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Hey Snackers,
Picture living in harsh conditions with four roommates and limited resources in just 1.7K square feet for a year. No, we’re not talking about your college dorm, but NASA’s just-finished Mars-mission simulation. Hope the crew had some ramen.
The S&P 500 and Nasdaq again hit new records as markets priced in a September rate cut. Fed Chair Powell told lawmakers that the US economy was no longer “overheated” and that he’s watching out for “more good data.” Investors hope to see cooling prices in tomorrow’s June inflation report.
The FTC accuses pharma intermediaries of inflating costs as prescription prices pop
A look inside drug pricing… Regulators have been investigating companies at the center of the complex pharma-distribution chain since 2022. Yesterday the FTC dropped a scathing report saying it didn’t like what it found. At the root of the report are pharmacy-benefit managers (PBMs): intermediaries hired by employers and gov’t insurance programs to haggle prices with drugmakers and save patients and employers $$. Turns out, the FTC said they may actually be making drugs pricier and profiting on inflated costs.
High dose: Together the three biggest PBMs — CVS’s Caremark, Cigna’s Express Scripts, and UnitedHealth’s Optum Rx — processed about 80% of the US’s 6.6B prescriptions last year.
Family discount? The FTC said PBMs steer patients to pharmacies affiliated with their parent companies and give those pharmacies better rates, resulting in extra revenue.
Second opinion: A trade group representing PBMs criticized the report as being based on cherry-picked studies. As scrutiny mounts, the group boosted its federal-lobbying spend by 75%+ last year.
Prescription anxiety… isn’t just from long pharmacy lines. 30% of Americans report having rationed or skipped taking prescribed meds because of high costs. In 2022, US drug prices were about 3x higher than the average in 33 other high-income nations, with folks paying about $1.4K/year on scripts. One study suggested that Novo Nordisk could produce a month’s supply of Ozempic for $5 at a profit, but it charges about $1K in the US. PBMs say they save patients and clients $286B/year, but critics say they regularly overcharge.
Pressure is strongest in the middle… If the big three PBMs were standalone businesses, their revenues would put them in the top 40 US companies. But as Americans struggle with soaring drug costs, regulators and drugmakers are taking aim at PBMs. Meanwhile, direct-to-consumer competitors like Mark Cuban’s Cost Plus Drugs and Amazon Pharmacy have emerged with a focus on affordability. Blue Shield of California ditched CVS’s Caremark in favor of these rivals.
Crypto leans into US presidential-election bets as prediction markets go all in
Hittin’ Vegas on November 5… As the US presidential election nears, investors are placing more bets that fall outside traditional market plays. On Polymarket, a crypto-based prediction market, traders are staking money on “events contracts,” which let traders bet on the likelihood of certain outcomes. $326M+ has been wagered on Polymarket on election-related bets like who’ll be the Democratic nominee and which party will win the popular vote.
Crystal balls: Prediction markets let users bet on nearly anything. Picture: how many times Elon Musk will tweet this week, or whether this year will be the hottest on record.
Y/N: Events contracts are typically “yes” or “no” bets that pay out $1/contract if the bettor is correct. Prices fluctuate based on shifting odds. On Polymarket, users buy contracts with stablecoins.
Outlook hazy: Polymarket stopped serving “US persons” after a 2022 settlement with regulators. But US regulators gave the OK to Kalshi (another prediction market).
Taking the bet… The prediction-market industry is bigger than just crypto. PredictIt and Kalshi both let users bet $$ on events like whether the Fed will cut rates by September. Now traditional finance wants a piece: Interactive Brokers is planning to launch a market dubbed ForecastEx this summer, and trading firm Susquehanna set up a Kalshi market-making team.
All bets are on: Online prediction markets have ridden the same wave that’s lifted booming sports-betting apps like DraftKings and FanDuel. US sports-betting revenue hit a record last year of nearly $11B.
Everyone wants in on the action… but they can’t all be winners. Crypto-savvy bettors, investment firms, and brokers are all supercharging the prediction-markets industry. Regulators have taken note. In May, the CFTC, which regulates the US derivatives markets, proposed rules that would ban contracts on some real-world events like elections. Both Kalshi and PredictIt are fighting the CFTC in court.
What else we’re Snackin’
Buzz: Non-alcoholic-beer maker Athletic Brewing reportedly doubled its valuation to $800M as more folks get sober-curious. Athletic’s sales have topped booze-free Heineken and Bud in US grocery stores.
AF1: Boeing’s said to be in talks with the US Defense Department over how to keep its contracts after pleading guilty to criminal charges. 37% of Boeing's revenue comes from gov’t deals (think: building Air Force jets).
Dupe: France has seized thousands of counterfeits like fake Louis Vuitton bags as it preps for millions of Paris Olympics visitors. Fakes cost French companies about $1.8B/year in lost sales.
Listen: Spotify will let listeners drop comments on podcasts. The move makes Spotify, which now has 250K+ video pods, more like YouTube as it expands beyond tunes to boost engagement.
Spark: Argentina’s president, Javier Milei, pushed through biz-focused reforms, signing a pact with governors to support his fiscal shock therapy. Half the country lives in poverty as inflation’s surged to ~300%.
Snack Fact of the Day
On Sunday, 3M fliers passed through TSA checkpoints — a one-day record
Wednesday
Earnings expected from PriceSmart, WD-40, and Manchester United
Authors of this Snacks own shares of: Amazon and CVS