Ozempic may soon be to weight-loss drugs what Advil is to ibuprofen – an expensive alternative to the generic brand. That’s if the Federal Trade Commission has its way.

On Tuesday, the regulator announced it’s challenging hundreds of patents filed by pharmaceutical players that it contends are mere ploys to keep companies from developing and distributing cheaper generic versions of 20 different brand-name drugs.

Patent Flop

Brand-name drugs are typically based on dozens of patented ingredients, manufacturing processes, and other various forms of intellectual properties — protecting them from generic copycats for a 20-year window before expiration (though it’s usually more like 10 years, due to all the clinical testing it takes to bring a drug to market). While the Food and Drug Administration usually mediates and manages patent disputes in the field, the FTC is stepping in this time to flag what it views as “junk patents” unnecessarily filed by pharma players with the intent to “block competition and inflate the cost of prescription drugs.”

The agency is targeting over 300 patents filed by 10 companies, including Ozempic maker Novo Nordisk, as well as diabetes and asthma-related patents from firms like AstraZeneca, GlaxoSmithKline, and Novartis. If the agency’s challenges prove successful, it could expedite the process for generics to hit the market — offering a major boon for consumers and patients: 

• A 2021 study published by the American Medical Association’s Jama Network found that introducing one generic competitor reduced initial brand-name drug prices by 17%, while a second reduced prices by nearly 40%, a third by 52%, and a fourth or more by 70%.
• Successful patent challenges could change the weight-loss drug landscape. For instance, if current patents hold, a generic Ozempic competitor isn’t likely to hit the market until 2031, and a prescription for the drug costs around $1,350 a month today, costly enough for some insurers to nix it from coverage plans.

Of course, pharma companies contend that the decade-long protected window is crucial for justifying the massive investment in new drug research and development. 

Weight and See: Eli Lilly — not flagged by the FTC for bogus patents — is enjoying the fruits of its exclusive name-brand weight loss and diabetes drugs, Mounjaro and Zepbound. During its first-quarter earnings report on Tuesday, the company increased its full-year revenue guidance by roughly $2 billion more than previous projections, thanks largely to an expected increase in production capacity. That was enough to push its share price to an all-time high; year-to-date, Eli Lilly is trading up about 31%. And it doesn’t have Lina Khan on its case about junk patents. 

They say “Make hay while the sun shines” — but it could be more accurate to say “Make hay while the sun’s rays blaze increasingly hotter.”

Arbol, a six-year-old climate risk insurance startup, has raised $60 million in Series B funding, Bloomberg reported Tuesday. While the insurance industry struggles to adapt fast to more climate change-related incidents (read: payouts), Arbol hopes to capitalize on that sluggishness and offer coverage in an increasingly uninsurable world.

I’m Not Happy, Bob

Climate change has cooked up a perfect storm for insurers. US home insurance is reaching record highs, and the risks of climate change-related damage in some regions are so high that the only insurers available to homeowners are state-backed “insurers of last resort.” The US isn’t the only one hurting, of course. Last week, the EU’s insurance regulator issued a Cassandra-esque warning to the Financial Times, saying insurers and states need to adapt quickly or face an extinction-level event. Notably, she cautioned against simply expanding areas excluded from coverage: “If you do that, you will, in the end, lose trust and lose your reason to be there.”

Enter Arbol. In 2020, the startup unveiled a system for determining payouts called “parametric insurance.” Rather than calculating losses, parametric insurance simply sets a benchmark that, if reached, triggers a payout. Benchmarks include things like wind speeds or specific amounts of rainfall, according to Arbol. But while Arbol has mostly targeted corporate clients like agriculture businesses, energy firms, and reinsurers, it now seems poised to move in where traditional insurers have fled:

• The new fundraising comes just a month after Arbol spun up a subsidiary catering to homeowners in US coastal communities — the exact communities experiencing a severe home insurance drought.
• The startup’s CEO, Siddhartha Jha, told Bloomberg the company is already profitable (although there’s no way to independently scrutinize the private company), and moving into home insurance offers a new revenue stream. “The world is starting to wake up to climate coverage gaps,” Jha said.

Why AI of Course: Parametric insurance isn’t a newfangled idea, according to Forbes. It’s been around for about 200 years but was never particularly popular — partly because it involves the delicate calculation of setting a predetermined payout amount completely independent of what actually happens in the future. Per Forbes’ reporting, the real catalyst in making parametric insurance more attractive is the availability of AI software to do all the mathematical heavy lifting.

No, I would not like any overpriced fries with that.

Low-income customers no longer comfortable with shelling out big bucks for burgers and chicken nuggets are tightening their belts, leading to subdued sales growth, McDondald’s said Tuesday as part of its Q1 earnings report.

Nothing Gold Can Stay

The burger giant has steadily hiked prices for the last decade, but the move really started to grab people’s attention over the past two years, when menu costs jumped 20%. 

But prices are relative to your zip code — a Big Mac might set you back $8.09 in Lee, Massachusetts, but only $6.49 in Hudson, New York, according to the McCheapest map. Plus, California recently raised its minimum wage to $20 an hour, so increased prices there were practically a given. 

While the price hikes are still working in McDondald’s favor, shrinking same-store sales and affordability are at the forefront of executives’ minds:

• First-quarter revenue grew 5% to $6.2 billion, in line with analysts’ expectations. But global same-store sales grew just 1.9%, slightly below what Wall Street had predicted.
• Executives said the chain lost some customers who have opted to eat more at home. McDonald’s plans more promotional deals and possibly larger burgers in the future. 

The Pause That Refreshes: One of McDonald’s biggest partners is employing a similar strategy of threading the needle between price hikes and affordability. Coca-Cola has been increasing the number of weeks that retailers are promoting 1.25-liter sodas as part of a value bundle targeted to appeal to price-conscious and lower-income consumers, Reuters reported. At the same time, Coca-Cola reported Q1 earnings and revenue on Tuesday that beat Wall Street’s expectations thanks to surging demand for higher-priced sodas and Minute Maid juices. As a result, the soda maker raised its revenue growth forecast.