Bloomberg - Evening Briefing - Biden targets Big Pharma

The US has the highest drug prices in the world. So on Tuesday, the federal government took a first historic step to rein them in. Medicines made by massive pharmaceutical companies such as Bristol-Myers Squibb, Johnson & Johnson and Eli Lilly became the first targets of the White House’s campaign to leverage a new tool against the industry: the negotiating power of Medicare, the healthcare safety net for roughly 65 million senior citizens. For years, the government has been barred from bargaining over drug prices as the industry’s profits soared. But now, President Joe Biden’s sprawling Inflation Reduction Act has mandated that drug companies come to the table (though Big Pharma is of course suing to block the law). Litigation notwithstanding, the first group of drugs named by the administration includes Eliquis, the blockbuster blood thinner by Bristol-Myers and Pfizer and the costliest on Medicare’s list, accounting for $16 billion of spending in just one year. Other medications under scrutiny range from treatments for diabetes to leukemia. The US expects the law will result in prices being slashed by half, with the first cuts taking effect in 2026—if it withstands court challenge, that is. —Margaret Sutherlin

China’s economy has struggled to recover since its catastrophic reopening from Covid restrictions, a sudden move to lift precautions that likely killed millions as the economy buckled under crises in shadow banking, local debt and real estate. Now, China’s largest banks are preparing to cut interest rates on existing mortgages and deposits later this week, the latest measure to shore up growth. The move is part of a push by Chinese leader Xi Jinping to spur consumer spending, drive more funds into the stock market and alleviate pressure on lenders’ profit margins.

Kremlin leader Vladimir Putin is said to be planning a trip to China in October. It will be his first foreign trip since the International Criminal Court issued a warrant for his arrest for war crimes tied to his war on Ukraine. News of the visit comes as the US announces another $250 million in aid to Kyiv, which has said it is making slow progress in a counteroffensive in the nation’s southeast. 

Xi Jinping and Vladimir Putin Photographer: Pavel Byrkin/AFP

Cryptocurrencies were handed a major victory Tuesday, sending Bitcoin prices surging 7%. A three-judge panel of the US Court of Appeals in Washington overturned a decision by regulators to block Grayscale’s exchange-traded fund tied to Bitcoin’s price. The crypto industry, which has been under scrutiny by the US Securities and Exchange Commission, has long viewed the launch of an ETF based on the cryptocurrency itself—rather than futures—as a significant milestone. The ruling brings the nascent industry to the precipice of tapping billions of dollars from everyday investors.

The US housing market is a mess. As rates surge past 7%, deals are cooling fast—loan applications for purchases fell last week to their lowest level in almost three decades. Many buyers are nevertheless locking in rates now for fear of getting caught in the next upsurge. And tight inventory is bringing the opposite of what typically happens in a real estate downturn: Even as sales fall, prices are climbing.

US job openings fell more than expected, offering fresh evidence that labor demand is slowing down as the Federal Reserve aims for an economic soft landing. The falling number of openings has been key to Wall Street hopes that the US will gently touch down following more than a year of rate hikes that have gone a long way to tame inflation. Fed Chair Jerome Powell suggested last week that, should the labor market continue to loosen, inflation will continue its downward path. Here’s your markets wrap. 

Competition for top-tier talent in finance has hit a new extreme. Citadel is paying its interns over $19,000 a month, tapping math geniuses and coding whizzes to join its most elite program.

Florida’s west coast is bracing for Hurricane Idalia, which is expected to make landfall Wednesday as a Category 3 storm. Up to 15 feet of sea water could be pushed onshore north of Tampa and water in Tampa Bay could rise as much as 7 feet. A large swath of the state is under evacuation orders. 

Fort Myers Beach ahead of Hurricane Idalia’s landfall in Florida Photographer: Eva Marie Uzcategui/Bloomberg

• New York CEOs ask Biden to step in on the city’s migrant crisis.
• Meta says it removed a Chinese influence campaign from its platforms. 
• FBI took down a malware network that stole tens of millions of dollars.
• When should you start saving for retirement? By age 25. 
• Regulators weigh laws for salary transparency around promotions.
• The hot new employee benefit is student loan repayment programs. 
• What do you do with a 45-story skyscraper and no tenants?  

In July 2018, Muhammadu Buhari, the president of Nigeria at the time, boarded a gleaming new train linking the capital city, Abuja, with its airport. At the ribbon-cutting ceremony, Buhari hailed the system as “evidence that we are a government that delivers on its promises.” Five years later, that promise looks empty. Train cars are locked away at a depot. Cavernous stations fully equipped with escalators, ticket offices, cameras and scanners stand empty, overseen by bored security guards. So how did it all go so wrong? 

Tracks lay unused as the abandoned Idu Station in Abuja, Nigeria Photographer: William Clowes/Bloomberg Businessweek

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