of sponsored links as we know them, the ad industry is embracing the tech. Ads have found their way into Microsoft's ChatGPT-fueled Bing search, and the company is exploring AI tools that could predict an ad’s performance. Meta has started letting advertisers try out its genAI ad products. Amazon's building out a team to create AI ad apps, and Google recently launched AI tools that aim to help marketers with placements.
Monetizing too early is a risk… Infusing ads into AI chatbots and search engines runs the risk of losing users’ trust before it's been gained. But given the staggering costs of running AI servers, the risk may be necessary — unless companies can get users to pay for another subscription, like the $20/month ChatGPT Plus.
Heard on the Block: "non-custodial exchange"
🛋️ Like using Craigslist to find a new home for your couch…
Non-custodial exchanges facilitate crypto trades between customers but don't hold their coins — unlike custodial exchanges like Coinbase and Binance. Decentralized exchanges like Uniswap and PancakeSwap are types of non-custodial exchanges. The CEO of EDX Markets, a new non-custodial exchange, said FTX's implosion created demand for non-custodials.
What else we’re Snackin’
IOU: The Education Department said that student-loan payments (which have been on pause for over three years) will be due starting in October, and interest will start accruing in September — for real this time.
Juice: Rivian said it’ll add the charging port that Tesla developed to its own EVs, and Hyundai may do the same. They follow Ford and GM in adopting Tesla’s charging standard, even as the Biden admin backs a different plug.
Fatal: Defective e-bike batteries are causing fires, and food-delivery companies are being urged to help solve the crisis. In NYC, bike batteries have been linked to 100+ fires and 13 deaths this year alone.
Brick: New US home construction soared in May by the most in three decades — an encouraging sign for the tight market. Homebuilding giant Lennar reported expectation-beating #s last week.
Box: Ex-Nissan CEO Carlos Ghosn is suing the carmaker for $1B, accusing it of “fabricating charges.” Ghosn was arrested in Japan in 2018 in connection with financial misconduct, but reportedly escaped to Lebanon in a box.
Wednesday
First day of summer
Earnings expected from KB Home and Winnebago
Authors of this Snacks own bitcoin and uniswap and shares of: Apple, Amazon, Google, GM, Snap, Tesla, and Microsoft