Econ Advantage - JDI 2024

Econ Advantage and Answers—GFM Wave 1
Notes
This card contains cards about the economy (“econ”) for each side, including an econ advantage for the Hatch Waxman aff. There are also some cards that are helpful for the neg’s econ DA from the starter case neg. Many of these cards can be used in multiple ways. For example, the impact defense (Walt 20) could be either read by the neg against the advantage or by the aff against the neg’s econ DA (if the aff didn’t read the econ advantage in the 1AC).
To win this advantage, the aff needs to win that the plan spurs innovation. For the aff, this means that innovation should be a high priority. For the neg, this means that arguments that answer solvency or innovation (like patents bad) is helpful.
A lot of the negative’s evidence in this file is uniqueness (“UQ”). Some of this (like pharma UQ) can also be read to the starter pack advantage with disease and bioterror. But, be cautious of which of these you read. For example, you don’t want to mess with your story on innovation, econ, or patents bad so the pharma UQ might just be read with the court clog DA (another new Wave 1 file from our lab)
Econ Stuff Working
Aff
Sample 1AC Adv
US growth has slowed sharply
Paul Wiseman 4-25-24, “US growth slowed sharply last quarter to 1.6% pace, reflecting an economy pressured by high rates,” Associated Press, https://apnews.com/article/economy-growth-inflation-gdp-consumers-federal-reserve-5a64d255a09313dabe54954060a09530/ONBM
WASHINGTON (AP) — The nation’s economy slowed sharply last quarter to a 1.6% annual pace in the face of high interest rates, but consumers — the main driver of economic growth — kept spending at a solid pace. Thursday’s report from the Commerce Department said the gross domestic product — the economy’s total output of goods and services — decelerated in the January-March quarter from its brisk 3.4% growth rate in the final three months of 2023. A surge in imports, which are subtracted from GDP, reduced first-quarter growth by nearly 1 percentage point. Growth was also held back by businesses reducing their inventories. Both those categories tend to fluctuate sharply from quarter to quarter. By contrast, the core components of the economy still appear sturdy. Along with households, businesses helped drive the economy last quarter with a strong pace of investment. The import and inventory numbers can be volatile, so “there is still a lot of positive underlying momentum,’' said Paul Ashworth, chief North America economist at Capital Economics. The economy, though, is still creating price pressures, a continuing source of concern for the Federal Reserve. A measure of inflation in Friday’s report accelerated to a 3.4% annual rate from January through March, up from 1.8% in the last three months of 2023 and the biggest increase in a year. Excluding volatile food and energy prices, so-called core inflation rose at a 3.7% rate, up from 2% in fourth-quarter 2023. From January through March, consumer spending rose at a 2.5% annual rate, a solid pace though down from a rate of more than 3% in each of the previous two quarters. Americans’ spending on services — everything from movie tickets and restaurant meals to airline fares and doctors’ visits — rose 4%, the fastest such pace since mid-2021. But they cut back spending on goods such as appliances and furniture. Spending on that category fell 0.1%, the first such drop since the summer of 2022. Gregory Daco, chief economist at the tax and consulting firm EY, noted that the underlying economy looks solid, though it’s slowing from last year’s unexpectedly fast pace. The rise in imports that accounted for much of the drop in first-quarter growth, he noted, is “a sign of solid demand” by American consumers for foreign goods. Still, Daco said that the economy’s “momentum is cooling.” “It’s unlikely to be a major retrenchment,” he said, “but we are likely to see cooler economic momentum as a result of consumers exercising more scrutiny with their outlays.’’ The state of the U.S. economy has seized Americans’ attention as the election season has intensified. Although inflation has slowed sharply from a peak of 9.1% in 2022, prices remain well above their pre-pandemic levels. Republican critics of President Joe Biden have sought to pin responsibility for high prices on Biden and use it as a cudgel to derail his re-election bid. And polls show that despite the healthy job market, a near-record-high stock market and the sharp pullback in inflation, many Americans still hold dim views of Biden’s handling of the economy. Last quarter’s GDP snapped a streak of six straight quarters of at least 2% annual growth. The 1.6% rate of expansion was also the slowest since the economy actually shrank in the first and second quarters of 2022. The economy’s gradual slowdown reflects, in large part, the much higher borrowing rates for home and auto loans, credit cards and many business loans that have resulted from the 11 interest rate hikes the Fed imposed in its drive to tame inflation. Even so, the United States has continued to outpace the rest of the world’s advanced economies. The International Monetary Fund has projected that the world’s largest economy will grow 2.7% for all of 2024, up from 2.5% last year and more than double the growth the IMF expects this year for Germany, France, Italy, Japan, the United Kingdom and Canada. Businesses have been pouring money into factories, warehouses and other buildings, encouraged by federal incentives to manufacture computer chips and green technology in the United States. On the other hand, their spending on equipment has been weak. And as imports outpace exports, international trade is also thought to have been a drag on the economy’s first-quarter growth. Kristalina Georgieva, the IMF’s managing director, cautioned last week that the “flipside″ of strong U.S. economic growth was that it was ”taking longer than expected” for inflation to reach the Fed’s 2% target, although price pressures have sharply slowed from their mid-2022 peak. Inflation flared up in the spring of 2021 as the economy rebounded with unexpected speed from the COVID-19 recession, causing severe supply shortages. Russia’s invasion of Ukraine in February 2022 made things significantly worse by inflating prices for the energy and grains the world depends on. The Fed responded by aggressively raising its benchmark rate between March 2022 and July 2023. Despite widespread predictions of a recession, the economy has proved unexpectedly durable. Hiring so far this year is even stronger than it was in 2023. And unemployment has remained below 4% for 26 straight months, the longest such streak since the 1960s. Inflation, the main source of Americans’ discontent about the economy, has slowed from 9.1% in June 2022 to 3.5%. But progress has stalled lately. Though the Fed’s policymakers signaled last month that they expect to cut rates three times this year, they have lately signaled that they’re in no hurry to reduce rates in the face of continued inflationary pressure. Now, a majority of Wall Street traders don’t expect them to start until the Fed’s September meeting, according to the CME FedWatch tool.
Absent the plan--pharma industry gets cut by 1/3rd and losses will accrue exponentially--that kills the pharma industry and spills over to other markets.
Michael Gibney April 28 2022 Michael Gibney is a senior writer and editor for PharmaVoice. He covered the pharmaceutical industry as a for three and a half years at S&P Global Market Intelligence and served as an editor at FiercePharma and FierceBiotech. Besides industry reporting, Michael has also covered science, wildlife and environmental issues as well as local news in Connecticut and Montana. A graduate of Bucknell University and the University of Missouri Journalism School, he is based in the Washington, D.C., area where you’ll find him hiking with two retired racing greyhounds, finding local breweries and grilling in the backyard. Article: “The ‘innovation gap’ haunts Big Pharma, and the race is on for the next blockbusters” https://www.pharmavoice.com/news/innovation-gap-pharma-blockbuster-drug-biotech/622804/ JAY-HOCH
The ‘innovation gap’ haunts Big Pharma, and the race is on for the next blockbusters. The next big innovation wave is out there, and as pharmas expect massive losses without enough internal R&D to fill those shoes, smaller biotechs beckon. History often repeats itself, and the pharmaceutical industry’s current “innovation gap” is one they’ve seen before — the world’s largest companies find themselves in the precarious position of needing to make big new bets before their once reliable cash cows stumble. The innovation gap, also called the innovation deficit, is happening as companies watch some of their bestselling products of the last decade approach the end of patent protection — and with biosimilar competition on the horizon, revenues are bound to erode. R&D pipelines aren’t likely to make up the difference in time without some major overhaul, experts say. Patent expirations are expected to put $226 billion in global prescription sales at risk through 2026, according to a report from Evaluate Pharma. And the replenishment rate of R&D is expected to drop by more than 50% over the next five years, EY analysts said in another report. Contrary to what the term might imply, the innovation deficit doesn’t come from a lack of new scientific advances, says industry analyst Arda Ural, EY’s markets leader for health sciences “The innovation deficit is not because productivity is low,” Ural says, noting there were 50 new molecular entities approved by the FDA last year. “The challenge here is the imbalance between the loss of exclusivity on the top line, and that top line not being replenished by the pipeline for Big Pharma.” To persevere, pharmaceutical giants will need to look for new acquisition targets that give them a leg up as they tiptoe toward the edge of the patent cliff, and small biotechs might offer some much-needed pipeline rejuvenation “I think first and foremost, we have to be science-driven and ask: ‘Is there science and good data to support an acquisition?’ And I think, as we’re seeing in the broader biotech market, it’s been challenging.” Inflection points, then and now--The industry is facing a number of substantial patent cliffs, as some of the biggest branded drugs like AbbVie’s Humira, Merck & Co.’s Keytruda, Johnson & Johnson’s Stelara and more will very likely see biosimilar competition within the decade. Bristol Myers Squibb watched as generics of its mega-blockbuster Revlimid entered the market this year. Ural calls it an inflection point for the industry, and looking back 10 years, drugmakers underwent some of these same changes. “Going into the 90s, it was all small molecules addressing more common conditions like hypertension [and drugs like] antidepressants, statins and anti-diabetic medicines, and they were all hitting the cliff around the early 2010s, which created this imbalance between the top line not being supported by the pipeline,” Ural says. Ironically, the biologic monoclonal antibodies coming off patent now were the big innovations that saved the pharmaceutical industry’s top line back then. The question now is whether they can pull off that same trick again by leaning into emerging innovations. “The next inflection point is going to be the cell and gene therapies targeting oncology, rare diseases, neurology,” Ural says. “Gene editing like CRISPR, plus the newly validated mRNA and RNAi platforms are coming to fruition to help mitigate [and help] the industry to get back on that growth path.” Riding that next wave of innovation to overcome the patent cliff deluge will require some crafty investing, Ural says. Luckily for pharma, the big companies are flush with cash and smaller biotechs are valued well below what they once were, providing opportunities to get in on the ground floor. The biotechnology index peaked toward the end of 2021 as biotechs reaped the benefits of having innovated in the face of COVID-19, but the index took a sharp downturn into 2022. Ural says the biotech sector became a story of haves and have-nots — more mature companies with marketed products or near-term catalysts in their pipeline were hurt less after the pandemic share prices wore off while smaller companies with earlier-stage candidates tumbled a lot further. Overall, it was a net loss. “These smaller biotechs need to avoid distress warnings, avoid cash burns beyond their means, and they need to get to the next value creation point,” Ural says. “They look to pharmas, who then need to be smart about where they want to take bets, even though those bets aren’t as expensive as they used to be a year ago.” Novartis’ CEO, Vas Narasimhan, is looking carefully at the reasonable options on the biotech table and what innovations are out there that could help build the company past upcoming challenges, he said Tuesday during the company’s first-quarter earnings call. “When you look at the pullback in the [biotechnology index] … many companies are trading below even the cash they have on hand,” Narasimhan said. “But I think first and foremost, we have to be science-driven and ask: ‘Is there science and good data to support an acquisition?’ And I think, as we’re seeing in the broader biotech market, it’s been challenging.” Of course, for the pharma giants, the more cash you have, the better your options are. J&J’s CFO, Joe Wolk, said on the company’s own first-quarter earnings call last Tuesday that more than $20 billion in cash flow generation gives them the firepower they would need to bring in new assets. One of J&J’s best sellers, Remicade, is already facing competition and ongoing sales dips. “I’ve got every confidence that we’ll be able to do small-, medium- and large-scale acquisitions should the right opportunity present itself,” Wolk said. “Whether it’s near-term or long-term, I think we’re in a very good position to utilize today’s cash and hopefully that which we generate tomorrow.” Ural sees these big pharmas lining up for early innovation markets to get ahead of their respective competitive headwinds. “Foundational shifts are indicating that the industry needs to set itself up for the next wave of growth,” Ural says. “Every pharma needs to take their positions.” Even some companies that never partake in the M&A rat race have joined the fray. Regeneron, which has always opted for partnerships over acquisitions, last week announced it would buy biotech Checkmate Pharmaceuticals for $250 million. Checkmate’s cancer drug in development could someday help Regeneron fill some big shoes — its foundational drug Eylea’s patent cliff is coming up halfway through this decade. The treatment pulled in almost $5.8 billion in 2021. “This is the business cycle,” Ural says. “This is an industry driven by science and medical innovation.”
The US is losing 10% of GDP due to disease right now---pharma innovation is key to solve.
Pethokoukis 24, is a Senior Fellow at AEI researching economic growth and innovation, (James Pethokoukis, 2-22-2024, "From AI to Ozempic: How health innovation can strengthen the US economy," American Enterprise Institute - AEI, https://www.aei.org/articles/from-ai-to-ozempic-how-health-innovation-can-strengthen-the-us-economy/)//CB
GS economists write in a new report that these breakthroughs “imply a remarkable pace of healthcare innovation that could significantly improve health outcomes and enable people to live better and longer lives. While the primary goal of healthcare innovation remains raising care quality, these efforts could generate positive spillovers to the macroeconomy as well.” Love the sound of that. So what might the macroeconomic effects be? For starters, a key piece of context needs to be understood: Health has big economic implications. As the GS economics team explains, poor health imposes economic costs through multiple channels: First, it lowers labor force participation by two to three percentage points, as people in poor health are less likely to work. Second, health issues increase absenteeism and reduce hours worked by around two percent a year. Third, early death from disease subtracts 0.2 percentage points per year from potential labor force growth. Finally, caregiving responsibilities for sick relatives reduces total labor supply by three percent. GS puts it all together: Combining current losses in hours worked and labor force participation from sickness and disability, early deaths, and informal caregiving, we estimate that GDP would potentially be over 10% higher if poor health outcomes did not limit labor supply in the US. These estimates suggest significant upside to economic output if the recent wave of healthcare innovation leads to an improvement in health outcomes that reduces the economic burden of poor health.
Pharma innovation results in a net decrease in healthcare costs---medicine is cheaper than hospitalizations.
Galindo et al 19, (Néboa Zozaya, Bleric Alcalá, and Jhon Galindo work at the Department of Health Economics in Madrid, 9-14-2019, "The offset effect of pharmaceutical innovation: A review study," Sage Journals, https://journals.sagepub.com/doi/full/10.1177/ 2284240319875108)//CB
*PI=Pharmaceutical Innovation
By improving the patients’ health status, the use of new drugs is often translated into a decrease in the utilization of healthcare resources, such as hospitalizations, medical visits, and concomitant medication, leading to financial savings, or releasing resources for other uses within the healthcare system. A growing body of literature has tried to measure the magnitude of this offset effect that is associated with PI, both at the aggregate level and for different concrete pathologies. Lichtenberg was one of the first authors who quantified the offset effect of drugs at the general level, leading to the notion that PI’s economic and social contribution could significantly exceed its costs. In a study published in 2001, the author estimated that if a 15-year-old drug was to be replaced by a 5.5-year-old one, per capita pharmaceutical expenditure in the United States would increase by USD 18 on average, while non-pharmaceutical expenditure would decrease by USD 72, leading to a savings ratio of almost 4 times the cost of the introduction of the newest drug.4 He later updated his analysis for the years 1997 and 1998 and obtained a savings ratio of 7.2 in the entire population and 8.3 for the population covered by Medicare, basically due to savings in hospitalizations.5 In another study, Lichtenberg6 estimated that, even under a most conservative cost methodology, the net cost of new drugs was negative, as they would generate savings in hospitalization and nursing home costs equivalent to 2.4 times the cost of the drugs. Other authors later found that the magnitude of the aggregate offset effect of new drugs in the United States actually amounted to intermediate values. For example, Civan and Koksal focused on Medicare- and Medicaid-covered population and obtained a net per capita savings ratio of 5.5 when using newer drugs (actually, when the average age of the drug being assessed was reduced in 1 year). However, the authors also found significant heterogeneity among different drug classes.7 In another study, Santerre (2011) obtained estimations for the United States and six other Organisation for Economic Co-operation and Development (OECD) countries and found larger offset effects in the long run than in the short run. Indeed, according to the author, the marginal effect of commercializing a new medication was equivalent to net per capita savings in healthcare costs of USD 5.9 in the short run and USD 11.4 in the long run. These findings implied aggregated savings at the national level of USD 1800 million and USD 3400 million in the short and long run, respectively.8 Public organizations lik

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