Newsletter: California Inc.: The sky-high cost of specialty drugs
Welcome to California Inc., the weekly newsletter of the L.A. Times’ Business Section.
I'm Business columnist David Lazarus, and here's a rundown of upcoming stories this week and the highlights of last week.
Looking Ahead
Union election: The Writers Guild of America West will select a new president Monday to replace Chris Keyser. Keyser, creator of the TV series “Party of Five,” served two terms and is prohibited from seeking a third. Howard Rodman, the union’s current vice president, is squaring off against veteran TV writer Joan Meyerson.
Office 2016: Microsoft on Tuesday will release Office 2016 for Windows users, the newest version of its software suite that includes Word, Excel and PowerPoint. It boasts stronger collaboration tools and better online syncing so that creating, editing and sharing across different devices is smoother. Pricing was still up in the air late last week.
Healthcare mergers: Are mega-mergers in the health insurance industry good for Americans? A Congressional subcommittee will tackle that topic Tuesday in a hearing that will include the chief executives of insurers Aetna Inc. and Anthem Inc., each of which has a multibillion-dollar acquisition pending.
Virtual reality: Oculus VR, the virtual-reality technology company owned by Facebook Inc., will unveil some details Thursday on such long-awaited products as headsets, accessories, games and apps during a three-day developers’ conference in Hollywood.
Apple’s latest: The new iPhone 6S and 6S Plus will hit stores Friday, so expect to see fans of Apple products lining up to claim the latest gadgets. Demand for the 6S Plus through advance orders online have outstripped supply, and customers might have to wait up to four weeks to receive their shipment.
The Agenda
Today’s Business section delves into the murky world of high-priced specialty drugs. They may be effective at treating or even curing illnesses, but their cost can be stratospheric. Gilead’s hepatitis C drug, Harvoni, has a cure rate as high as 99% — and a price tag of nearly $100,000. Now, cholesterol drugs are costing more than 100 times the price of widely prescribed statins.
Story Lines
Here are some of the other stories that ran in the Times’ Business section in recent days that we’re continuing to follow:
Big VW recall: State and federal environmental regulators accused Volkswagen of cheating pollution testing with software that circumvented emission standards in nearly 500,000 recent VW and Audi diesel models. Regulators ordered the German automaker to recall the vehicles; VW faces a fine of about $18 billion.
No rate hike: Federal Reserve policymakers held a key interest rate near zero to give them time to assess the impact on the country of China’s weakened economy and recent market turmoil globally. The Fed is also worried about low inflation but noted the U.S. economy’s “solid job gains and declining unemployment.”
GM settlement: General Motors Co. will pay a $900-million fine to settle a federal criminal probe into why it failed to recall millions of defective vehicles equipped with a faulty ignition switch that has led to hundreds of deaths and injuries. GM avoided prosecution but admitted it “failed to disclose” a “lethal safety defect” and “misled consumers about the safety of GM cars with the defect.”
Unemployment rate: The California unemployment rate fell a tick to 6.1% in August, the lowest level since January 2008, and employers added a healthy 36,200 net new jobs. In the past year, the state has added 470,000 net new jobs, a pace of 3% annual growth. A year ago, the state unemployment rate was 7.4%.
Nagging poverty: A steadily growing job market and higher minimum-wage laws failed to reduce the nation's poverty rate last year or reverse the long-running trend of stagnating incomes for most American households. The Census Bureau’s annual figures on income and poverty came as a disappointing surprise to experts.
Beer buddies: Anheuser-Busch InBev said it approached rival SABMiller with a takeover offer, a deal that would combine the world’s two biggest brewers into a global beer behemoth. Each multinational firm makes more than 200 beers. The combined company would be valued at about $275 billion.
What We’re Reading
And some recent stories from other publications that caught our eye:
Hacking for Defense: California Sunday Magazine checks out a Pentagon project called Hacking for Defense, which is intended to help the military identify promising Silicon Valley technologies. In the past, such things were very hush-hush. These days, the next great military breakthrough could be sitting in someone’s garage.
Tax loophole: The New York Times acknowledges that Donald Trump recently “has done more to put a stake in the heart” of the carried interest tax loophole than the Obama administration has in the past six and a half years. The loophole gives the super-rich preferential tax treatment on much of their income.
Hurricane Carly: Mashable takes a swing at Republican candidate Carly Fiorina’s track record as former chief executive of Hewlett-Packard. She’s “widely regarded in Silicon Valley as one of the worst tech CEOs of all time,” the site says, calling her tenure at the helm “an unmitigated disaster" that helped propel the iconic HP "into a tailspin.”
The China connection: The Miami Herald turns its attention to the loosely regulated pipeline of synthetic drugs from China that “has created a new model for doing business in the digital age.” Gone are the old-school go-fast boats and drug “mules.” Tech-savvy dealers now use the trusty U.S. Postal Service or parcel shippers.
No refunds: The Economist casts a wary eye at the challenges airline passengers face getting refunds from carriers. As Ryanair boss Michael O'Leary put it: You're not getting a refund. ... We don't want to hear your sob stories. What part of ‘no refund’ don’t you understand?”
For the latest money news, go to www.latimes.com/business.
Until next time, I'll see you in the Business section.
