February/March 2023

the control freak's guide to life, money & probability

February/March 2023

12 | Obesity & the First $100 Billion Drug

An Eli Lilly medication is reportedly poised to shatter the record for pharmaceutical annual sales volume.

14 | Competition is Coming for AbbVie’s

Blockbuster Humira

It’s among the prohibitively expensive biologic pharmaceuticals being replaced by cheaper “biosimilar” copycats.

17

| Mark Cuban is Disrupting Drug Pricing

Mark Cuban Cost Plus Drug Company is selling prescription medications at dramatically lower prices than the competition.

18

| The Luckbox Roundtable

The nation’s newest retail drug impresario joins our expert panel to weigh in on the state of American pharma.

24 | ADHD Meds? You May Have to Wait

A shortage started with Adderall and spread to Ritalin. A government crackdown made it worse.

28 | Off-label, But Lucrative

Big pharma profits when doctors prescribe a drug for a disorder other than the one that earned FDA approval.

30 | The Myth of Drug Expiration Dates

There’s not necessarily anything scientific or magical about the dates printed on medications.

32 | Betting on Biotech Stocks

Active investors can navigate the boom or bust biotech sector with the help of strategies like C-suite buying, cash to value and cash flow.

trades&tactics

On the cover:

Illustration by Ian Murray mrmurray.co.uk

editor-in-chief ed mckinley

managing editors

yesenia duran, james melton associate editors

kendall polidori, navpreet dhillon editor at large garrett baldwin

technical editor

james blakeway

contributing editors

vonetta logan, tom preston, mike rechenthin

editorial assistant

anam vaziri

creative directors

tim hussey + gail snable contributing photographer

garrett roodbergen

editorial director

jeff joseph

comments, tips & story ideas feedback@luckboxmagazine.com

contributor’s guidelines, press releases & editorial inquiries editor@luckboxmagazine.com

subscriptions & service support@luckboxmagazine.com

media & business inquiries

associate publisher james melton jm@luckboxmagazine.com

publisher jeff joseph

jj@luckboxmagazine.com

Luckbox magazine, a tastylive publication, is published at 19 N. Sangamon, Chicago, IL 60607

Editorial offices: 312.761.4218

ISSN: 2689-5692

Printed at Lane Press in Vermont luckboxmagazine.com

Luckbox magazine @luckboxmag

2019 & 2020 Best New Magazine Folio Award for Custom Content

Luckbox Magazine content is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities and futures can involve high risk and the loss of any funds invested. Luckbox Magazine, a product provided by tastytrade, Inc. (which uses the brand name tastylive) does not provide investment or financial advice or make investment recommendations through its content, financial programming or otherwise. The information provided in Luckbox Magazine may not be appropriate for all individuals, and is provided without respect to any individual’s financial sophistication, financial situation, investing time horizon or risk tolerance. Luckbox Magazine and tastytrade, Inc. are not in the business of executing securities or futures transactions, nor do they direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Luckbox Magazine and tastytrade, Inc. are not licensed financial advisers, registered investment advisers, or registered broker-dealers. Options, futures and futures options are not suitable for all investors. Transaction costs (commissions and other fees) are important factors and should be considered when evaluating any securities or futures transaction or trade. For simplicity, the examples and illustrations in these articles may not include transaction costs. Nothing contained in this magazine constitutes a solicitation, recommendation, endorsement, promotion or offer by tastytrade, Inc., or any of its subsidiaries, affiliates or assigns. While Luckbox Magazine and tastytrade, Inc. believe that the information contained in Luckbox Magazine is reliable and make efforts to assure its accuracy, the publisher disclaims responsibility for opinions and representation of facts contained herein. Active investing is not easy, so be careful out there!

BAD PHARMA KARMA

The law of karma tells us our bad deeds catch up with us, and that certainly seems to apply to the pharmaceutical industry. It’s earned the public’s disdain by charging what many view as untenably high prices for prescription drugs.

The average cost of a year’s supply of the new medications the FDA approved last year would set a patient back $222,003, according to a report from the Reuters news wire. Tell that to the average American worker who makes $54,132 a year.

But those new drugs seem like a bargain compared to Zolgensma, a pharmaceutical that’s been around for a few years. Novartis (NVS) makes it to treat progressive spinal muscular atrophy, which is caused by a defective gene. It’s usually diagnosed in infants and toddlers and often proves fatal.

It’s perhaps a miracle that a single injection of Zolgensma can replace the functions of that bad gene and give a child a new start on life. But it might also take a miracle to raise the $2.1 million required to pay for that single shot.

Even insurance companies can have a hard time covering some pharmaceutical bills and sometimes resort to paying for a drug in annual installments spread over five years.

But you might argue that a lot of the cash flooding the coffers of pharmaceutical compa-

Thinking Inside the Luckbox

Luckbox

1

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nies flows right back out to pay for seemingly endless and financially risky research and testing. That’s true, yet Big Pharma also keeps a lot of the money.

During the years when drug manufacturers have the exclusive right to produce a new product, companies rake in an average of $18.6 billion, a figure that amounts to 10 times the typical development cost of $1.8 billion, according to AHIP, a health insurance trade group formerly called America’s Health Insurance Plans.

Those whopping margins help explain why Americans pay three times as much for prescription medicine as residents of other countries, says Protect Our Care, a group that lobbies the federal government for lower drug prices and wider access to healthcare.

Still, the differential can be even more dramatic. Sen. Bernie Sanders, D-VT., wrote in a Fox News opinion piece last month that he accompanied a busload of Americans to Canada, where they bought prescription drugs for a tenth of the U.S. price.

America’s Big Pharma apparently likes it that way because drug makers collectively spent a little more than $100 million last year to lobby government officials who wield the power to counteract high drug prices, according to Protect Our Care.

So given the high prices for prescriptions

and the big spending to protect those prices, it’s little wonder pharmaceutical companies aren’t wildly popular. In fact, Big Pharma ranked dead last in popularity among 25 industries in a Gallup poll from a couple of years ago. More recently, the federal government and gas companies have pushed Big Pharma out of the bottom position.

But things change. Downward pressure on drug prices is coming from two sources: government and the markets.

The Inflation Reduction Act of 2022 requires that Medicare negotiate the price it pays for some pharmaceuticals. It also caps insulin copays at $35.

Meanwhile, billionaire Mark Cuban is promising his fairly new online Mark Cuban Cost Plus Drugs Company will “eliminate the middleman” and spare customers the tribulation of what he calls “price games.” (Turn to p. 16 for more on CPD, including some hard-tobelieve prices.)

Cuban faces competition from Amazon’s (AMZN) new RXPass, which enables customers to add $5 a month to their Amazon Prime bill and in return receive supposedly unlimited access to 80 eligible generic prescription medications.

At any rate, it appears somebody can do something about an average annual price of $222,003 for new prescription drugs.

Ed McKinley Editor in Chief Jeff Joseph Editorial Director

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Your thoughts on this issue?

Please take the next reader poll at luckboxmagazine.com/survey

is dedicated to helping active investors achieve skill-derived, outlier results.

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Don’t rely on chance. Know your options because luck smiles upon the prepared.

OPEN OUTCRY

We asked Luckbox readers ... Did you or do you plan to have a flu shot this year?

Have you ever skipped a prescribed medication because of the cost?

Yes

Would you consider purchasing prescription medicine from an online source not sanctioned by the FDA if it decreased your cost?

Thank you for the story on Tony (The Master) Battista. On the tastylive network, Tony does a great job of explaining the strategy behind all of his Option Trades Today ideas. Even when I don’t put on these trades (usually because the price has moved against me), I still learn a lot from Tony’s discussions.

—James S., Lafayette, Louisiana

I appreciated the stories about the three traders at different skill levels. Thanks for your great work.

—Harald W., Wiesbaden, Germany

First off, I love this magazine. Keep up the good work. This is a great piece of work that I look forward to each month.

Based on last month’s (Trading Faces) issue, I was greatly anticipating reading about the guy (Son Dao, The Journeyman) who had the 150,000% gain. I have two questions.

First, this guy is gambling, correct? As a follower of tastylive mechanics, it seems that he is completely ignoring the “stay small” component. It was still a really fun read and hearing stories like this is entertaining to someone like me who has his emotional game under control. But, I feel like there should be a counter article talking about how this is an extreme outlier and most people could not tolerate these kinds of swings—both emotionally and without blowing up their account on a bad day.

SCAN THIS

How many doses of the COVID-19 vaccines have you received?

Second, it specifically mentions he sold Carvana (CVNA) puts. How did he not lose his shirt during this period using this strategy on this stock? Did you guys fact-check that? It seems nearly impossible this one would have been a successful strategy for him. But, the overall theme of the three personal stories (The Master, The Journeyman and The Apprentice) was an interesting and creative idea for this issue.

—Tony L., Aliso Viejo, California

Should companies rehire employees who were fired for failing to get a COVID-19 vaccination?

James Blakeway, Luckbox technical editor, replies: When Son Dao started with $1,600, he was taking large trades disproportionate to his account size—often risking more in percentage terms than many traders would be willing to hazard.

As his account grew, he pared back the size of trades relative to the account. The article detailed his current ideas on trade size as risk.

We also recounted his rollercoaster journey, highlighting several large losses and an extensive drawdown in his account. But, given that he risked no more than 3% of his account (via 2SD loss potentials), he was “trading small” in his own way.

Two

We vetted his trading history, reviewing each of his statements for the period documented in the article. Sure, Carvana has been obliterated, but it exhibited short periods of upswings. Dao accurately rode one of those uptrends around earnings.

The January 2023 Trading Faces issue, along with every previous edition of Luckbox, is available for free in digital format at getluckbox.com.

THE ISSUE WITH BIG PHARMA

$5.5 BILLION

Pharma ad-spending for the first six months of 2022

Videos tagged #ozempic have garnered 311 million views on TikTok, while #ozempicweightloss is at 125 million views and rising.

—Celebrity magazine The Kit

WHAT’S YOUR VIEW OF THE PHARMACEUTICAL

41.4 million

—Moderna CEO Stephan Bancel on why the company may charge $110 to $130 per dose for the COVID-19 vaccine in the U.S. when it shifts from government contracting to commercial distribution. The original vaccine cost $15 to $16 per dose in earlier supply contracts.

The number of Adderall prescriptions dispensed in the U.S. in 2021

“OBESITY IS A CHRONIC DISEASE THAT IMPACTS THE HEALTH OF NEARLY 100 MILLION AMERICANS AND IS A SIGNIFICANT DRIVER OF HEALTHCARE COSTS … MOST PATIENTS DON’T ACHIEVE THEIR DESIRED TREATMENT GOALS WITH ONLY DIET AND EXERCISE.”

—Mike Mason, president of Lilly Diabetes, a division of Eli Lilly & Co.

“Kardashian has never commented on it, but TikTok in particular is convinced that she’s been using a drug called Ozempic to induce rapid, extreme weight loss.”

“The whole pharma industry is intentionally distorted. And now it’s my turn to fuck them up.”

Mark Cuban, billionaire entrepreneur and co-founder of Cost Plus Drugs, during an interview last year with Axios.

“I would think this type of pricing is consistent with the value.”

1.2 BILLION

The number of people Pfizer plans to offer vaccines and medicine at not-for-cost

—Pfizer CEO Albert Bourla via a press release on Jan. 18, 2023 SEE PAGE 58

Global Bond Sales Off to Record Start of Nearly $600 Billion

—Bloomberg, January 2023 SEE PAGE 60

Bristol-Myers Squibb stock saw an 18% rise last year, far better than the broader S&P 500 Index, which was down 20%.

Forbes

“TICKETMASTER HAD THE TEMERITY TO IMPLY THAT THE DEBACLE INVOLVED IN PRE-TICKET SALES WAS TAYLOR SWIFT’S FAULT BECAUSE SHE WAS FAILING TO DO TOO MANY CONCERTS. MAY I SUGGEST RESPECTFULLY THAT TICKETMASTER OUGHT TO LOOK IN THE MIRROR AND SAY, ‘I’M THE PROBLEM, IT’S ME.’”

Sen. Richard Blumenthal, D-Conn., during a Jan. 24 hearing on the ticketing industry

12,807 feet

Granite Peak, the highest point in Bozeman, Montana

“It’s truly amazing that 2.4 million people got tickets, but it really pisses me off that a lot of them feel like they went through several bear attacks to get them.”

—Taylor Swift, Nov. 18, 2022

Oh, No, No, Ozempic

Ever wonder how prescription drugs got such weird names? Well, the explanation feels weirder still.

By Vonetta Logan

Cleaning my apartment with the TV on in the background, I’m caught up in a catchy bop sonically streaming into my living room. My hips shimmy as I move my Swiffer in time with the music. I casually sing along, “A1C…down with ReeBell-Susssssss.”

As I shower and get ready for work, I can’t get it out of my head: “A1Ceeeeeeee down with Ree-Bell-Suss.” As I make coffee at the office, a subtle vocal run of “Get down with Reybelsus!” reverberates in my cranium. Later, I make a request before I go to bed: “Alexa…play Down with Rybelsus.”

At least I’m not alone in my addiction to this YouTube video ad for a diabetes drug manufactured by Novo Nordisk (NVO). Look at the comments on the website. “Why is this such a catchy song?” one listener asked. “Just hearing this song kept my A1C down,” another testifies.

But don’t expect much company from overseas. Advertising drugs this way is legal only in The United States and New Zealand.

Dubious anniversary

In 2022, society reached the 25-year milestone of subjugation to non-stop pop anthems from drug manufacturers. Drugs literally are big business, and it all starts with the name.

So, for this special issue dedicated to all things pharma, Luckbox set out to discover why pharmaceutical names got so wonky and how the companies have crafted the names to get you to ask your doctor if one’s right for you.

To that end, we interviewed a man who deals names to drugs. He’s Jeremy Vannatta, former president of a company called Brand Institute, which is responsible for naming 75% of the drugs that make it to market.

Unlike pop icons like Cher, Madonna and Beyoncé, drugs have two names: a generic

These were the Top 5 best-selling drugs in 2021. Match the drug brand name and company to its generic name. Bonus points if you know which disorders the drug can counteract. (Answers on p. 39)

NAME GAME

Generic Name

(non-proprietary) one and a proprietary (brand name) one.

“There are a lot of rules about the non-proprietary name based on the chemical structure and the mechanism of action,” Vannatta says. “It will have an ending that’s predetermined by USAN (the U.S. Adopted Names Council, which selects names for generic drugs).”

The generic, or non-proprietary drug name, is what you might search for if you’re trying to find lower-cost options on a site like billionaire entrepreneur Mark Cuban’s Cost Plus Drugs. (See p. 17.)

For example, a “prazole” suffix indicates anti-ulcer agents or the presence of Italian comfort food. Vannatta and his team worked to come up with prefixes to add to these suffixes that would differentiate the drug’s name from others in that class. The Brand Institute then “workshops” the non-proprietary names with physicians.

“We would ask them, ‘Do you know any drugs that sound like this?’” Vannatta says. “We would ask them to write it, then show those handwriting samples to other doctors and we’d have them spell it out for us.”

Can you imagine the Dr. vs. Dr. handwriting challenge? “I need you to write out idarucizumab, ixabepilone and eszopiclone.” (Everyone dies.)

“You can launch a drug without a brand name, but you cannot launch a drug without a non-proprietary name because there’s no way to prescribe it,” Vannatta notes.

So, firms pay big bucks to get good names. The cost can range from $75,000 to $250,000 for a single drug name, according to Scott Piergrossi, vice president of creative development for the Brand Institute.

Big Pharma, big ad budgets

Once the non-proprietary name is approved, companies like the Brand Institute can start working on the brand names. Last year, Big Pharma spent $7 billion dollars on advertising

those precious names.

Pharmaceutical companies want innovative names that stand out so consumers can ask for them by name. They convene “nomenclature workshops” to figure out if the brand name should sound strong with lots of Xs and Ks and Zs, or if it should have soft, soothing Rs and Ss.

When contemplating names, Vannatta asks his team to think of mountain ranges, Greek mythology or art. Inspiration is everywhere, he maintains.

He also shares some of his favorite naming insights with me to see if I could guess what the drug name meant. “You know the drug Latisse?” he asks. I excitedly respond that I had heard of the eyelash lengthening drug when it went viral a few years ago. “The ‘La’ in Latisse

pimp” in Portuguese.

Drug namers also must walk a fine line between empowering patients (Do more with Dupixent!) and being flat-out promotional. You can’t name your drug for male impotence bonerriffic.

Ceftaroline, bum, bum, bum

“Nobody gave a rat’s ass what drugs were called before everyday consumers became their target,” Sandy Hingston writes in City Life, a column in Philadelphia Magazine which covers Philadelphia news. “No one was matching them up with 1970s pop songs, like Sonny and Cher’s The Beat Goes On (Novartis (NVS) heart drug Entresto) or the Jackson Five’s ABC (GlaxoSmithKline (GSK) allergy med Trelegy).”

Catchy brand names work, according to Steve Woloshin of the Center for Medicine and Media at Dartmouth Institute.

“They increase patient requests and prescriptions for advertised drugs, even when there are lower-cost alternatives,” Woloshin says.

Companies recognized this and started

is for lash, and the ‘tisse’ for the artist Henri Matisse,” he replies.

Vannatta then offers another anecdote, saying, “You know Premarin?” I laugh and respond, “Of course! Anyone with a menopausal mom knows!” Vannatta breaks down the name, saying the “P” is for pregnant (best after school special ever), “mare” is for horse and “in” is for horse urine. Yup. They make Premarin out of pregnant mare urine. How are we a global superpower? Our drugs are named after horse wee.

After the naming workshops, Brand Institute takes the names global. Remember, drug names must be universal worldwide. So, they ask physicians across the world to pronounce the brand name and to write it. The team also has to make sure their pretty new name doesn’t mean something terrible like “candy

dropping off wheelbarrows full of cash to their marketing departments. Compared to other types of healthcare companies, pharmaceutical manufacturers had the largest marketing budgets.

So, that leaves an American public that’s sick of pharmaceutical ads. But hey, they have a catchy beat and that part where they mention “anal leakage” gets drowned out by the montage of the lady running through the forest with her newly healthy lungs, or eyes or restless legs.

Don’t fall for a slick ad. Do your own research and see if there are lower-cost options. And if your erection lasts more than four hours … call me.

Vonetta Logan, a writer and comedian, appears daily on the tastylive network. @vonettalogan

They make Premarin out of pregnant mare urine— just as the name implies.

Catchy names prompt patients to request advertised prescription drugs instead of lower-cost alternatives.

An obesity medication

poised

shatter the record for pharmaceutical sales volume

BY ED MCKINLEY

The First $100 Billion Drug

prescription drug that combats obesity is expected to become the biggest-grossing pharmaceutical in history, ringing up five times the sales volume of its nearest competitor, an industry authority predicts.

“With modest patient penetration, we could see tirzepatide generating more than $100 billion in sales annually” for drug manufacturer Eli Lilly & Co. (LLY), says Bank of America analyst Geoffery Meacham.

That would dwarf the one-year record of $21 billion in sales that the anti-inflammatory drug Humira posted in 2021 for its maker, AbbVie (ABBV). But a tirzepatide juggernaut seems likely, partly because the medication could prove effective in the treatment of a number of maladies.

Lately, tirzepatide has been generating buzz and capturing headlines for its ability to address obesity. It’s expected to earn U.S. Food and Drug Administration (FDA) fast-track approval this summer for treating that condition.

Yet the drug’s not as new as its pending certification might make it seem. Lilly received a patent for it in 2016, and it won FDA approval a year ago as a treatment for Type 2 diabetes.

Plus, a string of additional FDA approvals may extend far into the future and contribute to its projected record-breaking sales volume. Someday soon, the drug may earn certification for liver problems, sleep apnea, kidney disease and heart failure.

Let’s look first at tirzepatide for weight loss, the application of the drug that was lighting up the internet as Luckbox went to press.

TREATING OBESITY

Tests show tirzepatide affects two parts of the brain where hunger resides. Other weight-loss drugs that have recently won FDA approval can influence just one part of the brain, multiple sources say.

Tirzepatide works by curbing appetite, according to Lilly, the Indianapolis-based industry giant that developed the medication. The drug makes recipients feel full

sooner, encouraging them to eat less and thus lose weight. It also improves control of blood sugar, a Lilly report says.

In a clinical trial of the drug, participants lost up to 22.5% of their body weight or 52 pounds, the maker says. Viewed another way, 63% of the test subjects shed at least 20% of their weight. Average weight loss was 16% or 35 pounds in a 72-week trial that included 2,539 participants, and 89% lost at least 5%.

An overweight nation may welcome those results. The United States ranks near the top in obesity among developed countries. About 42% of American adults suffer from the disease, up from 10% in the 1950s, according to the Centers for Disease Control and Prevention.

Obesity becomes more prevalent as higher income enables the population to consume high-calorie foods and lead more sedentary lives. At the same time, doctors consider the condition a disease that results from the brain’s survival instinct.

Together, health problems related to obesity and less severe but still significant weight problems claim the lives of about 325,000 Americans annually, says the National Institutes of Health (NIH). That makes being overweight the No. 2 cause of preventable death in the United States, second only to using tobacco, the NIH says.

Although tirzepatide could forestall some of those deaths and ease much of the associated suffering, the drug still doesn’t qualify as a panacea.

THE TIRZEPATIDE DOWNSIDE

Like so many pharmaceuticals, tirzepatide can produce unwanted or even dangerous physical reactions.

Common side effects—the ones patients most often experience—include indigestion, constipation, decreased appetite, nausea, vomiting, diarrhea and intense abdominal pain, according to WebMD, a site for the healthcare profession.

Infrequent side effects listed on the website—which tend to be more severe but more unusual than common side effects—are gas, burping, abdominal bloating, skin reactions at the site of the injection and gastroesophageal reflux disease.

Rare yet severe side effects include gallstones, hypersensitivity and decreased kidney function.

is reportedly

to

The drawbacks don’t end with undesirable physical issues. Tirzepatide can also come with what some would consider a prohibitively high price tag.

COSTLY TREATMENT

Four weekly doses of tirzepatide cost $974.33, which adds up to around $12,666 annually, the Medscape website says.

Help with those bills may or may not be forthcoming.

Some insurance companies have declared weight loss a matter of vanity and may not cover drugs that address the disease, Pharmacy Times reports.

Medicare covers some approaches to dealing with obesity, like behavioral therapy, but doesn’t pick up the bill for anti-obesity drugs, according to the National Council on Aging.

A 5-foot-10-inch male should weigh between 133 and 168 pounds with a body mass index of 18.5 to 24.9, according to the Centers for Disease Control. We asked our readers to use the CDC’s Body Mass Index calculator to determine their BMI and then we compared the results with a CDC study. Here’s what we found:

Critics Question Alzheimer’s Research

Pharmaceutical companies are inundating the market with drugs meant to slow the progress of memory-robbing Alzheimer’s disease, but skeptics insist they’re taking the wrong approach.

Most researchers study the effects of prescription drugs on brain-clogging amyloid plaque, says Joanne Silberner, a National Public Radio correspondent and veteran of the medical beat. She claims they’re squandering time and resources.

The problem is some of the nation’s 6.5 million Alzheimer’s victims don’t have a buildup of that plaque, and some people who have the plaque aren’t subject to Alzheimer’s symptoms, Silberner says in an article on The Free Press website.

Medicaid pays for pharmaceuticals that target obesity under the programs in some states, but not others, says the Journal of the American Medical Association.

Some patients might need to take the medicine as long as they live, so for them the cost would never cease.

And even after raising the funds to finance tirzepatide, some patients may find it daunting to inject the drug themselves at home.

Some experience such intense anxiety at the prospect that they forego their medication, Amber Specialty Pharmacy notes on its website.

What’s more, taking a weight-loss medication for an indefinite period could distract patients from the need to control their weight by exercising and eating properly, some doctors say.

Meanwhile, some consumers have already embarked upon a tirzepatide regimen for weight loss, even though the FDA hasn’t approved it for that.

That’s because many doctors are already prescribing it off-label for shedding pounds, The Washington Post reports. The term “off-label” refers to the fairly common practice of ordering a medication that’s FDA-approved for some other ailment. (See p. 28.)

Yet anyone who raises doubts about focusing on plaque is quickly shut down and marginalized, she says in the story. They’re repudiated despite what they view as decades of painfully slow progress against Alzheimer’s.

One of the Alzheimer drugs generating publicity these days goes by the generic name lecanemab and is marketed as Leqembi by two companies, Tokyobased Eisai (ESALY) and Biogen (BIIB), which has headquarters in Cambridge, Massachusetts.

THE SPECTER OF SCARCITY

Prescribing tirzepatide for losing weight seems certain to be a factor in a shortage of the drug for diabetes patients. It’s marketed to fight diabetes under the brand name Mounjaro, and the FDA has added it to the lists of pharmaceuticals in short supply.

Moreover, the demand for tirzepatide could become even greater if it wins the FDA’s blessing for treating a laundry list of series conditions—something Bank of America analyst Geoff Meacham says he fully expects.

So, it becomes a matter of ramping up production to fill all the orders along the way to becoming the first $100 billion pharmaceutical.

In an 18-month test of 1,795 people in the early stages of Alzheimers, interviews and brain scans showed Leqembi slowed cognitive decline by 27%, the manufacturers say. That’s not enough for the skeptics, but it satisfied the U.S. Food and Drug Administration, which granted the drug accelerated approval in January.

Leqembi could post $6.5 billion in sales by 2030, according to a Bank of America report. The cost of a dose every two weeks comes to $26,500 a year, Eisai officials say.

IN A 72-WEEK CLINICAL TRIAL OF TIRZEPATIDE, 63% OF THE 2,539 TEST SUBJECTS SHED AT LEAST 20% OF THEIR WEIGHT. AVERAGE WEIGHT LOSS WAS 16% OR 35 POUNDS.

–

Readers –CDC Data

Competition Coming for AbbVie’s Blockbuster Humira

copycats

BY ANDREW PROCHNOW

orldwide sales of Humira have totaled $200 billion in the last 20 years— just about the biggest haul in the history of prescription drugs. The bonanza was predicated on charging as much as $84,000 for a year’s supply.

But price relief is on the way for patients who need Humira, a product made by AbbVie (ABBV) to combat conditions ranging from arthritis and psoriasis to Crohn’s disease and ulcerative colitis.

They won’t be paying as much for their medication because Humira belongs to a class of high-priced pharmaceuticals known as biologics, which drug companies are replacing with cheaper substitutes.

The stand-ins, called biosimilars, cost an average of 27% less than the originals they mimic, according to the National Institutes of Health, a government research agency. The savings mount up because of the sky-high cost of biologics. Unlike most pharmaceuticals, which are synthetic, biologic drugs are produced or extracted from humans, animals, plants or bacteria. Biosimilar drugs resemble their reference drug (i.e., the brand-name biologic) in structure and function, but they’re not exact copies.

The relationship between biologics and biosimilars approximates the connection between brand-name synthetic drugs and their generic substitutes.

HERE COME THE BIOSIMILARS

Three factors are converging to cause the switch from biologics to biosimilars: Biologic patents are expiring, biosimilar makers are suing biologic companies and the government has taken action to lower drug prices.

Adalimumab, the biologic often sold under the brand name Humira, provides a classic example of biosimilars’ downward pressure on prices, and shows how it came about.

The patent on Humira doesn’t expire until 2034, but competition’s about to heat up because of litigation brought by biosimilar makers and because the Affordable Care Act of 2010 provides an easier path for biosimilars to win U.S. Food and Drug Administration (FDA) approval.

A biosimilar version of Humira was scheduled to begin reaching the market in January, the GoodRX Health website says. As many as seven other substitutes could become available in the second half of this year. But what’s up with these copycats?

BIOLOGICS AND BIOSIMILARS

Because they’re biological, biologics vary more than synthesized pharmaceuticals in form, function or efficacy. As biological entities, biologics are also more sensitive than synthetic drugs to environmental conditions during production, storage and use.

It’s among the prohibitively expensive biologic pharmaceuticals being replaced by cheaper “biosimilar”

NUMBER OF SMALL MOLECULES AND BIOLOGICS APPROVED AS NEW MOLECULAR ENTITIES BY FDA’S CENTER FOR DRUG EVALUATION AND RESEARCH (2017-2021)

To accommodate those differences, regulators subject biologics and biosimilars to stricter standards than synthesized pharmaceuticals.

Approved substitutes for traditional synthetic pharmaceuticals go by the name “generics.” While biosimilars can pinch hit for biologics, they’re not the same as generics, notes Brandon Shank, a clinical pharmacy specialist at the University of Texas MD Anderson Cancer Center.

“Generic products are simple molecules, while biosimilars are large proteins or macromolecules, so they are different in their structure and how they are produced,” Shank told ASH Clinical News.

To earn the biosimilar designation, a drug must be safe, effective and work in much the same way as the brand-name reference drug. And, like generics, biosimilars are more affordable than the drugs they replace.

However, generic medications typically cost up to 85% less than their brand-name equivalents, quite a bit less than the average 27% difference between biologics and their biosimilar replacements.

Yet because biologics qualify for the specialty drug class of medications that cost more than $1,000 a month, any reduction in price becomes meaningful. Increased market penetration of biosimilars can help rein in the expense.

The jaw-dropping $7,000 monthly cost of Humira, for example, shows why specialty drugs account for only 2% of prescriptions in the United States but nearly 50% of total drug revenue.

THE BIOSIMILARS MARKET

Biosimilars have been available in Europe for nearly 15 years but have been used on a limited basis in the U.S. for about seven years. The FDA has approved 621 biologics, and 40 of them have associated biosimilars on the market.

Besides adalimumab (aka Humira), biosimilars that are available include the nearly unpronounceable lineup of bevacizumab, epoetin alfa, etanercept, filgrastim, infliximab, insulin glargine, pegfilgrastim, ranibizumab, rituximab and trastuzumab.

In addition to AbbVie, the world’s top manufacturers of biologics in terms of annual sales include Amgen (AMGN), Bristol-Myers Squibb (BMY), GSK (GSK), Johnson & Johnson (JNJ), Merck (MRK), Novartis

What’s a Biosimilar?

Biosimilars, less-expensive copies of biologic drugs, must match the originals in safety and effectiveness to earn U.S. Food and Drug Administration approval.

Biosimilars are safe and effective biologic medications for treating many conditions, including

CANCER

KIDNEY DISEASE

DIABETES

PSORIAIS

CROHN’S DISEASE

The seven drug makers expected to begin offering biosimilar versions of Humira in the coming months will be selling copies of adalimumab, the active ingredient. The companies are Amgen (AMGN), Organon (OGN), Coherus (CHRS), the Sandoz Division of Novartis (NVS), Pfizer (PFE), Viatris (VTRS) and privately held Boehringer Ingelheim.

Three more manufacturers may join them next year—Alvotech (ALVO), Fresenius (FMS) and privately held Celltrion.

ARTHRITIS

MACULAR DEGENERATION

MACULAR EDEMA

COLITIS

(NVS), Novo Nordisk (NVO), Ono Pharmaceutical (OPHLY), Pfizer (PFE), Regeneron (REGN), Roche (RHHBY), Sanofi (SNY) and Teva (TEVA).

So-called middlemen that negotiate prices and distribute biosimilars— including healthcare and insurance provider Cigna (CI) and CVS Health (CVS), the drugstore chain and insurer—also stand to benefit financially from the proliferation of the substitute pharmaceuticals, The Wall Street Journal says.

Consumers win, too. Lower prices inevitably make cutting-edge treatments more widely available, observes Steven Newmark, chief legal officer for the Global Healthy Living Foundation.

“With so many biosimilars coming on to the market, we hope it signals a sea change that biosimilars will finally live up to their intended purpose of providing effective, safe treatment at a more affordable cost in the coming years,” Newmark told Healio Rheumatology, a healthcare publication.

Andrew Prochnow, a longtime options trader, has contributed articles to Luckbox, Bleacher Report, Yahoo! Sports and other publications.

COSTLY “SPECIALTY DRUGS” ACCOUNT FOR ONLY 2% OF PRESCRIPTIONS IN THE UNITED STATES BUT NEARLY 50% OF TOTAL DRUG REVENUE.

THE BILL FOR A YEAR’S SUPPLY OF THE PRESCRIPTION DRUG HUMIRA CAN COME TO $84,000.

LUCKBOX LEANS IN WITH

Mark Cuban

Cost Plus Drugs Company is selling prescription medications at dramatically low prices

BY JAMES MELTON

hat would happen if drug pricing made sense to consumers?

Mark Cuban Cost Plus Drug Company, which launched its online pharmacy about a year ago, is trying to answer that question. Its approach is easy to understand—even if it’s difficult to implement.

First, CPD negotiates directly with manufacturers to get the best possible price. It adds a 15% markup based on the per-pill price that CPD pays to buy the medicines. Then, CPD adds a flat $3 pharmacy labor fee and $5 standard shipping to get to the total retail price.

Cuban believes strongly in CPD’s mission and business model. Among his many ventures, this is the first company to bear his name.

“I wanted everyone to know I was fully committed to taking on the incumbents in the pharmaceutical industry,” Cuban told Luckbox.

Under its model, the company says, prices to consumers can fall dramatically. For example, a 30-count supply of 400mg imatinib, a cancer drug sold under the brand names Gleevec and Glivec, costs $39 through CPD. That compares to as much as $9,657.30 else-

where, the company says.

Besides transparency, CPD offers a social mission. The operation is a public benefit corporation set up to generate social and public good while also making a profit.

CPD has more than 1,000 SKUs in its inventory and adds new ones constantly. On Dec. 20, the company announced on social media the addition of 10 new drugs. And on Jan. 6, it announced six more.

“We hopefully will grow to more than 5 million accounts and save people hundreds of millions of dollars—if not more,” Cuban said.

He maintained that CPD will have “a huge impact on not just generics, but also brand drugs pricing” in 2023.

A Maverick’s Milestones

1983

Cuban forms MicroSolutions with Martin Woodall.

1990 CompuServe buys MicroSolutions for $6 million.

1995

Cuban and Todd Wagner found Broadcast.com.

1998 Broadcast.com goes public.

1999 Yahoo! purchases Broadcast.com for $5.6 billion.

2000

Cuban buys the Dallas Mavericks pro basketball team for $285 million.

2011

The Mavericks become NBA World Champions.

2011

Cuban begins appearing on ABC’s Shark Tank

2022

Cuban and Alex Oshmyansky launch Cost Plus Drugs online pharmacy, Capital Blue Cross becomes the first health plan in the nation to collaborate with CPD, and CPD partners with pharmacy benefits manager EmsanaRx.

–Sources: Bloomberg Billionaires Index, MarkCubanCompanies.com, MCCPDC press releases

TWO QUESTIONS (OFF-TOPIC)

Of all your investments on ABC’s Shark Tank show, you lost the most money on the Breathometer—a device that used a smartphone to measure blood alcohol. What was your biggest success on the show?

I have a bunch. I was just visiting with BeatBox Beverages [which sells ready-to-drink cocktails in single-serve boxes]. I invested $1 million dollars at a $3 million valuation They just raised it to a $199 million valuation and are crushing it! [BeatBox Beverages had only $350,000 in sales before appearing on Shark Tank in October 2014. Since then, the company has surpassed $57 million in revenue.]

Are you open to running for public office? No chance!

How Cost Plus Drugs Sets Prices

Here’s an example from the Cost Plus Drugs (CPD) website: CPD’s’ cost per-pill is 2.4568 cents. The company multiplies that number times 0.15 to determine a mark-up of 0.036852 cents per pill—and rounds up to the nearest cent.

In this example, the total per-pill price would be 2¢, plus 1¢, equaling 3¢.

The company multiplies the per-pill total by the number of pills in your prescription. It then applies the pharmacy and shipping fees, which adds another $8

In this case, a 90-pill prescription would cost: (3¢ x 90) + $3 + $5 = $10.70.

BY JAMES MELTON & JEFF JOSEPH

The Luckbox Roundtable

PANELISTS

CHIEF OF THE DIVISION OF HEMATOLOGY, SYLVESTER COMPREHENSIVE CANCER CENTER AT THE UNIVERSITY OF MIAMI MILLER SCHOOL OF MEDICINE. AUTHOR OF DRUGS AND THE FDA: SAFETY, EFFICACY, AND THE PUBLIC’S TRUST.

ENTREPRENEUR, VENTURE CAPITALIST, TELEVISION PERSONALITY, OWNER OF THE DALLAS MAVERICKS AND INVESTOR IN MARK CUBAN COST PLUS DRUG COMPANY.

//LUCKBOX: Only 25% of Americans view of the pharmaceutical industry favorably. What’s the biggest problem?

PROFESSOR OF EPIDEMIOLOGY AND MEDICINE AT JOHNS HOPKINS BLOOMBERG SCHOOL OF PUBLIC HEALTH WHERE HE SERVES AS CODIRECTOR OF THE CENTER FOR DRUG SAFETY AND EFFECTIVENESS.

POSNER: It’s remarkable that positive ratings for pharma are declining after it came to the rescue on COVID-19 by developing lifesaving vaccines and therapeutics in record time. There’s no question the pharma industry stepped up to the plate when it was most necessary during the pandemic. Pharma has gotten a lot of bad press over the last few years over the opioid crisis and deserved it in many cases. If you ask the average person what they think about drug pricing, most will have heard about insulin prices. They’ve read an article saying insulin is too expensive and somebody is not eating the right food because of the cost.

INVESTIGATIVE JOURNALIST AND AUTHOR OF 13 BOOKS, INCLUDING PHARMA: GREED, LIES, AND THE POISONING OF AMERICA.

CUBAN: Lack of transparency and trust. No one understands how prices are set and why prices always go up. That’s going to upset everyone and is why we made cost plus drugs transparent.

SEKERES: During the pandemic we saw science, drug development and regulatory science unfold in real time. But a lot of people in this country also saw

Mark Cuban, the nation’s newest retail drug impresario, joins our expert panel to weigh in on the state of American pharma. Here’s what our panelists say lies ahead. (Luckbox lightly edited the responses for brevity and clarity.)

Dr. Caleb Alexander

Dr. Mikkael Sekeres

Gerald Posner

Mark Cuban

science is not always a linear process. And we saw information that was wrong communicated about COVID. I remember how much time we spent washing our hands when COVID was just breaking, not realizing the importance of masking. And then you had frequent vaccines rolled out, and they were free. More recently, you’ve heard that the government isn’t going to subsidize this anymore. People are going to have to pay for it.

ALEXANDER: On the one hand, we continue to see enormous innovation within the industry and remarkable scientific breakthroughs brought to market. On the other hand, millions of Americans are burdened and, in some cases, devastated by the cost of prescription drugs. The modern pharmaceutical industry is a mixed bag. We have remarkable breakthroughs and scientific innovations. But for every blockbuster, plenty of other products are marginal innovations at best.

Government officials and executives at Twitter may have suppressed the Great Barrington Declaration (GBD), an open letter signed by scientists harboring “grave concerns” about COVID-19 lockdowns. Assuming that happened, was it harmful?

the public airing of those disagreements is fine. Even during the pandemic, you’re going to get the experts at the government level at the FDA and others saying, ‘this is what we’ve decided, and this is what we’re going to do. And that’s what really matters.’ But it’s unfortunate that the Twitter files show the public had a right to have that information out there.

ALEXANDER: Unfortunately, we’ve learned the hard way that we were not as well prepared for COVID-19 as we should have been—as a country and as a society. There are a lot of lessons to learn from the pandemic, not the least of which is the threat misinformation poses to public health. Information and misinformation have been weaponized and used for political purposes or other purposes contrary to public health. If there’s one thing that we can learn from the pandemic, it’s the importance of investing in our public health system to ensure a more rapid, coordinated, and robust response to the next pandemic.

SEKERES: The basis for our understanding of science and the development of new therapies is transparency,

Looking Askance at Big Pharma

Luckbox asked readers for their view of each of the following sectors ...

CUBAN: If information were suppressed, no one would have known about GBD. Everyone who supports GBD has a Substack account and a YouTube channel. All of them appeared on Fox and every other supportive platform—all of which reach more people than Twitter. What Twitter did by taking requests from the Trump administration and then Biden was a non-event.

POSNER: Censoring any group because you think that’s not the ‘truth’ at the moment when you’re not doctors—which they weren’t at Twitter —boy, that’s fraught with problems. If you want to make some idea go viral as a conspiracy theory—I’m telling you as someone who studied conspiracy theories—then tell one group they can’t have something. And that will be the one everyone thinks was the truth. So, it was problematic on so many levels. It’s unfortunate because

communication and vetting ideas. If I submit an article to a scientific journal, it will undergo external review, where people will comment on it. Increasingly, scientists put their findings online and open them up to public comment before sending something to a journal. So, the basis of science is transparency, feedback from colleagues and eventually arriving at a source of truth. So, any censorship of that is ultimately going to hurt science.

What did we learn from

Operation

Warp Speed that might apply to the development of other vaccines?

“NO ONE UNDERSTANDS HOW PRICES ARE SET AND WHY PRICES ALWAYS GO UP. THAT’S GOING TO UPSET EVERYONE AND IS WHY WE MADE COST PLUS DRUGS TRANSPARENT.”

– Mark Cuban

ALEXANDER: When there is the right political will, and the forces are properly aligned, we can bring tremendous innovations to market and do so much more quickly than historically has been the case. There were many efforts by many individuals and organizations—and parts of the federal government—that allowed vaccine development to progress at the speed that it did. The speed with which the COVID vaccines were developed—and their remarkable safety and effectiveness—reflects what’s possible when there is the right momentum and alignment across many, many parties. So, that’s the main take-home for me. The whole drug development framework should take a close look at the achievements that were possible.

SEKERES: We learned the FDA could move quickly if adequately resourced. The FDA needs the resources to bring every drug for life-threatening diseases to market within a year. Similarly, we provided enormous government resources to some of the manufacturers of these vaccines to get the trials up and running. You had motivated medical centers and a motivated public enroll in these trials very quickly to get an answer.

POSNER: I would hope some lessons were learned and could be implemented into the future operating procedures. But I am a pessimist about that. The system responds best and fastest to a crisis. There’s nothing that could have made the FDA operate better than it did. Like everyone in Washington, the FDA responds to public pressure. And the pharma companies know that very well. That’s why they have mastered the art of creating patient advocacy groups for specific diseases. They find the most vulnerable of those patients to go to Capitol Hill and testify before Congress. Then Congress asks the FDA why aren’t [they] approving these drugs, and two months later something comes out.

President Biden has announced a “Cancer Moonshot” aimed at rebooting an Obama-era initiative to slice the cancer death rate in half within 25 years while improving the lives of cancer victims.

There have been some wildly effective drugs that have been approved under FDA’s accelerated mechanism [launched in 1992]. In the 1980s and 1990s people diagnosed with chronic myeloid leukemia—a cancer caused by a specific genetic mutation known as the “Philadelphia chromosome”—could expect to live, on average, for about three years after their diagnosis. Then the drug imatinib (brand name Gleevec) … was discovered and tested in 532 CML [Chronic myelogenous leukemia] patients … Almost all patients enrolled in the trial had a complete remission from their leukemia, and in almost one-third the Philadelphia chromosome—the root of all evil in CML—was eradicated.

—Excerpted from Drugs and the FDA: Safety, Efficacy, and the Public’s Trust by Dr. Mikkael Sekeres. Reprinted with permission from The MIT Press. ©2023.

“FDA CAN MOVE QUICKLY, IF ADEQUATELY RESOURCED. BUT THE FDA ISN’T ADEQUATELY RESOURCED TO BRING EVERY DRUG FOR LIFE-THREATENING DISEASE TO MARKET WITHIN A YEAR.”

– Mikkael Sekeres

25%

Of Americans had a favorable view of the pharmaceutical industry in 2022, down from 31% a year earlier.

–Gallup

SEKERES: Increasingly, we’re recognizing that cancer represents thousands of diagnoses. Leukemia, for example, isn’t just one thing. It’s dozens or hundreds of diagnoses of leukemia. So, within those narrower and narrower subtypes, yes, we are going to cure some people. But are we going to eliminate cancer as we know it in 25 years? No. One big reason is that is, during the pandemic, a third of the workforce for conducting clinical trials left as part of the great resignation. It will be hard to cure cancer with a third of resources to support clinical trials gone.

POSNER: Biden’s goal is admirable. The problem is that the idea of curing cancer or slashing rates by half is an over-promise made by every president since Richard Nixon declared a ‘war on cancer’ in 1971. The moonshot metaphor, which Biden has relied upon for six years, is simply the latest in fifty years of presidents talking tough about cancer. Nixon was the first to use that moonshot symbolism. The problem is that the moonshot metaphor is too simplistic and creates unrealistic expectations for many patients. As Mikkael points out, medical researchers realized over time that cancer was a far more complex disease with many variations. There would be no single cure but the battle against it would be more nuanced and take much longer, with some victories and plenty of setbacks.

The fees pharmaceutical companies pay to expedite FDA approval of their new drugs are said to provide 50% to 75% of the agency’s drug review budget. Does that threaten the FDA’s independence?

CUBAN: I don’t think the FDA inherently plays favor ites. They know they are responsible for saving lives and no one at the FDA gains financially from their decisions. The challenge is the optics of it. There will always be people who criticize the economics of the pharma business. But that’s the reality of how we do things in the U.S. We don’t want to pay more in taxes, so we find other sources of revenue for our agencies.

POSNER: There’s no quid pro quo because of these expedited fees. Does that constrain FDA’s enforcement ability? It is possible to be an aggressive regulator and enforce the rules, notwithstanding where the funding comes from. As an investigative reporter, I’d prefer in a perfect world that half of the budget didn’t come from the industry you’re regulating. But if you take away that funding, someone must give more money to the FDA, and no one wants to do that.

ALEXANDER: The FDA typically does remarkably good work. It has many different mechanisms to keep industry at arm’s length. But there are also many cases where regulators failed to do so. It creates concern about the perception of conflicts of interest. It’s a complex issue. It’s not a plain vanilla matter. The federal government has yet to step up and say, ‘We want to provide this money so you don’t have to rely upon user fees.’

SEKERES: In the history of the FDA, some people were fired because they had conflicts of interest. However, in my interactions with the FDA, I met a dedicated team who wanted to do the right thing and thought about the public’s safety all the time. The only way to resolve this potential conflict of interest is adequate funding from Congress to the FDA.

Does the drug approval process need improvement? If so, how?

POSNER: The FDA is underfunded and overmatched. I’ve spoken to people working in different divisions in the FDA over the last few years—and this is pre-COVID—and they were drowning. They were trying their best to keep their heads above water. And they’re earning a government salary. They say somebody in the private sector often tempts them with two to three times the salary to jump out. And so, some of the best people are leaving while others stay. Do they need a larger budget? Absolutely. Yes.

“THERE ARE A LOT OF LESSONS TO LEARN FROM THE PANDEMIC, NOT THE LEAST OF WHICH IS THE THREAT THAT MISINFORMATION POSES TO PUBLIC HEALTH.”

– Caleb Alexander

ALEXANDER: On the one hand, the United States is at the front of the pack in innovation in the pharmaceutical marketplace. But enormous inefficiencies, costly delays and, in some cases, inadequate safeguards exist. There are reasons to look at what was done during the pandemic, learn from that, and further improve and refine our drug development system.

SEKERES: People who are in clinical trials can trust that they are receiving—at the very least—the standard of care for their condition. And researchers conduct trials safely and with a lot of oversight. There’s not any other country that does that better than we do. However, to get that sort of oversight, pharmaceutical companies often contract out the supervision of clinical trials to groups called contract research organizations, or CROs. There’s a perverse incentive in that the CROs’ bill is based on how much work they do. We have essentially incentivized them to put more regulatory infrastructure into trials. So, how we conduct clinical trials here in the U.S. is safe, but oversight has gotten out of control to the point where the clinical trials have become very costly, laborious and take a long time to complete.

What should the U.S. do to make drugs more accessible and affordable?

SEKERES: One thing that’s done differently in Europe is regulatory agencies consider costs at the same time they’re considering approval. And if they’re not getting enough bang for their buck—if a drug isn’t prolonging survival in a meaningful way—they’re going to say, ‘Nope, we’re not going to pay a lot for that drug.’

What are your thoughts on Mark Cuban’s new Cost Plus Drugs platform?

ALEXANDER: We need innovation in pharmaceutical pricing. A lot of good ideas have been put on the table about how to lower drug prices. But unfortunately, there has yet to be the political will to adopt policies that get this done. [Cuban’s initiative] is a very important step. And I think the transparency of his model has broad appeal.

42%

Of Americans bought medications online in 2021, up from 35% the previous year.

POSNER: To use a very hackneyed expression, critics of the industry say what is needed is out-of-the-box thinking. And Cuban has done that. There’s no question he’s taken a model that he thinks will keep prices competitively low for patients and, at the same time, be profitable enough to run as a business. Now, it sounds simple when you think of its essence, but it’s not. If it were simple, everybody would be doing it. But I think that if anybody can do this, it’s a person like Cuban.

CUBAN: More transparency. Less dependence on insurance companies. I don’t think the interests of insurance companies and patients align.

SEKERES: It’s great to make medications affordable to patients. I know of at least one patient who is taking advantage of that. An important aspect of it is to make sure that the drug supply that’s going through that initiative is shored up. Part of the [Food and Drug Administration’s] job is to determine the relative balance of safety and efficacy of drugs—to get them to the U.S. population and to approve a drug for marketing purposes. The FDA also must ensure the consistency of drug manufacturing. And that can become harder when drug supply chains are outside this country. One thing I do know about the Cuban initiative is the drug pricing is awesome. That’s particularly true for the sorts of drugs that I prescribe—some of which might cost $120,000 a year.

HOW WE CONDUCT CLINICAL TRIALS HERE IN THE U.S. IS SAFE. BUT RESEARCHERS WHO WORK ON CONTRACT CAN PROFIT FINANCIALLY BY PROLONGING STUDIES.

– Mikkael Sekeres

–ASOP Global Foundation

No one knows where [the next pandemic] will come from,” says Karen Bush, a biology professor who had worked for nearly forty years in antibacterial development at a succession of large pharma companies. “Only when it arrives can we look back and identify what sparked it.” Cross-species transmissions have been the cause of every major epidemic from the bubonic plague (rats and fleas) to the 1918 influenza (birds), malaria (mosquitoes), and HIV/ AIDS (primates). Scientists have identified eighty-four diseases that pass from animals to humans. The one about which they are most concerned is the one that has not yet jumped species. “We won’t know until it happens,” says Bush.

The prediction of a coming pandemic, unstoppable because the pharmaceutical industry has put profits over its duty to develop drugs for the public good, is no wildeyed conspiracy theory heavy on drama and light on evidence. “It is not a question of if,” warns Professor Bush, “it is a question of when.”

— Excerpted from Pharma: Greed, Lies and the Poisoning of America by Gerald Posner. Reprinted with permission from Avid Reader Press, an imprint of Simon & Schuster. ©2020.

“I WOULD HOPE THAT SOME LESSONS WERE LEARNED [FROM OPERATION WARP SPEED] AND COULD BE IMPLEMENTED INTO THE FUTURE OPERATING PROCEDURES. BUT I AM A PESSIMIST ABOUT THAT.”

– Gerald Posner

BY JAMES MELTON

ADHD Meds? You May Have to Wait

s 2023 began, the national Adderall shortage had spread to other drugs used to treat attention-deficit/hyperactivity disorder (ADHD). Experts expect the mess to continue for much of the year.

The shortages started with Adderall—known generically as amphetamine mixed salts—which became harder to get because of a surge in demand during the pandemic, coupled with manufacturing bottlenecks.

The U.S. Food and Drug Administration (FDA) acknowledged the drug shortage last October, saying Teva Pharmaceutical Industries Ltd. (TEVA), the largest Adderall manufacturer, was “experiencing ongoing intermittent manufacturing delays.” Other manufacturers were unable to fill the void, the FDA said.

Teva, one of nine companies supplying generic Adderall in the U.S., controls about 30% of the market here, making it—by a long shot—the largest manufacturer.

In October, generic Adderall makers Camber Pharmaceuticals (a division of Hetero Drugs) and Sun Pharmaceutical Industries (SUNPHARMA) also reported supply chain problems related to Adderall.

At the same time, Fierce Pharma, a news website covering the pharmaceutical business, reported the Adderall suppliers serving the U.S. had supply chain problems affecting their ability to produce the drug.

Teva does not break out sales for individual generic drugs and did not respond to requests for more information about the status of its Adderall production.

MAKE MORE ADDERALL?

The seemingly obvious solution to the shortage of ADHD drugs would be to boost the supply. But the pharmaceutical market works differently from markets for consumer products like cars, washing machines or ginger ale. Big Pharma cannot just make more ADHD drugs—at least not without clearance from the Drug Enforcement

Administration (DEA).

The active ingredient in Adderall—an amphetamine—is a Schedule II controlled substance. That’s a classification of prescription drugs with medically acceptable uses that also have a high potential for abuse and/or addiction.

By law, the DEA regulates the production of all legal controlled substances in the U.S., says Erin Fox, senior pharmacy director at University of Utah Health.

“The DEA allows drug companies a certain amount of raw material each year ... And so, they say, OK, you could have ‘X’ amount, and that’s what the drug companies have to work with,” Fox says.

As supplies of Adderall run low, she notes, doctors and patients have turned to alternatives like the brand-name and generic versions of the popular ADHD drugs Ritalin and Concerta.

But Ritalin and Concerta rely on a stimulant called methylphenidate. Like amphetamines, methylphenidate is a Schedule II substance regulated by the DEA. As with Adderall, drug makers can’t quickly boost the supply of methylphenidate-based drugs. The result has been a shortage of all three medications.

DEA AND FDA CRACK DOWN

The DEA could loosen the screws and allow manufacturers to boost the production of ADHD drugs, right? Yes, it could. But first, the agency wants to reduce illicit use, which regulators believe accounts for much of the increased demand.

In April 2022, the FDA and DEA issued joint warning letters to operators of two websites the agencies said were illegally selling Schedule II stimulants. The agencies said Kubapharm.com and premiumlightssupplier.com sold Adderall without prescriptions. Also, the feds said, some of the products might have been “counterfeit, contaminated, expired or otherwise harmful.”

The crackdown continues. The Wall Street Journal reported on Dec. 31, 2022, that the DEA sent a letter to the makers of ADHD drugs saying it feared that “aggressive marketing practices” had driven prescriptions to excessive levels. The DEA’s concerns included how telehealth medical providers promote ADHD drugs, the Journal reported, based on its analysis of the DEA letter.

In December, the DEA said it was considering whether to revoke mail-order pharmacy Truepill’s ability to handle controlled substances because of allegedly

A shortage began with Adderall and spread to Ritalin. A government crackdown made it worse.

TEVA, THE LARGEST MAKER OF ADDERALL, HAS FACED MANUFACTURING DELAYS, AND OTHER PHARMACEUTICAL COMPANIES COULDN’T FILL THE VOID.

ADHD

Attention-deficit/hyperactivity disorder—better known as ADHD—is among the most common neurodevelopmental disorders in children, the Centers for Disease Control (CDC) says.

Kids with ADHD may have trouble paying attention, controlling impulsive behavior or refraining from overactivity.

The CDC estimates 9.8% of children aged 3–17 have been diagnosed with ADHD at some point, according to a 2016-2019 annual national survey of parents.

ADHD-related hyperactivity can decrease in adulthood, but patients may continue to struggle with impulsiveness, restlessness and difficulty paying attention.

ADHD costs the United States $156 billion annually, the National Library of Medicine website says. That includes the price of healthcare and the cost of absences from work for ADHD patients and their families.

unlawful prescriptions.

Other sources buttress the DEA’s concerns. A June 2022 report from healthcare data analytics firm Trilliant Health concluded that “there are more adults receiving prescription Adderall than there are with a formal ADHD diagnosis. This discrepancy likely speaks to the number of individuals using a direct-to-consumer, self-pay service in this clinical scenario.”

A study by the University of North Carolina at Chapel Hill found 62 online pharmacies sold Adderall online in late 2019 and early 2020. Researchers classified 61 of those sites as “rogue or unclassified” sellers.

DRUG SHORTAGES RISING

It’s not just ADHD drugs that are in short supply. As of year-end 2022, the U.S. had 295 active drug shortages—the most since 2014, according to the University of Utah Drug Information Service and the American Society of Health-System Pharmacists.

A growing need

stocks, as measured by the S&P 500 Pharmaceuticals Industry Index, handily beat the S&P 500 over the past year. For the 12 months that ended Jan. 19, the pharma index grew 7.48%. For the same period, SPX dropped 14.14%.

GROWTH OF PHARMA SALES

In 2021, U.S. prescription drug spending reached $576.87 billion, according to the American Society of Health-System Pharmacists. To put it another way, American spending on prescription drugs is nearly as big as the entire Belgian economy.

Growth of Adderall prescriptions

Fox says transparency will be a large part of avoiding, mitigating and responding to drug shortages in the future. In many cases, Fox says, it’s unclear why any drug is in short supply because drug companies do not have to report why shortfalls happen. That lack of information, she says, makes it hard for the public to estimate how long a shortage might last.

As part of a committee of the National Academies of Sciences, Engineering and Medicine, Fox was among the authors of a 2022 report that made seven detailed recommendations for making the drug supply chain more resilient.

Among the suggestions: “Make sourcing, quality, volume and capacity information publicly available for all medical products approved or cleared for sale in the United States.”

Doing that alone, the committee said, would give government agencies a firmer grasp of medical product supply chain vulnerabilities. Among other things, that could create better risk assessments and make it easier to predict future drug shortages.

The need for more transparency is a problem. But the performance of pharma

Unsurprisingly, traditional, walk-in retail pharmacies represented the largest share (42.2%) of those 2021 sales. But the fastest-growing sectors were online, mail-order pharmacies—some of which are operated by health-insurance companies or brick-and-mortar retailers. Online channels experienced sales growth of 10.4% in 2021. Sales growth of home health care providers was in second place, up 10.1% year over year. If trends continue, the future of online pharmacy services looks bright. In a June 2022 survey of 1,482 U.S. adults by the research company Software Advice, 58% of respondents cited “I don’t have to leave my home” as an important benefit of using a web pharmacy, and 51% said the online prices were lower than at traditional pharmacies. Also, half said online pharmacies could fill prescriptions faster than other retailers.

Software Advice, part of the consulting firm Gartner (IT), provides advisory services, research and user reviews on software applications for businesses.

Across all distribution channels, experts expect prescription drug sales to continue at a respectable, but not stunning, rate. Fortune Business Insights, a market data and analysis firm, projects U.S. prescription drug sales to see a compound annual growth rate of 6.3% through 2028, reaching $861.67 billion.

According to the Drug Channels Institute, the top

Staying home

The desire not to leave the house is manifested in relatively strong growth for mail-order pharmacies and home healthcare

Prescription drug expenditures and growth by sector in 2021

Sketchy Adderall Web Sales

From December 2019 to February 2020, researchers at the Eshelman School of Pharmacy, University of North Carolina at Chapel Hill, searched the web by typing the phrase “buy Adderall online” into the Google, Bing, Yahoo and DuckDuckGo search engines.

The findings were eye-opening:

• Of the 62 online pharmacies they found selling Adderall, the researchers believed 61 were “rogue or unclassified” sellers.

• None of the rogue or unclassified online pharmacies required prescriptions, offered pharmacist services or placed limits on Adderall purchases.

• Among the rogue and unclassified online pharmacies, most offered price discounts (61%), bulk discounts (67%) and coupon codes (70%).

• Contrary to the claims made on those sites, lower prices were available for all formulations and dosages of Adderall from GoodRx—an online platform that offers free coupons for discounts on medications.

• 74% of the rogue and unclassified online pharmacies accepted cryptocurrencies for purchases.

–Source: Journal of the American Pharmacists Association

seven players accounted for more than 70% of U.S. prescription dispensing revenues in 2021. The top dispensing pharmacies in the U.S., in order, are:

CVS Health (CVS)

Walgreens Boots Alliance (WBA)

Cigna (parent of Express Scripts, an online pharmacy and a pharmacy benefit manager) (CI)

UnitedHealth Group (parent of OptumRX, a pharmacy services manager and mail-order pharmacy) (UNH)

Walmart (WMT)

Kroger (KR)

Rite Aid (RAD)

Drug Scheduling

Schedule I: Schedule I drugs, substances or chemicals have no accepted medical use and high potential for abuse. Examples include heroin, lysergic acid diethylamide (LSD), marijuana (cannabis) and peyote.

Schedule II: Schedule II drugs, substances or chemicals have high potential for abuse and could lead to severe psychological or physical dependence. Examples include combination products with less than 15 milligrams of hydrocodone per dose (Vicodin), cocaine, fentanyl, Dexedrine, Adderall and Ritalin.

Schedule III: Schedule III drugs, substances or chemicals have low potential for physical or psychological dependence. They have less potential for abuse than Schedule I and Schedule II drugs but more than Schedule IV. Examples are Tylenol and codeine products containing less than 90 milligrams of codeine and ketamine, anabolic steroids and testosterone.

Schedule IV: Schedule IV drugs, substances or chemicals have low potential for abuse and low risk of dependence. Examples are Xanax, Soma, Darvon, Darvocet, Valium, Ativan, Talwin, Ambien and Tramadol.

Schedule V: Schedule V drugs, substances or chemicals have lower potential for abuse than Schedule IV and contain limited quantities of certain narcotics. They’re used for antidiarrheal, antitussive and analgesic purposes, and examples include cough preparations with less than 200 milligrams of codeine or per 100 milliliters (Robitussin AC), Lomotil, Motofen, Lyrica and Parepectolin.

–Source: Drug Enforcement Administration

–Source: American Society of Health-System Pharmacists *Retail pharmacies include standalone chain and independent stores, as well as mass merchandisers (such as Walmart) and food and convenience stores with licensed pharmacies.

BY NAVPREET DHILLON

Off-label, But Lucrative

ne in five prescriptions written in the United States is for a drug that hasn’t been approved for what’s ailing the patient.

That factoid from the Agency for Healthcare Research and Quality website casts a shadow of doubt over many of the prescriptions known as “off-label.”

It’s when doctors prescribe a drug for a disorder other than the one that earned Food and Drug Administration (FDA) approval. They might, for example, order a diabetes drug for a patient who’s not diabetic but wants to lose weight.

Off-label prescribing is often appropriate, and it’s become an everyday occurrence. The most common off-label prescriptions are cardiac medications, anticonvulsants and antiasthmatics. They’re most often used to treat depression, bipolar disorder and insomnia.

But up to 73% of off-label prescriptions aren’t backed by scientific research that would establish whether they’re effective for uses other than those the FDA certified, says Dr. Randall Stafford, a Stanford School of Medicine professor and director of the university’s Program on Prevention Outcomes and Practices.

Instead, medical providers prescribe drugs off-label because of anecdotal evidence, under-the-counter marketing and lax FDA supervision, Stafford notes.

They don’t always work, according to Dr. Caleb Alexander, a pharmacoepidemiologist and co-founding director of Johns Hopkins’ Center for Drug Safety and Effectiveness.

“Off-label use runs the gamut from highly evidence-based to grossly egregious use—and everything in between,” Alexander says. “But the concern is that many off-label uses are not well supported by clinical evidence.”

PROBLEMS AT THE FDA

Stafford conducted a study revealing the limitations of the FDA. Take gabapentin (Neurontin), for example, an anticonvulsant off-label prescribed for bipolar disorder and nerve pain.

As many as 83% of gabapentin prescriptions were off-label, the highest percentage of any drug Stafford studied. What’s more, 80% of those off-label prescriptions were not backed by

Big pharma profits when doctors prescribe a drug for a disorder other than the one that earned FDA approval. The practice ranges from evidence-based to highly egregious.

UP TO 73% OF OFF-LABEL PRESCRIPTIONS ARE FOR DRUGS THAT HAVEN’T BEEN PROVEN EFFECTIVE FOR TREATING THE PATIENT’S ILLNESS.

The great unknown Doctors often prescribe drugs even when there’s little or no proof they’ll combat the patient’s condition.

scientific support.

Gabapentin’s manufacturer, the Warner-Lambert division of Pfizer (PFE), paid more than $430 million in damages in 2004 for marketing the drug for bipolar disorder and nerve pain even when supplemental studies found a placebo performed better.

35%

Of Luckbox readers have used medications off-label

–Luckbox Readers Survey

The settlement amounted to a slap on the wrist for Pfizer compared to the billions of dollars gabapentin made the company, as Jeanne Lenzer wrote in a study published in the National Library of Medicine. Plus, gabapentin is still prescribed off-label for severe cases of bipolar disorder, depression and nerve pain.

“Old habits die hard,” Alexander observes. “Some of these prescribing patterns are heavily entrenched and have been learned and taught among a generation or two of providers and patients.”

OFF-LABEL

USE ACCOUNTS

While medical practitioners attempt to make the best decisions for patients, clinical trials should form the backbone of prescriptions, Stafford says.

Yet legislation mandates that the FDA keep its hands off of active clinical practice decisions, allowing providers to base prescriptions on their own knowledge.

“While it might look at post-market use—about how drugs are being used,” Stafford says of the FDA, “it doesn’t have the ability to say, ‘Well, that’s wrong, you should stop doing that.’”

WINNING OVER THE FDA

When manufacturers do find compelling evidence for additional uses for a medication, they can submit a supplemental new drug application (sNDA) to the FDA. An sNDA provides clinical studies for new uses and enables the manufacturer to market the drug for additional approval.

In a prime example of an sNDA, the FDA in 1990 approved the drug lamotrigine (Lamictal) to combat epileptic seizures. Then it approved the drug with an sNDA again in 2003 to treat bipolar disorder.

The blockbuster drug semaglutide, known as Ozempic and Wegovy, won FDA approval as a Type 2 diabetes management drug and retained an sNDA approval for reducing cardiovascular risk from Type 2 diabetes and weight management.

This drug, manufactured by Novo Nordisk (NVO), gained traction for its ability to help users drop around 15% of their weight, a number that caught social media’s attention.

It’s no secret that weight loss tips dominate social media conversations—but Ozempic and Wegovy took that to a new level. The Wegovy website labels it as a weight loss drug for obesity while the Ozempic website specifies it’s for lowering blood sugar and isn’t meant for weight loss.

The same compound but in different doses, semaglutide, quickly took off as celebrities credited their weight loss to both Wegovy and Ozempic, resulting in a shortage that has left Type 2 diabetes patients without the necessary drug.

Dr. Disha Narang, a diabetes expert and endocrinologist at Northwestern Medical Group in Lake Forest, Illinois, maintains that while off-label prescribing for semaglutide led to its approval for weight loss, the shortage reveals healthcare

providers have misinterpreted the indication.

“Obesity and weight management is chronic,” Narang says. “These drugs are meant to be used longer-term for this disease, so they’re not for short term use nor have they been indicated as such. But because of the social media surrounding it, people, unfortunately, are using it for that purpose.”

It remains unclear how patients react to semaglutide if taken short-term. Discontinued use likely leads to a weight rebound, but the long-term effects remain unknown for people without blood sugar problems, obesity or diabetes who have taken semaglutide for a period of months.

WHO’S TO BLAME

Because of a lack of funding, the FDA tends not to monitor drug use post-market. That means it can’t follow up on long-term effects of an approved drug.

Semaglutide, for example, underwent a two-year study, but for a disease that requires lifelong management, researchers like Stafford raise concerns about the consequences over time.

“It’s not completely clear that the FDA looked closely enough at long-term potential adverse effects of using this injectable drug,” Stafford says. “But it is certainly all the rage.”

Even in the development process, manufacturers compare the drug against a placebo, not against competing drugs. The lack of comparison prevents both the FDA and consumers from understanding whether the drug is an innovation and adds value to the system as a whole, or if it’s another drug released to saturate the market and liable to cause greater risk for unstudied off-label use.

Then, too, the FDA relies on funding from pharmaceutical manufacturers and thus isn’t entirely independent, observers say. As the dictator of what enters the market, the FDA needs better federal funding to serve the public and its needs, they conclude.

“Do we want an FDA that is dependent on corporate fees for its work?” Stafford asks. “Or do we want an FDA that is more oriented towards a societal or a public health viewpoint?”

DRUG

FOR 21% OF ALL PRESCRIPTIONS.

THE FDA TENDS TO STOP MONITORING PRESCRIPTION DRUGS ONCE THEY’RE ON THE MARKET.

BY NAVPREET DHILLON

The Myth of Drug Expiration Dates

hose expiration dates stamped on everything from a gallon of milk to a bottle of acetaminophen don’t mean what you probably think. Food doesn’t suddenly become unsafe and medicine doesn’t magically lose its potency at noon on a certain preordained day.

But that doesn’t stop hospitals, nursing homes, businesses and households—just about every institution— from wasting billions of dollars every year by throwing out food and drugs that might still be good.

See, it’s more subtle than being OK one day and not OK the next. Expiration dates represent the latest date when the manufacturer guarantees a drug’s safety and full potency. While the law requires drug makers to provide expiration dates, setting them is more or less on the honor system.

The U.S. Food and Drug Administration (FDA) isn’t responsible for verifying expiration dates when approving a drug. That lack of oversight leads critics to charge pharma companies with setting the dates with an eye toward enticing buyers to throw out and replace medicine that might still be perfectly good.

Whether the motivation is corporate profit or just an abundance of caution, it’s clear that at least some classes of drugs can last much longer than the expiration dates suggest.

ARE OLD EPIPENS SAFE?

EpiPens—a brand name for auto-injectable devices that deliver epinephrine to counteract an allergic reaction— provide a good example of a product without firm rules for expiration dates, says Dr. Lee Cantrell, director of California Poison Control.

Cantrell led a study that found expired EpiPens contained at least 84% of the original dose of epinephrine 50 months after the expiration date. Given the FDA allows 90% to 110% variability in doses, EpiPens could last at least 29 months after their expiration date with 90% potency, he notes.

Every EpiPen his team tested would deliver the dose needed to prevent fatal anaphylactic shock, including the oldest one that was 50 months past the expiration

date. The dose ranges from 0.2 to 0.5 milligrams for adults, and the maximum for children is 0.3 milligrams.

“I wondered if the expired EpiPens contained enough viable medication to potentially be beneficial in the case of an emergency,” Cantrell said. “And the majority of them had the potency that we used.”

Still, he doesn’t recommend routinely using expired EpiPens. But in a pinch, one within the 50-month time limit could save a life.

But the drug’s longer-than-anticipated lifespan isn’t the only reason it’s attracting attention.

Longevity

These prescription drugs remain effective for years longer than their expiration dates indicate, boosting replacement profits for the manufacturers.

There’s not necessarily anything scientific or magical about the dates printed on medications

Source: Lee Cantrell, Director of California Poison Control

NEARLY ALL ALBUTEROL PRODUCTS RETAINED MORE THAN 90% OF THEIR LISTED STRENGTH FOR MORE THAN 15 YEARS POST-EXPIRATION.

CONGRESSIONAL HEARINGS

EpiPens manufacturer Viatris (VTRS) and the corporate entitites that preceded it have been under fire for years for the way they’ve handled EpiPen pricing and how they have allegedly dictated expiration dates to increase revenue.

The trouble began even before 2020, when Pfizer (PFE) spun off its Upjohn Business and combined it with Mylan to create Viatris.

As early as 2016, Congress hauled Mylan management into a hearing for a dressing-down by skeptics that included U.S. Rep. Gerald Connolly, R-Va.

“Because you have such a stranglehold on the market, you could do what you want in terms of pricing—and you have,” Connolly said to Heather Bresch, who was then Mylan CEO.

The Mylan-Viatris lineage had endured for 30 years, remaining the sole source of epinephrine up until the FDA approved AuviQ, a generic, in 2012. Even after losing its exclusive right to make the drug, Mylan was still clinging to a 94% market share in 2016.

EPIPEN PRICE SKYROCKETS

Mylan raised the price of a pack of two EpiPens from about $100 in 2007 to $608 in 2016, even though the cost of labor and materials had not risen commensurately.

Pricey?

The incredible upward trajectory of the price for a set of two EpiPens resulted in costly legal headaches for the maker.

cation is no longer effective.” Kutty wrote in a study published in 2022 by Heliyon, a research journal.

“It is important to note,” the paper says, “that the expiration date of a medication is determined by the manufacturer based on the stability of the drug under specific storage conditions, and it is not intended to indicate the exact point at which a drug becomes ineffective or unsafe.”

Nearly all albuterol products “retained more than 90% of their listed strength for more than 15 years post-expiration,” Kutty’s study indicates.

DOOMSDAY PREPPERS

While the FDA doesn’t regularly test expired drugs, it runs the Shelf Life Extension Program (SLEP) for the Strategic National Stockpile, the government’s emergency repository of critical medicine.

Besides, EpiPens expire 18 months after they’re made, causing families to suffer financial hardships or risk fatal anaphylactic shock, observers note.

But those policies caught up with the company.

In 2017, Mylan paid $465 million to settle a lawsuit brought by the Department of Justice, according to Fierce Pharma, a watchdog website for the pharma industry.

In 2022, Viatris agreed to pay a $264 million settlement class-action antitrust lawsuit filed by consumers and insurers, The New York Times reported.

It was the rapidly rising cost of EpiPens that led Cantrell to begin his study, but it wasn’t his first crack at tackling expiration dates.

STUDYING EXPIRATION

In 2012, one of Cantrell’s friends found 25- to 40-year-old medications in the back of a closet in a pharmacy he owned.

“I’m always really skeptical about the dating of medications, and we analyzed them and found the majority of them retained their full potency,” Cantrell noted.

Twelve of the 14 compounds that Cantrell studied were within the 90% to 110% efficacy concentration the FDA mandates, notably acetaminophen (Tylenol), hydrocodone (Vicodin) and codeine.

Granted, the medications were stored in a pharmacy under nearly ideal conditions, which would likely extend their useful lifespan. But even in a less than perfect environment, drugs tend to last much longer than expiration dates dictate, Cantrell maintains.

A similar study of the post-expiration strength of the asthma medications albuterol and montelukast led by Dr. Raman Kutty of White River Health System also demonstrated that “expiration date” is a misnomer.

“Often, the expiration date is interpreted as the date beyond which the medi-

That’s how the FDA found 88% of 122 commonly used drugs retain efficacy for longer than a year after said expiration date, Cantrell said. “With an average extension of 66 months and a maximum extension of 278 months,” he noted.

Every dollar SLEP spends on research saves the government $94 because medications can stay in the stockpile longer, according to a National Library of Medicine article by Brooke Courtney, a senior FDA

MANUFACTURERS DETERMINE THE EXPIRATION DATES OF THEIR DRUGS.

regulatory counsel.

So, if the FDA finds through SLEP that Americans could spend significantly less on medications, why aren’t manufacturers compelled to extend the expiration dates?

As the House Oversight Committee emphasized back in 2016, manufacturers follow the money. While Mylan paid over a billion dollars in settlements for its EpiPen price-gouging, it hasn’t extended EpiPens’ expiration dates and a pack of two EpiPens costs $690 as of December 2022.”

$608.61 $100

$200

$300

$400

$500

$600

Active investors can navigate the boom or bust biotech sector with the help of strategies like C-suite buying, cash to value and cash flow

BY GARRETT BALDWIN & TIM MELVIN

Betting on Biotech

ick people need medicine no matter how the economy is faring, which keeps pharmaceutical stocks defensive and makes them likely to outperform in this year’s shaky financial scene.

Besides, the sector is loaded with large-cap stocks capable of paying big dividends and passing inflationary price increases through to consumers via insurance companies.

Passive investors seeking a defensive position might just purchase the VanEck Pharmaceutical ETF (PPH) and call it a year.

But trading will be more complex for active investors looking to beat the market by a wide margin while adjusting to the ups and downs of sentiment driven by the Federal Reserve’s policies.

Niche clinical biotech strategies have worked well during long stretches of the 2010s bull market. So, let’s study the recent history of some popular ones and determine their viability for the year ahead.

INSIDER BUYING

Over the last decade, one of the top-performing and least-understood strategies in biotech centered on tracking insider purchases. That’s when C-suite executives—

those who tend to have the word “chief” in their job title—buy stock in the companies where they work.

The C-suite includes the chief executive officer, chief operating officer, chief financial officer, chief marketing officer, corporate director, board members and any entity owning more than 10% of the company.

The wrong lead

The portfolio strategy consists of buying the four most recent open market biotech stock purchases within three days, each held at 25% of the portfolio and each sold at 30 days.

Don’t follow insider biotech purchases. The strategy has underperformed in strong and weak markets dating back to 2019. Wait for a Federal Reserve pivot before considering it.

From 2009 to 2018, the first 10 years of the long bull market, the strategy averaged a return of 40.6%, outperforming the S&P 500 by an average of 27%, according to WhaleWisdom, a platform offering data on moves by fund managers. It was one of the best-kept secrets of several biotech trading blogs.

In 2022, as the Federal Reserve raised interest rates and as valuation compression accelerated, this strategy drastically underperformed the market. It declined by 45% last year, trailing the S&P 500 total return of -18.1%. However, the downtrend for this strategy started a few years ago. Since 2019, the performance has underperformed the S&P 500 three times by at least 26.88%.

DEEP VALUE TO CASH?

When interest rates don’t matter, investors might fall back on the idea that biotech companies tend to hold a bit of cash. But consider the state of the sector today, with 156 companies trading for less

Insiders are Selling Moderna

Although stock in Moderna (MRNA) has been a darling of the COVID-19 era, corporate insiders have aggressively sold their holdings at every opportunity in the last two years.

In fact, they’ve sold a stunning $2.825 billion in stock while buying back none.

The insider selloff could be linked to incentives for corporate officers, who might have been awarded shares as part of their agreements, thus reducing the need to purchase stock.

Rising interest rates and cuts to the Fed’s balance sheet will likely pull earnings multiples lower and reflect broadly on companies already struggling for profitability.

That’s why investors could use some help identifying stocks to avoid or to sell short. One of the better tools for determining what stocks face serious earnings challenges comes from those students at Ross.

Each month, they compile a list of 100 stocks with characteristics they dub “earnings torpedoes.” Specifically, these companies face the increased possibility of “a rapid and precipitous decline in a richly priced growth stock that is triggered by revised information about fundamentals underlying the stock,” a university report says.

To create the list, the student analysts assess value, quality, momentum, and expectations for growth and profitability. When students add a company, it joins

than the value of their cash. It means the company’s market capitalization is lower than the net cash on the balance sheet.

The valuation suggests these companies burn through cash while conducting drug trials. They may be cutting back on expenditures, but investors have largely abandoned them based on the expectation they’ll fail to produce new drugs or find an acquirer.

As interest rates rise, the cost of capital increases, placing pressure on the balance sheets of biotech companies trading below their price-to-cash value.

In a rational world, such companies would shut down operations, return the cash to investors and retain the intellectual property. But that’s not how the biotech sector operates.

Instead, companies approaching the end of their cash runways hold onto the hope that a larger company might fund further trials. That expends a lot of capital quickly, and investors lose money because they think they’ve found a deeply undervalued stock.

TORPEDO WARNING

For further evidence of why it’s best to avoid stocks trading under the value of the cash, consider the work of students at the Ross Business School at the University of Michigan.

a notorious club—like the Black Book banning some gamblers from Las Vegas casinos.

For perspective, note that the list includes some of the worst-performing, most unprofitable companies of 2022, including Blink Charging (BLNK), Upstart Holdings (UPST), Peloton Interactive (PTON), Roku (ROKU) and ChargePoint Holdings (CHPT).

But digging into the list at the start of this year, observers see several healthcare and biotech companies. In fact, it carried 45 names from system-specific biopharmaceutical delivery and logistics services, diagnostics and drug delivery devices, general medical devices, healthcare support services, miscellaneous healthcare, and non-system-specific biopharmaceuticals. (See chart: Damn the torpedoes.)

As expected, the biotech players are spending lots of cash, and few have any discernible path toward profitability. The biotech names on the list look like promising shorts.

MRNA INSIDER TRADING - MODERNA INC.

FROM 2009 TO 2018, THE STRATEGY OF BUYING THE STOCK THAT INSIDERS BUY HAS AVERAGED A RETURN OF 40.6%, OUTPERFORMING THE S&P 500 BY AN AVERAGE OF 27%.

INVESTORS DECIPHER THE PHARMACEUTICAL MARKET BY TRACKING INSIDER STOCK PURCHASES.

BIG PHARMA

Damn the torpedoes

Consider shorting torpedo stocks this year as valuation and earnings compression limit profitability and destabilize balance sheets.

Ticker Name

ACET Adicet Bio

BPMC Blueprint Medicines

DAWN Day One Biopharmaceuticals

MRTX Mirati Therapeutics

RLAY Relay Therapeutics

RVMD Revolution Medicines

TARS Tarsus Pharmaceuticals

APLS Apellis Pharmaceuticals

INBX Inhibrx

KYMR Kymera Therapeutics

PHAT Phathom Pharmaceuticals

ARQT Arcutis Biotherapeutics

CERE Cerevel Therapeutics Holdings

CRNX Crinetics Pharmaceuticals

DNLI Denali Therapeutics

ORMP Oramed Pharmaceuticals

PRTA Prothena

QURE uniQure

RARE Ultragenyx Pharmaceuticals

STOK Stoke Therapeutics

SWTX Springworks Therapeutics

TVTX Travere Therapeutics

VERA Vera Therapeutics

VERV Verve Therapeutics

XENE Xenon Pharmaceuticals

What Buffett Sees in DaVita

DaVita Healthcare (DVA) ranks 10th on the list of stocks trading cheap compared to their cash flow and 12th among the largest holdings in Warren Buffett’s portfolio—with a stake worth $2.88 billion, according to Securities and Exchange Commission filings.

The company’s shares started the year up more than 8% as healthcare equites rebounded. However, Tipranks analysts have panned the stock, and it has an average price target of just $75.60. So what does Buffett see that Wall Street analysts are missing?

He often invests in companies with monopoly power, and DaVita controls a stunning 92% of the U.S. kidney dialysis industry, a wide moat for a niche sector.

Plus, it’s not the only dominant player in Buffett’s portfolio. He owns stock in companies with significant market share in mining, soft drinks, credit cards, credit rating, domain names and rail transportation.

Recovery in 2024

Buy and hold companies trading at the lowest price-to-free-cash-flow with positive net income. The outlook for these stocks is a 24- to 36-month time horizon.

CHEAP CASH FLOW

The lesson of 2022 and 2023 hinges on profitability and proper management of cash flow. Pharmaceutical giants and other healthcare players with strong margins that kick off cash are primed for an extensive recovery in 2024 and beyond.

After a strict dive into backtesting over 20 years, a top strategy uses two simple metrics: Investors can tap into stocks trading less than 15 times cash flow with 12 trailing months of net income. The strategy has provided an annualized return of 22.3% since 1998, according to Portfolio123, a stock screener providing extensive data.

That said, the strategy is off roughly 12% over the past year but has still improved markedly over the 19% drop in the S&P 500. To streamline the opportunity, investors can narrow their consideration to these 10 companies with positive net income and maintain the lowest price-to-free-cashflow.

Garrett Baldwin, a commodity and trade economist, serves as Luckbox editor-at-large. He actively trades value and momentum stocks and wagers on sports and prediction markets.

Tim Melvin, a 30-year veteran of financial markets, bases rigorous quantitative analysis on the principles of deep value and private equity styles of investing.

THE PHARMACEUTICALS SECTOR IS LOADED WITH LARGE-CAP STOCKS PAYING BIG DIVIDENDS.

PHARMA by the

//

5% of eighth graders

20% of 10th graders

numbers

24% of 12th graders HAVE USED ILLEGAL DRUGS IN THE U.S. WITHIN THE LAST 30 DAYS

–drugabusestatistics.com

The 10 politicians who received the most donations from the pharmaceutical industry during the 2021-22 election cycle:

Sen. Raphael Warnock (D, GA)

$606, 394

Rep. Cathy McMorris Rodgers (R, WA)

$409, 195

Rep. Scott Peters (D, CA)

$395,665

Sen. Catherine Cortez Masto (D, NV)

$378, 807

Rep. Brett Guthrie (R, KY)

$345, 200

Sen. Tim Scott (R, SC)

$343, 223

Sen. Mark Kelly (D, AZ)

$340,982

Sen. Charles E. Schumer (D, NY)

$340,974

Sen. John Fetterman (D, PA)

$337,838

Sen. Patty Murray (D, WA)

$305,788

–OpenSecrets

THE

–Zippia

9.49 million

The number of Americans (age 12 and older) who misuse opioids at least once a year. That’s 3.4% of the population.

–Substance Abuse and Mental Health Services Administration

47 %

of young Americans use illegal drugs by the time they graduate from high school.

–National Center for Drug Abuse Statistics

$975,520

$929,951

Americans spend an average of $2.1 BILLION per year on weight loss supplements.

trends

life, luxury & the pursuit of happiness

DIVERSIONS

Walking Up Thin Ice

In the Big Sky Country, our correspondent finds the beauty of nature imbues her with a sense of peace no medication can match

By Vonetta Logan

If you were to ask my dear mother to recount tales from my youth, she’d wave a handkerchief in the air and say, “Lawd, that child was always runnin’ wild outside.”

I spent every free moment either climbing or jumping. I’d build a ramp and point my banana-seated bike toward it at full speed, handle grip streamers flying, physics be damned.

My mother promptly enrolled me in the Girl Scouts. I was stoked to learn how to survive in the outdoors— until I found out the Boy Scouts got knives and we got Easy-Bake Ovens. Weak. But a lifelong love of the outdoors was born.

“The physiological response to being outside in nature is real, and it’s measurable,” says Michelle Kondo, a research social scientist with the United States Department of Agriculture (USDA) Forest Service’s Northern Research Station.

She’s right. Studies show spending time outside can reduce the risk of cardiovascular disease by easing stress and regulating cortisol levels, muscle tension and heart rate. This is

the Big Pharma issue, and I’m here to tell you to get high…on nature.

So, it wasn’t surprising when a random Instagram post led me to hop on a plane from Chicago to Bozeman, Montana, in December 2022 for a beginner ice-climbing clinic. The expedition was a joint effort of groups called Inclusive Outdoors and Montana Alpine Guides.

Outdoor activities, especially in the winter, are often dominated by a heterogeneous group of aggressively attractive white guys who won’t text you back. This clinic was intended to bring new faces into the sport. Looking for a new adrenaline high, I was delighted to attend.

Eleven intrepid climbers from all over the country showed up, from a Haitian NYPD cop to a nurse who jumps out of planes to fight fires in Oregon to a Paralympics ski racer. We met up at Alpine Guide headquarters to pick up our gear.

They outfitted us with mountaineering boots, harnesses, crampons, helmets and ice axes. I thought we were going to have a day of classroom instruction, but the training was pretty much, “Go up. Don’t fall.”

Soon enough, we’d learn ice climbing is the art of staring at a frozen waterfall and saying, “You’re not better than me, water!”

But first we carpooled into the Gallatin National Forest to reach the Hyalite Canyon trailhead. It was my first time in Montana, and now I know they nailed it with the state slogan, “The Last Best Place.” Step ya game up, “Maryland of Opportunity.”

Big Sky Country didn’t disappoint. I joked with another participant, who lives full-time in Bozeman, that “nature really didn’t have to go off this hard.” Many consider Hyalite Canyon one of

Ice climbing in Montana mixes a hint of danger with a rush of adrenaline. It reveals the magic of meditation and fosters a sense of community.

A wall of ice before you and blue skies above. You focus on the scrape of your axes and the crunch of your crampons. Ice Climbing: It’s both exhausting and exhilarating.

the three top U.S. destinations for ice climbing.

Once at the trailhead, you hike straight up another mile or so, with all your gear, to get to the ice. I don’t know why, but I thought there would be a valet.

Gasping for air at almost 7,000 feet above sea level, this round Midwesterner found herself challenged. But once you reach the crest of the trail, a majestic view of the crag emerges.

Icy blues, greens and white vie for majestic supremacy as the ice forms concave and convex features rippling down the rocky face in a stunning display.

Ice climbing requires a harness similar to the systems used for rock climbing. You’re safely clipped into a belay device that controls the rope, and you kick the ice like a nemesis who wronged you.

You then swing your axes in a downward motion in your best true crime podcast recreation as extensions of your arms to lever yourself up. You check to see if you’re still alive, then repeat.

Ice climbing is meditative because you drown out all the noise in your head so you can concentrate. You’re using every appendage to climb, and there’s no time to worry about that marketing email.

You focus on the high-pitched scrape of your axe making contact with the ice and the crunch of your crampon biting to find grip. If you’re

quiet enough, you can hear the trickle of the water flowing behind the ice.

It’s both exhausting and exhilarating. We all shouted encouragement to each other, shared snacks and danced around when someone pulled out a Bluetooth speaker.

There was instant recognition in this disparate group. In our hometowns, we may be the only ones “who looks like me” and also love crazy adventures. Here, we were all so similar that the friendships were instant.

NAME GAME ANSWERS

(from page 9)

n Brand/company: Comirnaty, Pfizer, BioNTech, ($36.8B)

Generic name: tozinameran Disease treated: COVID-19

n Brand/company: Humira, AbbVie, ($20.7B)

Generic name: adalimumab Disease treated: Rheumatoid arthritis

n Brand/company: Spikevax, Moderna, ($17.7B)

Generic name: elasomeran Disease treated: COVID-19

n Brand/company: Keytruda, Merck, ($17.2B)

As we made our way down the mountain, we spoke with other climbers at the trailhead who were curious about our diverse group. “We’re bringing melanin to the mountain!” we joked, but everyone was welcoming.

With any new skill, whether it’s training to scale ice or learning to trade options, it’s comforting to join a group of newbies who embrace you even when you fall. Nature is healing. Get outside.

Generic name: pembrolizumab Disease treated: Melanoma, cancers

n Brand/company: Eliquis, Pfizer, BMS, ($16.7B)

Generic name: apixaban Disease treated: Non-valvular atrial fibulation

You’re using every appendage to climb, and there’s no time to worry about that marketing email.

Ticketmaster’s Bad Blood

Music fans are accusing the ticketing giant and its parent company, Live Nation Entertainment, of wielding disfunctional monopoly control

By Kendall Polidori

Frustrated concert-goers have formed a posse of “vigilantes” to rein in a ticketing platform they view as a malfunctioning monopoly.

They’ve dubbed their group “Vigilante Legal,” even though it’s not a law firm and doesn’t offer legal services. It’s really a gathering of “Swifties” who want to do something about the recent Taylor Swift-Ticketmaster debacle and the ticketing industry’s larger issues.

Vigilante Legal organizer Blake

Barnett, who’s also a lawyer, established the crew along with other attorneys and scholars, regulators, journalists, paraprofessionals and public relations consultants.

Barnett had been one of millions of music fans who used Ticketmaster’s Verified Fan presale in November to buy tickets for Taylor Swift’s 2023 Eras Tour. After trying to cope with what they viewed as a defective ticketing system and paying “astronomical” prices and fees, the self-identified vigilantes were fed up.

Here’s how bad customers say it was: More than 3.5 million fans pre-registered for tickets. The platform sent out 1.5 million presale codes and placed 2 million people on a waiting list. On the day of the sale, an estimated 14 million people descended upon the site, where they encountered glitches, crashes and interminable waits. Bots and other users were allowed into the site even though they didn’t have the required presale codes. Then, Ticketmaster canceled the general sale, and an uproar ensued.

Don’t Blame Me

Both Live Nation and Ticketmaster released public statements regard -

1994

2010

Live Nation and Ticketmaster merge to form Live Nation Entertainment.

2011 Ticketmaster begins basing ticket prices on consumer demand.

2019

The Department of Justice declines to act against Live Nation for allegedly forcing venues to accept Ticketmaster services.

ing the Eras Tour sale, blaming the issues on unexpected high demand and bot attacks. Ticketmaster did not respond to Luckbox’s requests for comment.

But the day after the debacle, the Justice Department opened an investigation into Live Nation Entertainment (LYV), Ticketmaster’s parent company.

“Ticketmaster knew that Taylor Swift’s demand was going to be insane [because] she hadn’t toured since 2018,” Barnett says. “They knew how many fans were trying to get these tickets because they’re the ones who signed people up for verified fan presale—when they knew for a fact how many tickets they had available.”

Swift’s tour generated more demand for tickets than virtually any other event in history, and Barnett says the singer’s fans are not the type to keep quiet. But other fans and the artists they follow have also complained bitterly about Ticketmaster for decades.

As far back as 1994, Pearl Jam claimed Ticketmaster abused its marketplace dominance by charging high service fees and ticket prices. The band members attempted to boycott the ticketing service and subsequently found themselves playing small venues that didn’t make sense for such a prominent act.

All Too Well

By 2010, Ticketmaster was in talks to merge with Live Nation, a global American entertainment company. The deal went through and created an entity known as Live Nation Entertainment.

Among those waving a red flag and

April 2021

House democrats call on the Biden administration to revisit the Live Nation and Ticketmaster merger.

warning of monopoly at the time of the merger was David Balto, an antitrust lawyer and former policy director of the Federal Trade Commission’s Bureau of Competition. Ticketmaster, the dominant provider of ticketing services, was joining forces with Live Nation, the largest concert promoter, he noted then.

The merger “created a corporation that has used its monopoly power to bully venues, ticketing providers, concert-goers and even musicians,” says the American Economic Liberties Project, a group that lobbies for corporate accountability laws and enforcement of antitrust regulations.

“I have no doubt in my mind

high as 78% of the total ticket price.

If you’ve bought tickets to a live event, it was likely through Ticketmaster. The platform usually operates reliably and is easy enough to navigate. Some say it has changed the way ticketing works in the digital age.

But for artists with a mass following, such as Taylor Swift, the platform’s ability to handle high demand remains questionable. Throw in dynamic pricing, a secondary ticketing market, high service fees and an anticompetitive nature—and the platform doesn’t look so great anymore.

The control doesn’t end there, either. Large stadiums across the country are under contract with Ticketmaster, meaning ticket sales for those shows must go through the platform. Some 70%-80% of major U.S. venues have exclusive contracts with Ticketmaster, notes The Hustle, an online business and tech newsletter.

TAKING STOCK IN MUSIC

Ticketmaster, an American ticket sales and distribution company, merged with Live Nation in 2010 to create Live Nation Entertainment (LYV).

Live Nation’s stock declined 43% last year, underperforming the S&P 500’s loss of 19%.

At press time, Live Nation’s stock price hovered around 73, but some analysts saw upside potential this quarter because 2022 revenue, as of Q3, grew to $6 billion.

that Ticketmaster is a monopoly,” Barnett agrees. “The merger of Live Nation and Ticketmaster should have never gone through. They own everything. There’s no option when it comes to touring, at least for artists as big as Taylor Swift, Harry Styles or Bad Bunny.”

These days, Ticketmaster controls more than 70% of the market for ticketing and live events and more than 80% for live concerts, according to a Yale University study.

Average ticket prices on Ticketmaster have more than tripled since the mid-’90s, and fees shared among venues, promoters, artists and Ticketmaster for each ticket can run as

“That’s really what a monopoly is,” Barnett says of the arrangement with giant venues and control of pricing. “It means there is no competition in the marketplace that artists can go to instead.”

Vigilante Shit

The ticketing situation has fueled enough anger to inspire the villagers to take up pitchforks and torches in a campaign to break up Ticketmaster and Live Nation.

So far, it appears leaders are listening. Sens. Amy Klobuchar (D-Minn.) and Mike Lee (R-Utah) say the Senate Judiciary Committee’s subcommittee on antitrust plans to investigate the lack of competition in ticketing. The Senate held a hearing on Jan. 24 on the ticketing industry

Demand for tickets is outpacing the pre-COVID-19 levels of 2019. But prices are declining because fans are concerned about inflation, recession and the Federal Reserve’s repeated hikes in interest rates. They’re not falling because of recent issues with Ticketmaster.

What’s more, Live Nation has a history of stock price bouncebacks, Forbes magazine notes.

July 2021

President Biden signs a broad executive order aimed at fostering competition in the American economy.

October 2022

Dynamic pricing and resold tickets push the price of some Blink-182 tickets to more than $1,000.

November 2022

High demand for Taylor Swift tickets crashes Ticketmaster’s site, inflates ticket prices and forces a halt to sales.

November 2022

The Justice Department begins investigating Live Nation Entertainment, owner of Ticketmaster.

December 2022

Hundreds of fans are denied entry to a Bad Bunny show in Mexico when Ticketmaster Mexico allegedly sells invalid tickets.

“Out of 33 instances in the last 10 years that LYV stock saw a 21-day decline of 16% or more, 19 of them resulted in LYV stock rising over the subsequent one-month period of 21 trading days,” the magazine says.

That trend suggests a nearterm positive upturn for the company.

Ticketmaster abused its marketplace dominance as far back as 1994, members of Pearl Jam say.

following the Taylor Swift Ticketmaster debacle. At press time, the hearing was set to stay open until Jan. 31.

Meanwhile, the Justice Department has opened an antitrust investigation to determine whether Live Nation Entertainment has abused its power in the music industry, according to The New York Times.

At the same time, groups of Swifties are alleging in lawsuits that Ticketmaster employs anticompetitive practices to impose higher prices in the presale, sale and resale markets. About 350 plaintiffs are parties to a suit filed in November, says attorney Jennifer Anne Kinder.

“The [Eras Tour] experience was unusually horrible,” Kinder observes. “There were some

stands for Swifties Working to Increase Fairness from Ticketmaster. It’s working to teach young people about antitrust laws and was started in response to the Eras Tour ticket debacle. But it’s taking a broader approach to involve young people and encourage action by the DOJ.

“That was a moment we were able to capitalize on, but we’ve been wanting to do some sort of antitrust project for a while,” says Marianna Pecora, deputy communications director for digital engagement at Voters of Tomorrow. “Antitrust isn’t exactly something that gets young people too excited. It’s not a very flashy topic.”

That’s why the organization is capitalizing on the moment when the Swift ticket problems occurred, she continues. “Young people are caring about antitrust for the first time,” she says, “because it is directly affecting them.”

It’s all part of what seems like a movement to hold Ticketmaster accountable for fans’ grievances.

Long story short

In a lawsuit filed by DB Hill Law, attorneys explained the Taylor Swift problem this way: “Ticketmaster did not have enough seats to meet the demand this number of codes would require. Ticketmaster intentionally provided codes when it could not satisfy ticket demand.”

DO YOU HAVE A FAVORABLE OR UNFAVORABLE OPINION OF TICKETMASTER?

10% Favorable

32% Neutral

58% Unfavorable

Luckbox Reader Survey

with obstructed views or in areas reserved for customers with disabilities, sources say.

So it goes ...

The time has come for legislators and the judicial system to deal with Ticketmaster, Barnett says. It’s tough to predict what will come of the investigations and lawsuits underway, but the company should take allegations of breaking antitrust laws seriously, she says.

“These are laws that companies violate all the time, and people get away with it because many people don’t understand the laws and spread false information,” Barnett says. “The hope is to educate the population so when it happens next time, maybe something different will happen.”

pretty significant antitrust violations going on with this particular sale. And another angle was to look at it as fraud and misrepresentation just based on how the sale was set up for the verified fan with the codes and how horribly wrong it all went.”

The plaintiffs cite the Eras Tour specifically, but Kinder says her firm has received phone calls related to other ticket sales. “There’s definitely a systemic problem going on here,” Kinder maintains.

Presale tickets to see rockers Blink-182 went on sale through Ticketmaster in October, and fans saw their tickets pulled from their online checkout carts as prices were soaring to more than $600 each. Founding member and bassist Mark Hoppus couldn’t secure tickets to his own show.

While Vigilante Legal isn’t suing Ticketmaster, Barnett’s own firm isn’t opposed to the idea, she says. For now, Vigilante Legal lawyers are compiling a brief listing action the government can take against Ticketmaster and providing evidence.

Youth organization Voters of Tomorrow has begun an initiative titled S.W.I.F.T., which

Ticketmaster and Live Nation also rob artists of the right to maintain their set ticket prices, Kinder maintains. For the Eras Tour, Swift is said to have set prices from $49-$499, but fans wound up paying much more. Swift also tried to hold down prices by opting out of dynamic pricing, which raises prices as demand increases, but she had no way of avoiding vertical pricing, which refers to reselling tickets.

“People got through the queue, and the tickets were not the price that Taylor Swift negotiated for the tickets—instead they went for $800 and more,” Kinder says. “What we believe is that they were already being resold— that the bots and their resellers had already had their computer program configured to beat fans in buying the tickets.”

The originally priced tickets were probably resold within 20 minutes of the beginning of the sale, she says. In one example, a woman who tried to check out 41 times was charged $14,000 and never obtained a ticket.

“I suspect that Ticketmaster realized about an hour in that they were in a lot of trouble,” Kinder says.

Because tickets were selling so fast and being resold almost immediately, Ticketmaster began seating customers in spots

Barnett doesn’t anticipate a breakup of Live Nation and Ticketmaster but hopes public outrage will spark change. Ticketmaster dominates the ticketing market, but competitors like SeatGeek and AXS are also accused of charging high service fees.

“Keep the pressure on the government,” Barnett declares. “Yes, there are attorneys general and the DOJ who are investigating, but no one seems to really care about that anymore. Ticketmaster has done a pretty good job in the last few weeks of trying to convince the public that they’re not bad.”

The suit by DB Hill Law had not had its first hearing when Luckbox went to press. The next step is for the defendant, Ticketmaster, to file a response to the complaint.

Perhaps the citizenry will take an interest in the litigation. Some 71% of poll respondents are concerned about the cost of tickets online, 79% support the Justice Department’s investigation into Live Nation Entertainment, and 68% favor breaking up Ticketmaster and Live Nation, according to research by Data for Progress.

“We’re going to continue to beat the drum loud enough and never stop,” Kinder says. “We may lose everything we do. But that’s not going to stop us from protesting, from participating and from being on social media because somebody needs to answer for what happened [to Swifties] that day.”

Some 71% of poll respondents are concerned about the cost of tickets online, 79% support the Justice Department’s investigation into Live Nation Entertainment and 68% favor breaking up Ticketmaster and Live Nation, according to research by Data for Progress.

Meet Me in the Bathroom

A new film documents the New York music scene of the early 2000s

By Kendall Polidori

The documentary film Meet Me in the Bathroom, based on the 2017 book of the same name by journalist Lizzy Goodman, provides a snapshot of what’s known as the last great romantic age of rock ‘n’ roll.

The story highlights the defining New York bands of 2001-2011, including The Strokes, Yeah Yeah Yeahs, The Moldy Peaches, TV on the Radio, LCD Soundsystem, The Raptor and Interpol.

While the book is better than the movie, the film adaptation makes the musical endeavor more personal by offering perspectives from the core musicians themselves, such as Karen O (Yeah Yeah Yeahs), Paul Banks (Interpol), James Murphy (LCD Soundsystem) and Julian Casablancas (The Strokes).

The documentary shows more than just the bands’ early performances in New York’s hottest clubs. It details the struggles and anxieties that came with becoming so popular too fast. With a backdrop of world events, such as 9/11 and Y2K, and key moments in pop culture, like the

introduction of Napster, Meet Me in the Bathroom hops around each band’s rise as DIY artists.

The watch is worth it for its raw live footage. In one clip, viewers get a front row look at an expressive live performance from Yeah Yeah Yeahs. Sweat gleams on Karen O’s face as she grips the microphone and holds it close to her lips, singing with her whole heart as she crawls the stage. Her quirky outfit clashes with the look of her bandmates.

But the documentary fails to maintain a clear story arc. Scenes are short and jump too quickly, and the ending felt abrupt. Maybe the storyline is that there was no direct storyline.

These bands weren’t necessarily trying to pioneer a new age of music, but they did. Their experiences were sporadic, radical and punk, and the moment was gone before they knew it. No one was ever sure what was going to work— until it did.

The Beatles, Stones and Zeppelin were awesome—but rock lives on. Why not break out of the classic rock cocoon and give new rock a chance? Rockhound is here to help. Think of it as a bridge from 1967 to today and beyond.

Kendall Polidori is The Rockhound, Luckbox’s resident rock critic. Follow her reviews on Instagram and Twitter. @rockhoundlb

More 2000s Rock

MEET ME IN THE BATHROOM

3 out of 5

A journey through the early 2000s New York music scene

PHOTOGRAPH: MIKE MCQUADE

Patria

Modest gold watches made with superior manufacturing skill, have a centuries-old tradition in Germany. After Glashutte‘s new rise, the watchmakers and their fine watches were able to attain a world-renowned reputation once again.

With the Patria, we keep Glashutte’s deep-rooted horological tradition alive: the watch must be noble, beautiful, and precise.

Patria · manufacture caliber · 6600-01

Pre-workout Supplements

Three non-magical substances help make athletes strong and lean

Ever wish you could swallow a pill, capsule or some powder that would make you stronger and more athletic? If it sounds too good to be true, scientific research demonstrated more than a decade ago that pre-workout supplements can do exactly that.

Combining the supplements with high-intensity interval training—short bursts of vigorous exercise broken up with periods of rest—can boost oxygen uptake, increase training volume and shed body fat, according to a 2010 University of Oklahoma study reviewed in the Journal of the International Society of Sports Nutrition.

A solid supplement starter pack for overall health should include a good fish oil, plenty of vitamin D and even a little magnesium citrate. But what about super jocks who want to push the envelope on physical fitness? Or those who want to test their performance boundaries in the gym and on the field? What additional supplements should they consider?

First, most supplements in the pre-workout/ post-workout/muscle gain/fat burn categories belong in the trash bin, not on the pantry shelf. They’re loaded with fillers and marketed with hype, so users almost always overpay for ingredients they don’t need and find themselves underwhelmed by lackluster results. It’s better to put away the wallet and simply eat more chicken and vegetables.

However, some tried, tested and true supplements do have value. Let’s consider three of the most effective.

Creatine monohydrate

This might be the most widely studied supplement in history—at least when it comes to performance and athletics. Trials have demon-

strated creatine is safe and offers performance benefits in strength output, work capacity and lean body mass.

It’s really a no-brainer that creatine should become a regular part of a performance supplement lineup. The only downside is users put on a few pounds almost overnight.

It happens because creatine pulls water into the muscles, keeping them hydrated and primed for optimal performance. Thus, the body naturally holds more water while supplementing with creatine.

But the water is inside the muscles, and it’s not the subcutaneous bloat experienced after slamming down a plate of sweet and sour chicken.

Consult with a physician for daily dosage.

Citrulline malate

A popular ingredient in many pre-workout supplements, citrulline malate, has been shown to boost performance in the gym by increasing arginine levels in the bloodstream.

Citrulline malate promotes vasodilation, a medical term for widening blood vessels and increasing blood pressure. With that improved blood flow, the system is primed for more oxygen uptake at the muscular level.

By Jim Schultz

As a result, users almost immediately develop more overall work capacity, better training endurance and quicker recovery.

Consult with a physician for daily dosage.

Beta-alanine

The body produces this non-essential amino acid naturally. It reduces fatigue, allowing for more weight-training repetitions or more intense cardio sessions.

The benefits might not be noticeable immediately—the way they are with citrulline malate—but supplementing with beta-alanine over time could lead to higher training output.

Consult with a physician for daily dosage.

Unneeded “supplements”

Neither caffeine nor protein powder made the list.

While caffeine acts as an incredibly effective pre-workout stimulant, more than 90% of Americans already consume it regularly. That makes it the nation’s most popular drug, and it seems safe to assume readers’ consumption is already on point.

While many consider protein powder a supplement, it’s really nothing more than a quick, convenient source of that essential nutrient. So, a good protein powder seems more like a boneless, skinless chicken breast than like a multivitamin.

But three true supplements—creatine, citrulline malate and beta-alanine—can help anyone who’s dedicated to fitness achieve the next level of training—no magic required.

Jim Schultz, Ph.D., a derivatives trader, fitness expert, owner of livefcubed.com and the daily host of From Theory to Practice on the tastylive network, was named North American Natural Bodybuilding Federation’s 2017 Novice Bodybuilding Champion. @jschultzf3

Combining

supplements with high-intensity interval training can boost oxygen uptake, increase training volume and shed

body fat.

Some supplements belong in the trash bin, not on the pantry shelf.

The pre-workout supplements market was valued at $14.2 billion in 2022 and is projected to reach $26.8 billion by 2030.

— Verified Market Research

IS ELON MUSK KILLING TWITTER?

INTELLIGENCE SQUARED U.S.

invites some of the world’s brightest thinkers to debate issues. The organization was founded in New York in 2006 to promote intellectual diversity by fostering respect for differing opinions.

The debates are organized in the traditional Oxford style. The side that convinces more audience members to embrace its arguments wins.

The excerpts below come from a debate in January about whether Elon Musk is killing Twitter after taking over the platform in October. To see who won the debate, visit the Intelligence Squared website via the QR code on this page.

60% FOR 20% AGAINST 20% UNDECIDED

10% OF TWITTER USERS ACCOUNT FOR 92% OF TWEETS

48% OF USERS RELY ON TWITTER FOR NEWS

52% OF TWEETS COME FROM GEN-Z USERS

70.4% OF USERS IDENTIFY AS MALE

SWISHER: First, he blew up a stable $5 billion ad business in a few months. It wasn’t that good, but it was still $5 billion ... losing huge opportunities like the World Cup and the holiday season.

The Twitter bank debt has been marked on the books of both Morgan Stanley and Bank of America at 50 cents on the dollar. That means the $13 billion of Twitter debt is now worth about half that amount, or $6.5 billion—thanks to a combination of rising interest rates and Twitter’s shrinking EBITA (earnings before interest, taxes and amortization), as well as questions about whether Elon will be able to make roughly $600 million in interest payments due on the Twitter bank debt in April.

And following the logic here, if the bank debt is only worth half its face amount—it has now been recorded as such—it means Twitter equity, which is owned mostly by Elon and a bunch of his rich friends, is virtually wiped out after a mere two months under Elon’s rule.

SWISHER: Because he’s Elon Musk, he thinks he’s a genius. And, therefore, because he’s good at rockets and cars, which are physical, and have physical aspects, he believes he’s going to be fantastic at media. Media is hard. And this is a media company.

leaders.

More Debate

See who won the debate

SCARAMUCCI: The facts are indisputable about Twitter being a high-quality business in the following sense. It is a pervasive part of our zeitgeist now. It is the town square, proverbially. And I think there are more active users today if you look at their numbers.

When Elon’s on Twitter Spaces, there could be upward of 100,000 people in that town square listening and potentially asking questions.

I think it’s early; we’ll have to see how this thing plays out. But it’s far from dead. In fact, if anything, it’s more vital than ever. And over the next six, 12 or 36 months, I think we’ll see really good progress ahead for Twitter.

I think ultimately, as he executes this plan—and whatever the erratic nature of his personality—we can go back to the situation with Elon Musk in 2008, when he was on the verge of bankruptcy in two companies: SpaceX and Twitter. He was able to use his guile and his relationships to save those two companies.

SCARAMUCCI: This is a durable business; it may be smaller than he wants it to be. But it’s a durable business, and it can take a lot of hits before it gets killed off. So, Elon Musk is not killing Twitter. If anything, we’ll be looking at Twitter in the 2024 presidential election.

Anthony Scaramucci, founder and managing partner of SkyBridge Capital hedge fund, served briefly as White House communications director in the Trump administration. He’s a member of the Council on Foreign Relations and a board member of the Federal Enforcement Homeland Security Foundation. Worth magazine once ranked him among the 100 Most Powerful People in Global Finance.

Kara Swisher, host of the On with Kara Swisher podcast and co-host of the Pivot podcast, serves as editor-at-large for New York Magazine and co-founded the Recode technology website. Once called “Silicon Valley’s most feared but revered journalist,” Swisher has established herself as the oracle of the tech world with unrivaled access to the industry’s most significant

Gin is a Trending Tonic

By Jeff Joseph

For centuries, gin has captured the imagination and soothed the spirit. But it got its start as a medicine used to treat or even prevent illness.

Medieval healers in Holland and Belgium called gin by another name— jenever—and employed it in their attempts to remedy everything from coughs and colds to strains and ruptures.

By the early 1700s, the libation had become widely available in Europe and was used to combat ailments that included respiratory problems and rheumatism. In the 1800s, the English were exploring gin’s medicinal properties and using it to address fevers, jaundice and smallpox.

Were those early medical practitioners onto anything? Apparently, yes.

Studies show the juniper berries used as an ingredient for gin contain compounds rich in essential oils and flavonoids that function as potent antioxidants that protect against the oxidative damage caused by free radicals. Juniper berries have also been found to have antibacterial, antifungal and antiviral properties, and they may help protect against gastrointestinal disorders and liver diseases.

Long before science supported the belief that gin held medical properties, word spread of its use as a cure-all. The wealthy were soon partaking of it, often mixing it with other ingredients such as lemon juice, honey and spices. It became commonplace to supplement gin with hot tea, lemon or honey to relieve cold and flu symptoms.

The public often associates gin with the British. The liquor’s popularity skyrocketed there after King William III, known as William of Orange, banned the import of French brandy. As the British administered their colonies in the tropics, they relied on it to mask the bitter taste of the quinine they drank to fight malaria. Gin even helped provide “Dutch courage” to English troops during the Thirty Years’ War.

ALCOHOL KILLS MORE THAN 95,000 AMERICANS EVERY YEAR —webMD

Like all good things, gin has its downside, too. It earned the sobriquet of “mother’s ruin” in the days when people mixed it themselves in bathtubs. Licensing has long since regulated the distilling process and made the spirit safe for consumption.

Tonic or not, gin is hot right now—revenue is expected to reach $2.9 billion in the United States, and $15.5 billion globally this year.

Juniper berries used as an ingredient for gin contain compounds rich in essential oils and flavonoids that function as potent antioxidants.

V.J.O.P.

The botanical-forward booze once known for its medicinal benefits has been the fastest growing spirit for at-home consumption since the beginning of the pandemic

—a 1930’s gin ad

Embracing Equity

International Women’s Day (IWD) was observed for the first time in Austria, Denmark, Germany and Switzerland on March 19, 1911. On that day, more than a million people gathered at IWD rallies and events to campaign for women’s rights to work, vote, be trained, hold public office and end discrimination.

Less than a week later, more than 140 working women were killed in the Triangle Shirtwaist Factory fire in New York City—most of them Italian or Jewish immigrants. That event became the focal point of subsequent IWD events, and it drew attention to working conditions and labor legislation in the U.S.

In 1913, IWD moved to March 8 and has been celebrated that day every year since. This year’s IWD theme is #EmbraceEquity—a motto that supports a call to action for gender parity.

And the Oscar goes to ...

Luckbox’s Oscars prediction for Best Picture:

What will win:

Top Gun: Maverick

What should win: Everything Everywhere All at Once

Angel’s wings

The Tuesday before Ash Wednesday is celebrated in Polish culture with paczki—rich, deep-fried donuts stuffed with fruit or cream filling and covered with powdered sugar or icing. The pastry is available at Polish delis and bakeries around the world.

3.14

Pi, a constant value that represents the ratio of a circumference of a circle to its diameter, comes out to about 3.14. It’s represented by the Greek letter π and celebrated on Albert Einstein’s birthday.

Pi goes on for at least 2.7 trillion digits, and only 477 people around the world have recited 100 or more of those numbers, according to a 2017 article in Mic, a newsletter that targets millennials.

Akira Haraguchi, the unofficial record-holder, recited 111,700 digits in 16 hours and 30 minutes in 2006.

How to Choose an ETF

Exchange-traded funds reduce risk by diversifying portfolios

Retail investors had their choice among 3,145 exchange-traded funds (ETFs) as of the beginning of this year, according to Morningstar. But how do you pick the right ones?

Here are some key questions to ask and three metrics to consider. Keep in mind that nobody has to choose just one ETF and that prudent investors often add diversification on top of diversification.

Key metric Why is it important?

Expense ratio

Dividend yield

Recent returns

How much does it cost to hold the fund? While you never get a bill to pay, high expenses can drag down an ETF’s returns.

Does the fund pay a dividend? If so, how much will the dividend provide as a return (assuming the fund doesn’t move).

While the past may not predict the future, it’s important to consider how markets have performed historically.

A great question to start with is this: “Where do I see growth potential around the world?” Investors with money already invested in U.S. stocks may look overseas for diversification. Here are some possible global funds:

ETF symbol Expense ratio Dividend yield Average return (5 years)

What market does it track?

EEM 0.69% 2.25% -2.1% Emerging market economies

EFA 0.33% 2.48% 1.6% Developed economies outside North America

EWJ 0.50% 1.75% -0.3% Japan

EWW 0.50% 2.33% 2.6% Mexico

EWZ 0.58% 11.04% -1.6% Brazil

FXI 0.74% 2.07% -7.2% China

By James Blakeway

What if an investor decides to stick with domestic funds? Well, after chanting, ”USA…USA,” it’s good to assess both broad market ETFs and sector- or industry-specific funds.

ETF symbol Expense ratio Dividend yield Average return (5 years)

What market does it track?

SPY 0.10% 1.63% 9.3% S&P 500

Also consider whether to invest just in stocks. Certain ETFs provide access to markets like bonds and precious metals.

ETF symbol Expense ratio Dividend yield Average return (5 years)

What market does it track?

BNDX 0.07% 3.0% -0.22% International Bonds

SPBO 0.03% 5.3% N/A Corporate Bonds

TLT 0.15% 3.8% -2.74% U.S. Treasury Bonds

SLV N/A 0.0% 6.61% Silver

GLD N/A 0.0% 6.53% Gold

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Hooked on Pharma

AstraZeneca manufactures top-selling drugs, including Crestor, Symbicort and Nexium, at the Cambridge Biomedical Campus in Cambridge, England

By Stephen W. Bigalow

AstraZeneca (AZN), a British-based biotech and pharmaceutical company, has produced steady growth in sales and earnings for the past five years.

It recently received a contractual commitment to provide COVID-19 vaccines for China. Positive trading from this level would produce a J-hook pattern breakout.

The J-hook has a recognizable price move, and the third wave uses the same magnitude as the first. Trading above $72.50 would indicate Wave 3 is in progress, making the $90 area a viable target.

Stephen W. Bigalow, a veteran of 45 years of trading, directs a candlestick analysis learning forum at candlestickforum.com.

Price target

AstraZeneca (AZN)

Technology: Biopharmaceutical

Market Cap: $215 B

Employees: 76,100 (as of 2020)

J-hook pattern

A J-hook pattern provides a high-probability price target. Wave 3 is usually of the same magnitude as Wave 1.

(As of Jan. 20)

Beta versus SPX: 0.56

One-year total return: 14.9%

Analysts’ target (Avg.): $90

Positive trading has produced a J-hook pattern for AstraZeneca. Source:

CRYPTO CURRENTLY THE STATE OF CRYPTOCURRENCIES AND DECENTRALIZED FINANCE

Tokens of Depreciation

Cryptocurrency exchanges issue tokens to reward loyalty— but the terms are subject to change

By Mark Helfman

Of the top 50 cryptocurrencies listed recently on CoinGecko, seven were exchange tokens, a type of loyalty or rewards program for a cryptocurrency exchange.

These tokens serve legitimate purposes on their exchanges by offering perks that include discounts on trading fees and access to exclusive promotions. When demand for those benefits increases, investors can sell their tokens for a profit.

At the same time, exchanges control the tokens and can change the terms, supply, function and benefits at will.

Unlike Bitcoin or other cryptocurrencies governed by immutable blockchains and computer protocols that no single entity can change, exchange tokens function more like frequent flier miles or cash-back rewards delivered on a blockchain.

Some exchanges sell the tokens to fund their operations or cover liabilities. Many hold some in reserve to sell or use as collateral for loans. The failed FTX exchange did that with its FTT token.

In fact, FTX counted its token as an asset on its balance sheet while using its trading arm, Alameda, to prop up the price. Imagine General Motors creating 1 billion GM tokens, selling a single token to a Buick dealer for $100, then

Investors sometimes sell their tokens for a profit, but many view them with concern.

claiming to have $100 billion in assets—and borrowing against those (imaginary) assets.

It’s no wonder savvy investors view these tokens with concern.

Not all cryptos

But if all cryptocurrencies are worthless, then their form is irrelevant, right?

Perhaps investors can tell the difference between permissionless, decentralized financial protocols and the businesses that use

Are exchange tokens bad investments?

those protocols to create their own centralized money systems.

The former is a new technology secured by token incentives. The latter is a substitute for revenue, profits, yield and productivity.

Does that mean exchange tokens are bad investments?

For the most part, yes.

For those who consider cryptocurrency a game of greater fools, exchange tokens exemplify that (inaccurate) perception.

Few people buy Dave & Buster’s tokens because “they might go up if people use Dave & Buster’s.” Lots of people buy Dave & Buster’s tokens because they enjoy playing games and winning prizes.

If only the exchanges promoted the tokens that way.

Seeking proof

Bitfinex defines its LEO token as “designed to empower the Bitfinex community.” Crypto. com speaks of a “trading, payment and financial services token for a cross-asset intermediary settlement layer.”

Gate and Binance built decentralized financial platforms around their tokens, ostensibly with community governance.

In reality, the exchanges still dictate the issuance, function and utility of the tokens. Token holders receive no equity in the business nor any claim on its assets.

When exchanges create tokens, they do the same thing credit card companies and retailers do with loyalty and rewards.

Users can debate the utility of tokens as perks. As investments, the conclusions are far more straightforward.

Mark Helfman, crypto analyst at Hacker Noon, publishes the Crypto Is Easy newsletter at cryptoiseasy. substack.com and wrote Bitcoin or Bust: Wall Street’s Entry Into Cryptocurrency. @mkhelfman

Corporate coin caps

While not at the same scale as Ethereum or Bitcoin, some tokens exhibit sizable market caps. Take LEO, for example, which is used on iFinex platforms and is valued at more than Papa Johns, a $3 billion company.

For the most part, yes.

Big Pharma’s Big Gains

Given enough time, stock in pharmaceutical giants has yielded life-altering gains

By Tim Knight

With a successful COVID-19 vaccine and a single-digit price-to-earnings ratio, Pfizer seems poised for continued growth.

Many investors will look back upon 2022 as a disaster.

It was the worst market for bonds in over a century, and even the largest and best-known tech stocks lost about one-third of their value— with a few losing virtually all their market cap. Value plunged for cryptocurrencies, stocks in social media companies and yield-sensitive exchange-traded funds.

Yet “big pharma” remained a relatively safe haven and continued to produce life-changing profits for long-term holders. Plus, there’s no indication the bonanza will end anytime soon.

The United States healthcare system is famously expensive, and much of the revenue flows into the coffers of pharmaceutical companies.

Over the past half century, the absolutely gargantuan gains for four major firms have ranged from “only” about 12,000% to about twice that much. Those firms are Bristol-Myers Squibb (BMY), Eli Lilly and Co. (LLY), Merck & Co. (MRK) and Pfizer (PFE).

Fab Pfizer

Because of its popular and widely distributed COVID-19 vaccine, Pfizer has sparked more controversy than other stocks in its sector. It’s also fundamentally the least expensive, with a single-digit price-to-earnings ratio (P/E).

The “bull run” following its basing pattern in the 1970s lasted a full 20 years. The next basing pattern, which took nearly 15 years to complete, is relatively young—assuming a lengthy bull market in Pfizer is to follow. So, even at present prices, Pfizer might be the best opportunity among the stocks featured here.

Eli Lilly has been one of the most exceptionally profitable investments over the past half century. Shares are up about 24,000% since 1970. The ascent was especially swift since the bottom of the financial crisis of 2008. Over

Pictures of Lilly

Over a period of decades, four pharma stocks have always recovered and pushed on to new highs.

Pfizer fortunes?

the past dozen years, the stock has gone from about $20 to nearly $400.

Large saucer patterns have preceded each ascent. The first spanned 1973 to 1984, the second occurred from 1990 to 1995 and the third (and largest) took place from 2000 to 2016.

Mercky waters

The technicals and fundamentals tell contradictory stories about Merck. The price relative to earnings looks like an acceptable buy, but the stock could have some distance to fall.

With the rapidity of its ascent in recent years and a P/E ratio of about 54, Lilly is an exceptionally expensive stock right now. Longterm investors probably would want to wait for a potential smack-down before acquiring shares, given its tremendous distance from principal support.

Merck works

Merck has been another exceptional performer, providing long-term investors with returns of about 22,000%. Over the past five decades, it formed two major bullish bases: the first all through the 1970s and into the early 1980s, and the second from the late 1990s through 2015. Each was followed by a hearty bull run.

Bristol-Myers “Saucer” Co.

Bristol-Myers Squibb formed two saucer patterns in prior decades. Investors may want to hold off for another one.

Bristol-Myers Squibb

These stocks aren’t immune to severe bear markets or shifts in investor preference. For example, a person buying Merck in late 2000 would have seen nothing but losses for a full 14 years! That’s an exceptionally long time to hope a stock will turn around, although holding it eventually paid off handsomely.

Fundamentally, the stock isn’t particularly expensive with a P/E of 18. At the same time, it could fall nearly 50% and still not violate its ascending trendline. Much of the gain in pharmaceutical stocks in recent years has been driven by investors fleeing disasters, such as tech stocks, as well as by those seeking pandemic profits.

The Squibb game

Like all of the stocks in this article, Bristol-Myers Squibb has been a strong and steady performer, eventually. The prices tend

to “base” in a saucer formation before breaking out, as shown from the late 1970s to the early 1990s, and in other more recent (and much larger) instances.

Naturally, even such a successful stock occasionally back-tracks. Indeed, it lost about two-thirds of its value during the bear market of 2000-2002.

As safe and reliable as a chart like this might appear, investors are at the mercy of timing. They might go into a seemingly safe stock

such as this and see most of their investment wiped out before the stock stabilizes and turns around—which can take many years.

Over a period of decades, however, these pharma stocks have always recovered and pushed on to new highs.

Tim Knight has used technical analysis to trade the equity and options markets for decades. He founded Prophet Financial Systems and created the website slopecharts.com, which offers free access to his charting platform. @slopeofhope

Even amid the market disasters of 2022, “big pharma” remained a relatively safe haven.

America’s healthcare system is famously expensive, and much of the revenue flows into the coffers of pharmaceuticals companies.

Those Other Dollars Are Looking Up

As the U.S. dollar declines from the heady highs of 2022, it’s time to revisit the Australian and Canadian dollars

By Ilya Spivak

The value of the U.S. dollar soared in 2022 as currency markets followed a familiar script.

It happened because the Federal Reserve delivered more interest rate hikes than any other top central bank, pushing them up by a blistering 4.25% in just 10 months.

Owning U.S. dollar-denominated assets suddenly offered the highest yield net of inflation in nearly 20 years. The Bank of Japan didn’t move rates at all, and the yen (JPY) became the year’s weakest major currency.

The other majors landed mostly as expected. The pace of rate hikes in the Eurozone broadly matched those of Norway and Sweden, but the euro (EUR) outperformed against the krone (NOK) and krona (SEK).

That makes sense because the high cost of borrowing cooled economic activity and soured the appetite for risk-taking in business ventures and investing.

Against that backdrop, capital tends to look for safety in “end demand” economies where the rich importers live. It flows away from “vendor” economies with greater dependence on exports.

Just think about who’s likely to feel financially safer in an economic downturn—the customer at the fancy coffee shop or the barista.

This calculus also helps explain why currencies weakened in commodity-exporting countries like Australia, Canada and New Zealand,

even when their central banks outpaced the interest-rate actions taken by the European Central Bank (ECB).

However, the currencies of those three countries bested the krone and the krona as faster rate hikes from the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) and the Bank of Canada (BoC) offered an edge.

Political factors helped account for what happened. The Swiss franc (CHF) stood tallest among European majors despite a relatively smaller rates lift from the Swiss National Bank (SNB). The currency has a reputation as a regional haven.

Most of Europe’s economies have been exposed to the conflict in Ukraine, making Switzerland attractive as a comparative safe harbor yet again.

Meanwhile, government turmoil in the United Kingdom has anchored the value of the British Pound (GBP) despite a relatively energetic Bank of England (BoE). The country had three prime ministers between the start of September and the end of October.

The way forward in 2023 seems less clearcut. Market pricing suggests most of last year’s rate-hike leaders will see their advantage narrowed as laggards play catch-up. That means the largest monetary policy changes might benefit the euro and British pound. However, yield-chasing may go out of fashion, ceding the spotlight to capital preserva-

The “Aussie” may soon end a two-year downtrend against the Canadian dollar.

tion and boosting the U.S. dollar as the most liquid cash-out venue of choice. It could come as sharply higher lending rates take a toll on growth and financial stability.

The global economy has been shrinking at an accelerating pace since last August, according to purchasing managers surveyed by S&P Global and JPMorgan.

At the same time, spikes in short-term U.S. dollar borrowing costs akin to those seen in 2007 amid the global financial crisis are a sobering sign of credit stress. They came as markets struggled and ultimately failed to digest an earlier round of rate hikes, and traders seem worried something similar is back— thanks to central banks’ latest efforts.

So, it seems appealing to plot a path away from risk on/off extremes to create a nuanced stance. Weighing the prospects of the Australian and Canadian dollars provides a case in point. They reside on the same “risk-on” side of the sentiment divide, which may dull the influence of big swings in the overall market mood.

Meanwhile, a genuine divergence in their economic stories may be developing. The Australian dollar is strongly exposed to China, its largest export market. Beijing’s sudden turn away from the highly restrictive zero-tolerance COVID policy stirred hopes for an economic revival, after current spikes in case numbers subside.

The Canadian dollar is similarly anchored to the U.S., where economists place the odds of a recession within a year at a dismally high 65%.

Australia’s central bank is also expected to deliver another 75-100 bps in rate hikes in 2023, while Canada’s central bank retreats into wait-and-see mode.

The markets seem to have noticed. The performance of the /6A Australian dollar futures contract against its /6C Canadian dollar counterpart suggests the so-called “Aussie” may be set to end a two-year downtrend against its North American cousin.

Higher interest rates

In recent months, the U.S. Federal Reserve has hiked interest rates more than any other central bank.

2022 Policy Interest Rate Change vs FX Spot Return

Reversal of fate

Comparing the Australian dollar futures contract with its Canadian counterpart suggests a brighter outlook for the so-called “Aussie.”

6A/6C Futures Spread

Data courtesy of

Confirmation on a sustained breach of 0.9324 may set the stage for a rise toward 0.9515 at first. Alternatively, slipping back below 0.9112 might neutralize upward pressure, at least in the near term.

Ilya Spivak heads tastylive Global Macro and hosts the network’s Macro Money show. @ilyaspivak

DO DILIGENCE QUIET FOUNDATION HELPS INVESTORS FIND NEW TRADING OPPORTUNITIES

Pandemic Profits

Pfizer and Moderna profited by developing vaccines at a breakneck pace, but should investors add them to their portfolios in 2023?

By James Blakeway

id you get Pfizer or Moderna?”

DThat question came up in countless everyday conversations during the past two years as America got vaxxed and de-masked in an attempt to return to a normal life post-lockdown.

So, let’s look at the two major public companies at the forefront of Operation Warp Speed, the effort to deliver mRNA vaccines to the public as soon as possible.

Moderna

Although founded in 2010, Moderna (MRNA) wasn’t a household name until 2020. Shares in the biotech firm began trading on the NASDAQ exchange in December 2018, closing the first day at $18.60, 19% below the $23 initial public offering (IPO) price.

Moderna stockholders suffered through a miserable year in 2019 as the shares declined to a low of $11.54 in August and spent very few days above the IPO level.

The stock struggled for good reason—the firm was burning money on research and development expenses. Most quarters it brought in less than $20 million in sales and spent more than $100 million.

Everything changed in 2020 as the race to develop COVID-19 vaccines became paramount, and

Moderna’s years of mRNA research would finally pay off.

In Q1 2020, the worst revenue quarter on record for Moderna, the company posted revenue of $8.4 million and R&D expenditures of $115 million. A year later, as vaccine distribution began to roll out, the Q1 revenue figure reached $1.7 billion with an R&D expense of $400 million. It was the company’s

at just over $450. But the meteoric rally was met with swift craters in price, even before the general market pullback of 2022.

With Moderna trading in a range of $170 to $210 so far this year, it seems unlikely the stock will return to $450 anytime soon. That said, analysts remain optimistic about Moderna, with an aggregate price target of over $230.

Moderna was scheduled to report another round of earnings on Feb. 23.

Pfizer

Pfizer (PFE) products have been an integral part of global medicine for decades. By 1936, the company had become a world leader in vitamin production, and in 1944 it began mass-producing penicillin.

first quarter of positive earnings per share (EPS). (See Earnings explosion, right).

Before publishing Q1 results on May 6, 2021, Moderna’s stock had already reached an all-time high over $189 in both February and May of that year. Despite dropping to $160.50 post earnings, IPO investors were still sitting on a near 600% return.

The euphoria continued as Moderna shares seemingly gained meme-stock status and capped out

For 30 years, the stock paid steady dividends while providing incremental price increases for investors who rode out the dot-com crash.

Revenue figures tell a similar story, with the stock earning $10 billion to $14 billion a quarter, every quarter, from 2013 through 2019. While 2019 saw a pullback as COVID gripped the world, Q3 2021 to Q4 2022 earnings consistently rose above $20 billion per quarter as vaccines and then Paxlovid padded Pfizer’s bottom line and EPS.

As with most stocks, Pfizer got caught up in the systemic selloff of

Moderna, a long shot that paid off for early investors, will likely morph into something resembling an established company like Pfizer.

2020. Its price tumbled from over $38 per share to below $27 between January and March. In 2021, it achieved a peak of $61.71 before pullbacks throughout 2022.

We asked Luckbox readers which manufacturer provided their first set of vaccines:

Luckbox readers Statista survey

Earnings explosion

Pfizer was already well-established before COVID-19, but the pandemic brought Moderna to profitability for the first time.

The stock sat between $45 and $50 to start the year. Wall Street analysts have set a current average price target of $55, providing hope of potential upside for investors buying at current prices.

Past and future

The pandemic made Moderna and possibly even saved it, pulling the struggling biotech into the stratosphere with a wave of profitability. While the company will lead mRNA innovation, it will continue diversifying its product line.

That seems a natural progression for a biotech like Moderna, whose future profits will not be decided entirely by a single U.S. Food and Drug Administration approval.

Likewise, Pfizer will continue to innovate and add to its product suite.

So, should investors opt for Moderna or Pfizer as a healthcare play in their portfolio? Why not both? While Moderna was a long shot that

paid off for early investors, it will likely morph into something more like Pfizer in the coming years.

Investors looking to take a broader stake in healthcare might also check out IYH, the iShares U.S. Healthcare exchange-traded fund. It provides diversification across over 100 healthcare firms. But bear in mind that

exposure to Moderna accounts for less than 2% of the ETF’s total assets and Pfizer is just 5%.

James Blakeway, Luckbox technical editor, serves as CEO of Quiet Foundation, a data science-driven subsidiary of tastylive that provides fee-free investment analysis and trade ideas for self-directed investors.

@jamesblakeway

Pharmaceutical maker Pfizer had achieved success even before its COVID-19 vaccine boosted profits.

Pfizer (PFE) — Moderna (MRNA)

FUTURES A SAVVY FUTURES TRADER’S TAKE ON THE MARKETS

Bonds Look Strong

By Christopher Vecchio

Even though equity markets declined by double digits last year—more than 20% in some cases—the bond market didn’t provide a bastion of safety.

In fact, the S&P U.S. Aggregate Bond Index was down more than 11.5% at the end of the year. From U.S. treasuries to investment grade to high yield, it was a bad time through and through.

But the disappointment of 2022—spurred by multi-decade highs in inflation and the most aggressive central bank rate hike cycles since the 1970s—may be a relic of the past.

The groundwork is laid for 2023 to be a better year for bonds, especially for U.S. treasuries, including two-year (/ZT), 10-year (/ZN), and 30-year (/ZB). Let’s examine three reasons why.

The “Fed ratio” perspective

Bond yields will outpace stock earnings and dividend yields this year. That’s unusual because equity markets have tended to produce a higher annualized return than treasuries since the end of World War II.

However, stocks also carry more risk than bonds and thus returns on stocks have been more volatile. Specifically, the standard deviation of stock market returns has been higher than those of the bond market.

But the expectation of higher returns on stocks makes them a potentially more appealing investment than bonds.

The Fed model measures the trade-off by comparing the earnings yield (E/P; the inverse of the P/E ratio) of the S&P 500 to U.S. Treasury 10-year yield.

Fed fund pricing

Fed fund futures show the market’s expectations for rates, and at press time they indicated pricing in a sub-5% terminal rate by mid-year.

As long as the earnings yield of the broader stock market remains higher than the yield on bonds, it would follow that investors would favor stocks over bonds.

But if the S&P 500’s earnings yield drops below the U.S. treasury 10-year yield, why would investors take on additional risk to earn a lower return?

The U.S. treasury 10-year bond and 30-year bond yields began this year at 3.880% and 3.975%, respectively. By comparison, the Dividend Aristocrat ETF (NOBL) had a dividend yield of 2.6% heading into 2023.

The S&P 500 (/ES) has a P/E ratio of 19.97, providing an earnings yield of 5.01%. For many investors, the close proximity of U.S. treasury yields to earnings yields and dividend yields will make them alluring, particularly at the long end of the yield curve (/ZN and

/ZB).

The groundwork is laid for 2023 to be a better year for bonds, especially U.S. treasuries.

Investing in bonds didn’t pay off in 2022, but three factors may combine to change that this year

The end of rate hikes

The Federal Reserve may raise interest rates a few more times this year but not much more than that.

Even so, with the Federal Open Market Committee outlining its case in December 2022 for its main rate to end 2023 at 5.1%, interest rate markets aren’t in agreement.

In fact, according to Fed fund futures, the Fed’s main rate will peak at 4.92% by the middle of this year before subsiding to 4.55% by the end of December. (See chart.)

Assuming the market is correct, the short end of the U.S. treasury yield curve may not feel significant upward pressure (i.e., further decline in prices) much longer.

Fed policy, aimed at the short end of the yield curve, tends to have a greater impact on two-year notes (/ZN) than on those at the long-end of the yield curve. Two-year notes, which lost 6% in 2022 as the two-year yield rose from 0.766% to 4.428%, may be poised to rally—particularly in the second half of this year.

Less inflation

Federal policymakers were maligned last year for calling inflation “transitory.” But they may have been right, and it’s just lasting longer than anticipated.

Sharp deceleration in price pressures over the past few months may return inflation to 2% to 4% by mid-2023.

Coupled with the prospect of an economic slowdown and potentially a recession this year, the long end of the U.S. treasury yield curve, with elevated interest rates in both real and nominal terms, may offer great value heading into next year.

The long end of the U.S. treasury yield curve captures both growth and inflation expectations, which have been subsiding in recent months.

Ten-year notes (/ZN), which lost 13.93% in 2022 as the 10-year yield rose from 1.513% to 3.880%, and 30-year notes (/ZB), which lost 21.87% as the 30-year yield rose from 1.902% to 3.975%, may be positioned for a strong performance throughout 2023.

Christopher Vecchio, CFA, head of Futures & Forex at tastylive, forecasts economic trends in a number of countries. @cvecchiofx

Much-maligned federal policymakers may have been right when they called inflation “transitory.” It may return to 2% to 4% by mid-2023.

CHERRY PICKS RIPE & JUICY TRADE IDEAS

Good Pharma Karma

The healthcare sector is set to contribute to your bottom line

By Michael

Rechenthin

The market downturn has been kind to the healthcare sector. The S&P 500 (SPY) dropped 16% since the beginning of the bear market, while the Health Care Select Sector SPDR Fund (XLV) decreased by only 4%.

The healthcare sector appears to be acting like a consumer staple and may recover strongly when the market rebounds.

So, what are some interesting healthcare stock picks?

The XLV healthcare exchange-traded fund is an attractive option for investors seeking to minimize risk and maximize stability.

It consists of the largest health care stocks, such as UnitedHealth (UNH), Abbott Laboratories (ABT), Amgen (AMGN) and Merck & Co. (MRK), as well as other companies in the pharmaceutical, healthcare and biotechnology industries.

By investing in the ETF, investors can benefit from the stability and potential growth of the entire healthcare sector, instead of just a single stock.

For investors seeking greater volatility and a potential for increased gain, Pfizer (PFE) may be an attractive choice. The company has been down 17% year-over-year and has recently taken steps to offer its portfolio of drugs, including chemotherapies and vaccines, to 45 low-income countries.

To capitalize on the high volatility of the stock while still taking a bullish stance, consider purchasing 100 shares and selling an expensive call contract.

With that strategy, investors can benefit from the potential upside while mitigating

some of the risk. The current dividend yield of 3.6% is especially beneficial for long-term investors.

Both UnitedHealth Group and Johnson & Johnson (JNJ), two of the most widely traded healthcare stocks, have a strong presence in the industry.

They’re large-cap stocks with similar market capitalizations of around $445 billion. UnitedHealth trades about $1.6 billion of

stock per day, while Johnson & Johnson trades roughly $1.4 billion per day.

Both have done well over the past 12 months, with UnitedHealth up 5% and Johnson & Johnson up 3%. Those gains seem considerable because the S&P 500 is down 13% over the same period.

Michael Rechenthin, Ph.D. (aka “Dr. Data”), is head of research and development at tastylive @mrechenthin

Sign up for free cherry picks and market insights at info.tastytrade. com/cherry-picks

MICHAEL ANTZAS

1. tastyworks trading platform

2. Apple desktop

3. tastylive on screen

4. Murphy, Antzas’ poodle

5. Stand-up desk

6. Favorite book: The Unlucky Investor’s Guide To Options Trading by Julia Spina

peace of mind as well as a reasonable premium as long as the IV (implied volatility) is 35 plus.

Average number of trades per day?

Six to 10

What percentage of your outcomes do you attribute to luck?

Delta (Δ): 16 delta strangle: A neutral approach that combines selling one call option above the current stock price and one put option below. Each option has a 16 delta, which means the stock should theoretically stay between the options approximately 68% of the time (100 - 16 - 16 = 68). The goal of the strategy is for the stock to stay between the options before they expire. As time passes, if the stock doesn’t move, the options will decay (lose value) and the spread can be bought back for less than it was sold for.

using probabilistic methods—a new full-time career. Eight years later, I am excited to get up every morning and continue studying and trading.

Worst trading moment?

How did you start trading?

The company I worked for 27 years ago offered a 401(k), and on the weekends I would go to Barnes and Noble and read and research trading strategies.

Favorite trading strategy?

The 16 delta strangle personally provides

About 15%. In my opinion, luck is a small part of the strategy. I believe using trade analytics and mechanics reduces the percentage of luck. I was introduced to options after the dot-com bubble. I switched brokerage firms after taking a 50% hit to my portfolio. The advisor I chose was 20 years my senior and asked if I used covered calls or sold puts. This was completely foreign to me but fortunately he could explain the basics, which began my options journey. The housing bubble was the next wake-up call. After many Google searches, I found tastylive. I knew I needed a better mousetrap.

Favorite trading moment?

After discovering trading, I realized retiring from operating automobile dealerships for 35 years was a possibility. So, I studied and researched and decided to make trading—

The March 2020 pandemic. The start of 2020 was very positive. I got the brilliant idea of selling naked puts on SPX (S&P 500) and NDX (Nasdaq-100) after a 400-point down week and then continued selling 10 delta puts on SPX and NDX. I ventured away from the tastylive “trade small” philosophy. The bottom fell out, and I had three margin calls in one day.

Favorite trading book

The Unlucky Investor’s Guide to Options Trading by Julia Spina 2022, $24.95 Amazon hardcover, 224 pages.

THE LAST PICTURE

You Won’t Believe What This Last Photo of Civilization Looked Like Before It Was All Too Late!

Luckbox believes the generative artificial intelligence capabilities that debuted late in 2022 will have a more profound impact on business and culture this year than any other technological innovation since the introduction of the internet.

OpenAI’s third version of its conversational robot, ChatGPT, got off to an unprecedented start in November by engaging more than a million users in its first five days. (It took Facebook 10 months.)

OpenAI was founded in 2015 by CEO Sam Altman, Elon Musk and others. Microsoft invested $1 billion in the company in 2019 and is on the verge of kicking in another $10 billion. The cash infusion will solidify a stra-

tegic partnership that has alarmed Google execs and prompted HR departments to begin reconsidering their headcounts.

The conventional wisdom around AI has been that computers have the edge over humans in making data-driven decisions but simply can’t compete on qualitative tasks. That thinking seems likely to change soon because the frightening “singularity”—the tipping point when humans lose control of technology—may be closer than we imagined.

The next Luckbox will focus on the implications and opportunities of generative AI and the anticipated 2023 ChatGPT v4 release—what this means for Microsoft’s stake in the company and for Google’s inter-

net search dominance. Naturally, we’ll also delve into how it may affect a host of other industries and individuals, including active investors.

For this issue’s Last Picture, we asked AI image platform Midjourney to conjure up pictures of “the last selfie ever taken.” You’ll see our favorite above.

To lighten things up, we prompted ChatGPT to write “a clickbait-like caption for the very last photographic image taken prior to the apocalyptic end of civilization.”

Seconds later, the bot graciously complied, spitting out the headline above that would make Business Insider and Buzzfeed editors envious.

69TH ANNUAL MAGGIE AWARDS

> BEST SPECIAL THEME ISSUE (DECISION 2020)

AMERICAN SOCIETY OF MAGAZINE EDITORS

> BEST NEWS & POLITICS COVER 2020— READERS’ CHOICE (DECISION 2020)

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MAGGIE AWARDS OF EXCELLENCE (68TH & 69TH ANNUAL)

> SPECIAL THEME ISSUE (DECISION 2020)

> SPECIAL INTEREST PUBLICATION (THE ISSUE WITH PODCASTING)

> SPECIAL INTEREST PUBLICATION (DECISION 2020)

> SPECIAL THEME ISSUE (THE HIGH ANXIETY ECONOMY)

> NEW CONSUMER PUBLICATION 2019

NICHE MAGAZINE AWARDS

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> BEST BUSINESS-TO-BUSINESS MAGAZINE 2020

> NEW MAGAZINE DESIGN—HONORABLE MENTION 2020

FOLIO EDDIE (EDITORIAL) AWARDS

> BEST FULL ISSUE, CONSUMER (ART ISSUE) 2022

> BEST FULL ISSUE, CUSTOM CONTENT (THINKING IN BETS) 2022

> BEST HOW-TO, SINGLE ISSUE (THINKING IN BETS) 2022

> SERIES OF ARTICLES—HM 2021

> FULL ISSUE (AMAZON)—HM 2021

> BEST HOW, SINGLE ISSUE (ART & SCIENCE OF FORECASTING) 2021

> BEST FULL ISSUE (HOW NOT TO DIE) 2020

> BEST NEW MAGAZINE—HM 2020

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FOLIO OZZIE (DESIGN) AWARDS

> DESIGN IN CUSTOM CONTENT—HONORABLE MENTION 2019

> DESIGN IN A NEW MAGAZINE—HONORABLE MENTION 2019