💊 Pharma’s forced discount

…and big bank earnings, plus MrBeast deepfakes   Prescribing a plan (Jim Watson/Getty Images)   [Sponsored by]( Last Week’s Market Moves   Dow Jones 33,408 (-0.30%) S&P 500 4,309 (+0.48%) Nasdaq 13,431 (+1.60%) Bitcoin $27,993 (+4.04%) Dow Jones 33,408 (-0.30%) S&P 500 4,309 (+0.48%) Nasdaq 13,431 (+1.60%) Bitcoin $27,993 (+4.04%) Hey Snackers, We're closely watching the harrowing scenes coming out of Israel and Gaza. On Saturday, Hamas militants fired thousands of rockets at Israel and entered the country in a surprise attack, taking dozens of [hostages]( and leaving at least 700 Israelis dead. At least 400 Palestinians were killed as Israel launched counterstrikes on Gaza. President Biden pledged “rock solid” US support for Israel, sending military aid on Sunday. Oil prices spiked yesterday as the conflict unfolded. The S&P 500 (narrowly) snapped a four-week losing streak despite much-stronger-than-expected September job numbers, which spooked traders wary of more Fed rate hikes. This week, investors have eyes on the US consumer prices report for September. Btw... Do you want to start getting Snacks daily? Or prefer to unsubscribe? Manage your subscription preferences [here](. Rx As prescription costs soar, drugmakers agree to Biden’s negotiation plan — for now Uncle Sam’s ultimatum… Several pharma companies (reluctantly) [agreed]( last week to participate in the Biden admin’s Medicare price negotiation program. It would let Medicare negotiate discounts of up to 60% on numerous drugs. FYI: 65M Americans, most age 65+, are Medicare-enrolled. Ten initial blockbuster drugs (like diabetes and heart meds) have been chosen from the likes of Merck, Bristol-Myers Squibb, Johnson & Johnson, and Novo Nordisk. - Refresher: In June, Merck and Bristol-Myers sued the gov’t, arguing the Medicare policy is unconstitutional and could hurt research and revenues from top drugs (some make up a quarter of their annual sales). They’re not dropping the suits. - If companies fail to comply, they’ll be forced to pay a penalty of up to 95% of their drug’s US revenue or remove all their drugs from Medicare (the largest buyer of prescription drugs). Drugmakers say they had no real choice. Rx anxiety… Americans spend more on prescription drugs than anyone else in the world, partly because the US doesn’t directly regulate prices. 60% of adults take at least one prescription med, and while most costs are covered by private insurers or Medicare, nearly 28M Americans didn’t have insurance last year. And 9M adults said they skipped or delayed drug doses because of the cost (some drugs 6X’d in price last year). Medicare’s negotiations could save participants $800/year, on average, and save taxpayers $102B through 2031. - Still: The new prices aren’t expected to take effect till 2026, and drugmakers are likely to keep fighting (maybe even taking it to SCOTUS). THE TAKEAWAY Old problems need new solutions… Lawmakers have long fought against skyrocketing costs, and now retailers are seizing on demand for affordable meds. Amazon, Walmart, and Mark Cuban’s Cost Plus have entered the market with cheaper generics (picture: Amazon’s new $5/month RxPass). Blue Shield of California recently replaced CVS’s pharmacy benefit services with Amazon Pharmacy, Cost Plus Drugs, and others to lower its costs. Sponsored by Masterworks This asset class’s prices outpaced the S&P 500 by 136% (Now you can access it) It's true. Over the last 27 years, contemporary art had 136% higher price appreciation than stocks.* But you’re probably wondering: how is the average person supposed to access an asset class that has been the exclusive domain of the ultra-rich for centuries? The answer is [Masterworks]( an award-winning platform for investing in shares of multi-million dollar art. It’s amassed a nearly $1 billion collection including works from greats like Banksy, Basquiat, and Picasso. Over 800,000 people have already signed up. Best of all, Snacks readers can [skip the waitlist to join with this exclusive link](. Events Coming up this week Bond blues… JPMorgan Chase, Wells Fargo, and Citi are kicking off bank earnings. All three topped expectations in July, raking in a combined $22.3B in profits as interest income rose. But US 10-year Treasury yields have soared to 16-year highs, hurting the value of banks’ bond portfolios (bond prices fall when yields rise). US banks had $620B in unrealized losses on low-yield bonds last year. Meanwhile, investment-banking fees are at a decade low. Most of the top 20 US banks are expected to report lower Q3 earnings than last year. Dippin’ that crust… into AI-oli. Domino’s has leaned into tech (picture: ’za tracker) for years, and now the pizza powerhouse is teaming up with Microsoft to use AI algos for ordering and store operations. The slice slinger could use the boost: the cost of takeout rose faster than groceries in the past year, and consumers may be experiencing postpandemic pizza fatigue. In Q2, Domino’s reported higher profit but lower sales than last year. Analysts expect similar results on Thursday, but a new partnership with Uber Eats could whet more appetites. Sponsored by Ladder Fast, easy, and affordable life insurance in minutes. Helping protect your loved ones with affordable term life insurance has never been easier. Apply online in about 5 minutes through Ladder for smart coverage that can flex as your needs change. Ladder guarantees no medical exams on up to $3M in coverage, just health questions asked. [See your quote in seconds.**]( Zoom out Stories we’re watching $2.13/hour + tips… Chicago — foodie mecca (s/o “The Bear”) and the US’s third-largest city — approved a measure on Friday to phase out the subminimum wage for tipped workers. If you’ve never bussed a table in the dozens of states where sub-wages are a thing, they allow employers to pay tipped workers (like servers and bartenders) less than minimum wage. In 15 states, it means paying $2.13/hour. Pressure on cities and states to raise it has been mounting as tips fall from pandemic highs (see: tip fatigue). Imposter syndrome… AI deepfake scams had a moment last week, highlighting a threat that experts say could turbocharge online fraud (expected to hit $8T globally this year). Tom Hanks, Gayle King, and MrBeast all warned about AI-generated videos using their likenesses to promote shady products and contests. Meta and TikTok have policies against undisclosed deepfakes, but stopping scams before they spread is hard. US lawmakers questioned Meta and X last week over their plans to curb fakes ahead of next year’s presidential election. ICYMI Last week's highlights - [SBFTX]( Sam Bankman-Fried’s trial began, with the onetime billionaire facing fraud and money-laundering charges (SBF pleaded not guilty). The trial could help the crypto industry put the FTX scandal behind. - [Techy]( Oddity, the AI-obsessed company behind TikTok-popular makeup brand Il Makiage, said sales were up nearly 60% this year. Oddity says it’s a tech (not a beauty) platform, and tech sells. What else we're Snackin' - [Cut]( Walmart said customers on diabetes drugs like Ozempic and Wegovy are buying less food. The rise of appetite-suppressing meds could have ripple effects (7% of Americans are expected to be on such drugs by 2035). - [SoForYou]( Paramount put “Mean Girls” on TikTok in 23 clips. TikTokers were already posting full (pirated) movies, but critics say the platform gives studios a workaround to avoid paying writers and actors. Want your Snacks daily? The Daily Newsletter Get fresh takes on financial news every week day. Try a sample: 📦 [Uber’s un-delivery service]( • Oct 6, 2023 💊 [Kaiser’s historic strike]( • Oct 5, 2023 ⚖️ [SBF’s day in court]( • Oct 4, 2023 [Subscribe to the Daily]( Snack Fact Of the Day "Suits" was the most streamed show for the 12th straight week — a record [Read more]( This Week - Monday: Indigenous Peoples Day (bond market closed). IMF and World Bank annual meetings begin - Tuesday: Earnings expected from Pepsi - Wednesday: September Producer Price Index report - Thursday: September US consumer-inflation report. Earnings expected from Delta, Domino’s, and Walgreens - Friday: Earnings expected from BlackRock, Citigroup, PNC Financial, and Wells Fargo Authors of this Snacks own shares of: Amazon, CVS, Delta, Microsoft, Uber, and Walmart *Masterworks disclosure: Contemporary art is measured by the Repeat-Sale Pair Index of Post-War and Contemporary Art and All Art (as defined by the applicable auction house) using Standard & Poor's CoreLogic Case-Shiller Home Price Indices Methodology, inclusive of all applicable public auction sales with last sale occurring at Christie's, Sotheby's, or Phillips. Art sales price data and metrics are used for comparative modeling purposes only. Each painting is unique and historical price trends of a group of selected artwork is not a direct proxy for historical price performance of any specific painting or any investment in securities referenced. The data shown represents whole art and is not comparative of an investment into our offerings, which includes fees and expenses. Performance of exited investments is not representative of artwork that has not yet sold and past performance is not indicative of future results. This investment is speculative, illiquid, and involves a high degree of risk, including the possible loss of your entire investment. See important disclosures at masterworks.com/cd. **Ladder disclosure: Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers – for further details see [ladderlife.com](. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products. Coverage is not guaranteed for all applicants. 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