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- [00:02]
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- [00:31]
Alex Osula
FBI Director Christopher Wray is stepping down before President elect Donald Trump takes office, and lawmakers have introduced bills that, if approved, would be the most far reaching intervention yet into the operations of pharmacy benefit managers.
- [00:45]
Harriet Torrey
PBM reform has been a big bipartisan issue for years now. It almost got done at the end of last year and didn't quite get across the finish line. It definitely seems like there are more and more people interested in car harnessing this populist rage against the cost of health care.
- [01:03]
Alex Osula
Plus, US Inflation ticked up last month. What does that mean for the fed? It's Wednesday, December 11th. I'm Alex Osula for the Wall Street Journal. This is the PM edition of what's the top headlines and business stories that move the world today. Inflation was up in November. The Consumer price index rose 2.7% from a year earlier, the Labor Department said this morning. That's up 0.3% from the prior month, the strongest month over month increase since April. Here to tell us more about what these numbers mean is Wall Street Journal economics reporter Harriet Torrey. So Harriet, this report follows other data that suggest that consumers are feeling pretty upbeat. And though inflation is down from a few years ago, it's still at a level that's kind of difficult for people. So what does this report say about consumer spending?
- [01:55]
Harriet Torrey
It shows that consumers are continuing to spend pretty strongly, and that is reflected in prices. We saw some pretty notable increases in the CPI in November. For instance, vehicle prices ticked up. Now, that was probably impacted by hurricanes and people replacing cars that were damaged. But it could also be a sign that consumers are trying to get ahead of tariffs. And there are other increases in other sectors. The index for housing cooled ever so slightly and that's positive for the Fed because they do want to see it cooling. But it is nonetheless still pretty persistent inflation in housing and in other services like medical care services. So by and large the trend is pretty encouraging from the Fed and investors are very convinced. Fed funds futures suggest that they expect a cut at the next meeting in December. But at the same time, there are definitely some things that the Fed needs to be looking out for. In this report, we saw that goods, which have generally been on quite a major downswing over the past couple of years, goods prices appear to be reversing a little bit. And we've seen a few months now of core commodity prices ticking higher. The trend is somewhat bumpy, but that is definitely something that the Fed is going to want to watch out for because by and large, a lot of the inflation that they've been battling hard to contain has been in services. And now that seems to be balancing out somewhat.
- [03:15]
Alex Osula
So the thinking is that this data doesn't necessarily change the expected cut that's supposed to come from the Fed next week. Right.
- [03:23]
Harriet Torrey
But what people will be looking for very closely is what the Fed signals about the year ahead, because this last mile of inflation is proving very sticky and persistent. And it's something that some of the proposed policies that the Trump administration has said it wants to enact, like worker deportations, tariffs, tax cuts. Economists say those things could all prove inflationary. So it could make the Fed's battle to bring down inflation back to target ever harder.
- [03:50]
Alex Osula
That was Wall Street Journal economics reporter Harriet Tory. Major US Indexes rose, buoyed by the inflation report. The Nasdaq crossed 20,000 for the first time, gaining about 2%. The S&P 500 gained about 1%, while the Dow closed down about 0.2%. America's two biggest supermarket operators have gone from deal partners to legal rivals. In less than 24 hours, Albertsons is terminating its planned sale to Kroger. The company also filed a lawsuit alleging that Kroger didn't do enough to secure regulatory approval for the company's $20 billion deal. The suit comes a day after a federal court blocked the sale. A Kroger spokeswoman said that Albertsons claims are baseless and without merit and that Kroger is evaluating its options. Two of the country's top real estate agents and their brother have been arrested in Florida on sex trafficking charges. Tal and Oren Alexander and their brother Alain are expected to be extradited to New York. An attorney temporarily representing the three brothers said his clients were facing three sex trafficking related charges. The arrests follow a number of lawsuits accusing them of rapealegations that sent shockwaves through the luxury real estate world when they first surfaced. The men have denied the allegations. Coming up, legislators introduce bills that could break up drug middlemen in the healthcare industry. That's after the break.
- [05:14]
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- [05:49]
Alex Osula
A bipartisan group of lawmakers has introduced legislation that would break up pharmacy benefit managers, the drug middlemen that have now faced years long scrutiny. If passed, bills introduced in the Senate and House would be the most far reaching intervention yet into the operations of pharmacy benefit managers or PBMs. Wall Street Journal reporter Liz Esley White joins us from Washington to tell us more. Liz, what are legislators proposing here?
- [06:13]
Harriet Torrey
Legislators are proposing that any company that owns an insurer or a pharmacy benefit manager, so there are three big ones that fit this bill and they would be forced to sell off their pharmacy businesses. So this is any retail pharmacies in addition to mail order or specialty pharmacies. And that would be a big blow to CVS health, Cigna and UnitedHealth Group.
- [06:37]
Alex Osula
Tell me a little bit more about these pharmacy benefit managers. What do they do exactly?
- [06:42]
Harriet Torrey
If you look at a map of what PBMs do, it's like a spaghetti bowl, it's very complicated. But among other things, they will come up with formularies which are drugs typically that have priority for each disease. They have some kind of favorite drugs that they've gotten a good deal on for their clients and they will negotiate discounts for those drugs. And so their contention is that they end up saving employers and other people money because they're doing all these deals to get these good rebates on these drugs for the formularies.
- [07:15]
Alex Osula
So what would change for them if this legislation passes?
- [07:18]
Harriet Torrey
One of the things that they've been accused of doing is they will charge a lot more for drugs that come through their mail order pharmacies. They all have these kind of affiliated mail order pharmacies and they can encourage the people using them to use a mail order pharmacy and that can end up steering more dollars into their pocket and having patients end up paying more for their drugs. So the senators and the House sponsors feel that this would put an end to those kind of tied up incentives and that the steering of patients to mail order pharmacies that make more money for these PBMs would end.
- [07:55]
Alex Osula
So this is a bipartisan bill introduced into the Senate by Democrat Elizabeth Warren and Republican Josh Hawley. What does that tell us about the likelihood that this legislation could pass?
- [08:05]
Harriet Torrey
Yeah, PBM reform has been a big bipartisan issue for years now. It almost got done at the end of last year and didn't quite get across the finish line. It definitely seems like there are more and more people interested in harnessing this populist rage against the cost of healthcare, and so maybe we'll see Congress finally move the needle. In addition to this bill, there have been other bills proposed that would ban certain pricing practices that PBMs use or require more transparency from PBM transactions. So we'll have to see what ends up crossing the finish line. But this is definitely the biggest aim at some of what the legislators are calling perverse incentives that we've seen so far.
- [08:45]
Alex Osula
That was Wall Street Journal reporter Liz Esley White. FBI Director Christopher Wray is stepping down after President elect Donald Trump made clear he would fire him in favor of a loyalist. Trump chose Wray for the post in 2017, but the former president soured on him and the bureau more broadly after years of federal investigations into his conduct. Trump's breaking point with Wray came in August 2022 after a team of FBI agents conducted an unprecedented search of his Mar A Lago residence in search of classified documents. Before Donald Trump won the election, he was facing a number of state and federal lawsuits. Now, many of those have been dropped or shelved, except a suit from the state of Georgia alleging that Trump operated a criminal enterprise aimed at overturning the result of the 2020 election. But the case has been sidelined all year and its future is uncertain. National Legal affairs correspondent Mariah Timms joins us. Mariah, where could the case go from here?
- [09:44]
Mariah Timms
First up, former President Trump has moved to remove himself from the case. He has argued that because Haiyi is about to be president again, questions of presidential immunity are likely to mean he cannot be prosecuted while he's in office. It's not clear what immediate next steps would be taken on that, but it's possible that the court system could decide to drop all charges against him, could move to hold the charges against him until 2029, when he ends his term, and try to pick them up again later. But likely the rest of this case is going to move forward without him in the short term.
- [10:14]
Alex Osula
It seems like Even without that 2029 delay, it's been pretty slow going so far. Is that good news or bad news for the prosecution?
- [10:24]
Mariah Timms
Mostly it's bad news. If a case sits around for this Long the case has been tied up in appeals. There are questions over whether they will disqualify the current prosecutor from the case. Then that would possibly go to a state board, which again, a lot of ifs here would decide whether to move forward or not with it. The problem with sitting on cases is the same in any case. Witnesses, their memory fades, they might change their testimony. Evidence is no longer as useful as it was in the past. But that doesn't mean they couldn't rebuild the momentum. This case had four plea deals in quick succession. There was a sense that they were moving forward with people wanting to cooperate with the prosecution. So it is possible that if this case stays with the current prosecution prosecutor, it could be picked up again when they get the go ahead to go there.
- [11:04]
Alex Osula
That was national legal affairs correspondent Mariah Timms. Well, as Harriet was saying earlier, commodity prices are up. One of the places caffeine addicts might be feeling it is in their morning cup of joe. Prices for arabica coffee beans, one of the two main varieties of coffee, the other being robusta, have jumped more than 80% this year, reaching an all time high. WSJ commodities reporter Joe Hoppe explains what's behind this price surge in the enormous coffee market.
- [11:32]
Joe Hoppe
It's actually one of the world's most traded commodities. It's often, according to Saxo bank, at the very least considered the second most traded by volume after crude oil. The price for a pound of arabica coffee beans have actually topped their previous record, which was set in 1977. To put that into perspective, the last time coffee was this expensive, the first Star wars movie was in theatres. The main reason that has been driving up the price comes back down to weather. Brazil has been hit by its worst drought in more than 70 years over the late summer, followed by a series of heavy rains which have raised crop failure fears. Brazil is the largest exporter of arabica worldwide. The prices of arabica and robusta are pretty closely linked. Generally speaking, whenever there's a shortfall or a price surge in one of these, you'll see a price surge in the other one as well. And so robusta has also gone up very heavily in price. So Vietnam is the largest producer of robusta in the world, but it's also had a much lower production this year, hit by its own droughts and heavy rains. Because of that, that's created a larger reliance on Brazilian harvests, themselves in short supply.
- [12:38]
Alex Osula
And that's what's news for this Wednesday afternoon. Today's show was produced by Anthony Bansi and Pierre biename with supervising producer Michael Kosmidis. I'm Alex Osula for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.