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REBOUND/ Context on Tariffs, Throwback on 340B “Rumors”
My favorite non-health newsletter writer, Matt Levine, summed up yesterday how I feel about tariff coverage:
And yet, both Matt and I are still digging through the rumors and reality. Except that Matt is now on vacation. Not so much the case for me.
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I received a couple of insightful pieces of reader feedback yesterday on tariffs.
One subscriber noted that the pharmaceutical industry is going to be particularly constrained in its ability to pass along costs from higher tariffs, given that there are now inflationary penalties baked into Medicare and Medicaid (and, by extension, 340B). There are probably contractual barriers, too.
The upshot is that tariffs will directly dent revenue, and there’s good evidence that anything that dents revenue dents R&D spending. So much winning.
Another reader wrote in, referencing this Brookings tome on the impact of pharma tariffs, highlighting the fact that pharmacies may end up holding the bag — again — if generic drug prices spike.
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I mentioned yesterday the rumor that CMS would take 340B from HRSA, but I should have noted that this supposition isn’t exactly new: Adam Fein called this back in December. Just a quick AWA reminder. (AWA=”Always Watch Adam”)
QUICK TURNS/ Levity and Legislation Around Vertical Integration
PhRMA’s “middleman” campaign has a new ad. I find these commercials to be delightful. And they effectively harness what is probably a universally held skepticism about vertical integration in health care.
Speaking of opposition to vertical integration, Arkansas is one signature away from officially barring PBMs from running pharmacies in the state, per STAT’s coverage. I have no idea what implementation of that law will look like, but it’s going to be something to watch. (Assuming the bill gets signed, assuming lawsuits don’t derail it, etc.) Laboratory of democracy, indeed!
If you want to start your weekend on a cheery note, please don’t read this Axios newsletter on the current state of the pharmaceutical industry. Or, if you do, hold tight to Axios’ “Yes, but” argument that maybe biopharma has hit rock bottom: “That leaves a lot of space for lobbying, policy reversals or for things to simply turn out better than expected.” Calvin’s counterpoint.
Many people find my fundamental position on the obesity budget-impact conversation — that we, as a rich society, should be able to find the fiscal headroom to afford cost-effective interventions — to be frustrating/irritating/naive.
And yet every day brings more examples of out-and-out waste in the system that, if eliminated, could be the solution to the obesity-med conundrum. Today’s evidence: this fantastic NYT piece on how “skin substitutes” are costing Medicare $10 billion a year. That could pay for a lot of Zepbound.
Cost Curve is produced by Reid Strategic, a consultancy that helps companies and organizations in life sciences communicate more clearly and more loudly about issues of value, access, and pricing. We offer a range of services, from strategic planning to tactical execution, designed to shatter the complexity that hampers constructive conversations.
To learn more about how Reid Strategic can help you, email Brian Reid at brian@reidstrategic.com.
