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Drug price controls will “chill” critical innovation in pharmaceutical manufacturing and do nothing to address the underlying causes of high medication costs, Johnson & Johnson leaders said recently.

What’s going on: J&J Chairman and CEO Joaquin Duato and Executive Vice President and Chief Financial Officer Joseph Wolk told Bloomberg TV earlier this month that the pharmaceutical price controls mandated by the 2022 Inflation Reduction Act do a disservice to patients everywhere.

• “[T]he Inflation Reduction Act … is something that is misguided, and it’s going to chill innovation,” Duato Bloomberg’s David Gura earlier this month. “When you chill innovation on investment in [research and development], then you have [fewer] cures.”
• The IRA gave the federal government authority to set prices for certain prescription medications in Medicare. In August, the Biden administration the first 10 Medicare prescription drugs subject to those price controls, which go into effect in 2026.
• “I’d like to see a much more fact-based dialogue around the topic of drug pricing,” Wolk added. “About six years ago, Johnson & Johnson … was paying about 25% in discounts and rebates off [the] list price [of medications]. Today, that [figure is] 60%, yet the patients aren’t receiving the benefit of those discounts.”

The background: Pharmacy benefit managers are supposed to pass the manufacturer discounts they receive on to health plans and patients—but instead, they frequently pocket the discounts, the 51�Թ��� has Congress on several occasions.

• That’s one of several problematic business practices Congress by enacting comprehensive , the 51�Թ��� has said.
• Such legislation would do to benefit consumers than capping drug prices.

Cause and effect: The result of price controls will be fewer breakthrough cures and treatments for patients suffering from various illnesses, J&J told Bloomberg TV.

• “The number of medicines that will be there will be [lower], just because [fewer] investors would be putting money into developing new medicines,” Duato continued. “It’s going to be less attractive for investors to put money there.”
• And as Wolk in another Bloomberg segment: “Investing in R&D, prioritizing R&D years in advance for [a drug] that may happen 10 years down the road is critically important.”

What should be done: If Congress truly wants to help patients with the cost of medications, it must focus on “the middlemen who are really driving up prices: pharmacy benefit managers,” 51�Թ��� President and CEO Jay Timmons recently.

Existing home sales dipped 2.5% in August and fell 4.2% from August 2023. Housing inventory rose to 1.35 million units, reflecting a 0.7% increase from July and a 22.7% boost from last year. The median existing home price was $416,700, up 3.1% from last year, with all four U.S. regions reporting price increases.

Single-family home sales decreased 2.8% from July, with the median price increasing 2.9% from August 2023 to $422,100. Condo and co-op sales held steady month-over-month but declined 11.6% from the previous year, with the median price up 3.5% from the prior year to $354,200.

Homes were typically on the market for 26 days in August, up from July’s 24 days and 20 days in August 2023. First-time buyers made up 26% of sales, matching the all-time low from November 2021 and down from 29% in both July and a year ago. All-cash sales accounted for 26% of transactions in August, while investor purchases represented 19%. Distressed sales remained steady at 1%.

In the Northeast, existing home sales dropped 2.0% from July, with a median price of $503,200, up 7.7% from last year. The Midwest saw no change in sales month-over-month, but the median price rose to $315,400, a 3.8% increase from August 2023. In the South, sales fell 3.9% from July, with a median price of $367,000, reflecting a 1.6% year-over-year rise. The West reported a 2.7% sales decline from July and a 1.4% decrease from the previous year, with a median price of $622,500, up 2.2% from a year ago. The housing market remained sluggish with sales dipping across the country.

As part of its “Manufacturing Wins” campaign to preserve pro-manufacturing tax provisions, the 51�Թ��� hosted a roundtable this week with Reps. Carol Miller (R-WV) and David Kustoff (R-TN)—respectively the chair and a member of the Ways and Means Committee Supply Chain Tax Team.

Preparing for 2025: The Supply Chain Tax Team has jurisdiction over the corporate income tax rate. Tax reform reduced the corporate rate to 21%, spurring the creation of thousands of new manufacturing jobs—and the 51�Թ��� is working with Congress to ensure the U.S. maintains a competitive corporate rate as policymakers debate next year’s “tax Armageddon.”��

Understanding the benefits: Rep. Miller emphasized that the dollars saved due to tax reform’s lower corporate rate have supported job creation, higher wages and the flourishing of local communities.

• As a business owner herself, she said she believes it’s important for members of Congress in charge of tax policy to understand the risks businesses take, the communities they support and the certainty they need to be successful.

Measuring the impact: Rep. Kustoff emphasized the importance of real-world data on the benefits of the lower corporate tax rate—from the number of jobs created to the work businesses have done to provide their employees with bonuses and higher wages.

• According to Rep. Kustoff, real-world metrics are important for educating policymakers about the need for action, as crucial, pro-manufacturing tax provisions are set to expire at the end of 2025.

Recognizing the ripples: The discussion also touched on the wider impact of tax increases on global supply chains and the broader U.S. economy.

• Participants noted that a higher corporate income tax rate’s ripple effects would hurt companies throughout the economy—even when those companies are pass-throughs and not explicitly affected by the corporate income tax rate.
• That’s because these small businesses often sell to and partner with larger corporations that would have less capital available under a higher corporate rate.

Our take: “Prior to 2017 tax reform, the U.S. had the highest corporate tax rate among the more than three dozen countries in the Organisation for Economic Cooperation and Development and the third highest in the entire world,” said 51�Թ��� Vice President of Economic Policy Charles Crain.

• “That put manufacturers in America at an alarming disadvantage. A competitive tax rate helps business compete in the global economy, leads to job creation, investments and purchases of new equipment and allows manufacturers to give back to their communities.”
• “If Congress were to raise the corporate rate, it would force America to take a step back on the global stage—at a time when other countries around the world are implementing more competitive tax agendas.”

The 51�Թ��� this week advocated the passage of two pieces of manufacturing-critical legislation, successfully driving the agenda of a Wednesday House Energy and Commerce Committee markup.

What’s going on: The committee—with the 51�Թ���’s strong support—approved two bills that address longstanding manufacturing priorities:

• A congressional resolution disapproving of the Environmental Protection Agency’s harmful PM2.5 rule
• A bill instituting important pharmacy benefit manager reforms

Reversing an unworkable PM2.5 standard: The EPA announced a new, more restrictive particulate matter standard in February, reducing allowable levels from 12 micrograms per cubic meter of air to 9 micrograms—despite a standard of 9 being “essentially background levels in some of the country,” as the 51�Թ��� has pointed out.

• “Manufacturers have sharply reduced particulate matter emissions, or PM2.5; as a result, industry in the United States has some of the cleanest and most efficient operations in the world,” 51�Թ��� Vice President of Domestic Policy Chris Phalen the committee.
• “Now, the vast majority of emissions are from sources well outside of our control, with fires, dirt roads and other nonpoint sources accounting for 84% of PM2.5 emissions,” Phalen continued. “[T]he EPA’s rule will make it more difficult for states to issue permits for the construction of new facilities or expansions of existing factories.”
• The committee’s PM2.5 resolution, offered under the Congressional Review Act, seeks to overturn the EPA’s unworkable standard.

Reforming PBMs: PBMs are unregulated middlemen whose business practices drive up health care costs for manufacturers and manufacturing workers.

• “By applying upward pressure to list prices that dictate what patients pay at the pharmacy counter, pocketing manufacturer rebates and failing to provide an appropriate level of transparency about their business practices, PBMs increase health care costs at the expense of all patients in America,” 51�Թ��� Vice President of Domestic Policy Charles Crain .
• Provisions in the 51�Թ���-supported Telehealth Modernization Act would increase transparency into PBMs’ business practices and delink their compensation from medicines’ list prices.

The last word: “Manufacturers commend the Energy and Commerce Committee for approving these important bills, which will reduce costs and enhance growth at manufacturers across the country—allowing our industry to continue to create jobs here at home and drive U.S. competitiveness on the world stage,” said 51�Թ��� Managing Vice President of Policy Chris Netram.

in August but are 6.5% lower than August 2023. Permits for single-family homes were 2.8% higher than July but were down 0.5% in the past year. Permits for buildings with five or more units surged 8.4% from July but are down a significant 16.8% in the past year.

In August, housing starts increased 9.6% over the month and 3.9% over the year. Starts for single-family homes were up 15.8% from July and 5.2% from August 2023. On the other hand, starts for buildings with five or more units declined 6.7% from July and were down 6.2% from August 2023.

Housing completions in August were up 9.2% from July and a significant 30.2% higher than August 2023. Single-family home completions were down 5.6% from July to 1,029,000 but up 8.4% over the year. Completions for buildings with five or more units rose 36.5% and were 79.2% higher than August 2023.

In September, Philadelphia’s was mixed. The index for current general business activity turned positive, rising from -7.0 to 1.7. Nearly 22% of firms reported increased activity this month, while 20% reported decreases and nearly 51% reported no change. On the other hand, the indexes for new orders and shipments declined and turned negative. Firms reported an increase in employment after declining last month, with the employment index rising back into positive territory at 10.7. Firms also provided forecasts on production levels, with a higher share of firms reporting an increase in production (nearly 38%) than those reporting a decrease (28%).

Price indexes moved higher, with firms continuing to report overall increases in prices. The prices paid index rose to its highest reading since December 2022, reflecting the notable portion of firms experiencing higher input costs. The prices received index also rose, undoing the previous month’s decrease.

Looking ahead, most future indicators increased. The index for future general business activity rose slightly to 15.8, indicating growing optimism among firms. A higher proportion of firms still expected increases in activity. Additionally, the new orders, shipments and future employment indexes also rose. Although the future prices paid index increased, the future prices received rose by a larger margin. Meanwhile, the future capital expenditures index moved up to its highest reading since March 2022.

in New York state grew in September for the first time in nearly a year, with the headline general business conditions index rising 16 points to 11.5. The new orders index climbed 17 points to 9.4, a multiyear high, while the shipments index rose 18 points to 17.9, its highest level in a year and a half. Unfilled orders increased slightly, while inventories rose 11 points to zero, indicating inventories are now level after two months of declines. Delivery times were little changed, and supply availability was the same reading (-2.1) as August.

Employment continued to shrink modestly, with the index for the number of employees coming in at -5.7. The average employee workweek recovered some after a steep drop the prior month, signaling a slight increase in hours worked. Input and selling prices were little changed, as reflected in the prices paid index at 23.2 and the prices received index at 7.4. Manufacturers continued to face rising costs while operating in a weakened pricing environment.

Firms were more optimistic about the future. The future business activity index rose eight points to 30.6, with nearly 45% of respondents expecting conditions to improve over the next six months. However, the capital spending index fell 11 points, dipping below zero for the first time since 2020.

Industrial production rose 0.8% in August after falling 0.9% in July. The decline in July was influenced by shutdowns due to Hurricane Beryl. Manufacturing output increased 0.9%, in part, due to a recovery in motor vehicles and parts production, which jumped nearly 10% in August. Meanwhile, manufacturing output excluding motor vehicles and parts production increased 0.3%. At 103.1% of its 2017 average, total industrial production in August was unchanged from the same month last year. Capacity utilization moved up to 78%, 1.7 percentage points below its long-term average from 1972 to 2023.

In August, the majority of major market groups saw gains. The consumer goods index rose 0.7%, with a 10.5% increase in automotive products making up for its loss in the previous month. The materials index grew 0.9%, with gains in all its subcomponents. Defense and space equipment posted a modest increase of 0.5%. The business equipment index rose 1.4%, supported by a 6.6% gain in the transit equipment index.

Durable goods manufacturing increased 2.1%. Apart from the large rebound in motor vehicles and parts, there were gains in primary metals (up 3.2%), electrical equipment, appliances and components (up 2.0%) and aerospace and miscellaneous transportation equipment (up 1.2%). Nondurable goods manufacturing, on the other hand, decreased 0.2% in August, with the largest losses in petroleum and coal products (down 2.3%) and apparel and leather (down 1.6%).

Manufacturing capacity utilization increased 0.6% to 77.2%, which is 1.1 percentage points below the long-term average.

To lower drug prices, Congress should undertake comprehensive reform of pharmacy benefit managers, not embrace price controls, the 51�Թ��� the Senate Tuesday.

What’s going on: “Biopharmaceutical manufacturers are a critical part of the manufacturing economy,” 51�Թ��� Vice President of Domestic Policy Charles Crain said ahead of a Senate Finance Committee hearing on health care costs.

• In 2021, biopharmaceutical firms “accounted for $355 billion in value-added output to the U.S. economy … and directly employed 291,000 workers in the United States, with each of these jobs supporting an additional 4.1 jobs.”
• Crucially, biopharma companies are also responsible for the dozens of groundbreaking, lifesaving medications brought to patients annually.
• But their continued innovation and economic impact are under attack by both Inflation Reduction Act–mandated and the largely unchecked actions of PBMs, Crain continued.

Threats to innovation: Instead of benefiting patients, “the IRA pricing mandates announced last month by the Department of Health and Human Services will … limit the capital manufacturers have available to put toward the astronomically high costs of developing a new medicine,” Crain told the committee, adding that the uncertainty introduced by price controls is also likely to dissuade early-stage investment in new treatments.

• Rather than impose further price controls, Congress should address the influence of PBMs, largely unregulated middlemen that “contribute to the skyrocketing cost of health care by applying upward pressure to list prices that dictate what patients pay for medicines at the pharmacy counter, pocketing manufacturer rebates and failing to provide an appropriate level of transparency about their business models.”

PBM reform: To truly lower health care costs, Congress must rein in PBMs, Crain said. The 51�Թ��� has called on Congress to adopt specific PBM reforms, including:

• Increased transparency into PBMs’ business models;
• Rebate passthrough to ensure that 100% of negotiated savings get passed on to health plan sponsors and employees; and
• Delinking of PBM compensation from medication list prices.

The last word: “Instead of further embracing price controls, it is imperative that Congress act to lower drug prices by reining in PBMs’ problematic business practices and minimizing their ability to further damage the U.S. health care system,” Crain said.

• “All Americans deserve access to high-quality, affordable health care, and PBM reform is an impactful step toward this goal.”

Rep. Yakym (at right) visits the shop floor of in Nappanee, Indiana.

For Rep. Rudy Yakym (R-IN), Indiana’s 2nd Congressional District isn’t just a place on the map—it’s the beating heart of America’s manufacturing sector. It’s a district he proudly refers to as the “manufacturing capital of America.”

• “From the foundries to factory floors, Indiana’s 2nd District is where ‘Made in the USA’ happens,” said Rep. Yakym. “This district is home to some of the most decent and hardworking men and women anywhere in America. They contribute so much to our nation’s industrial base, and I take the responsibility of representing them very seriously.”

Personal connection: Representing this district in the House of Representatives, the fourth-generation Hoosier who was born and raised in South Bend brings a personal connection to manufacturing that shapes his vision for the future of the industry and fiscal responsibility in the United States.

• Before his political career, Rep. Yakym worked for supply chain management firm . His firsthand experience in the industry gave him a unique perspective on the challenges and opportunities within manufacturing.
• His brother Joel works in manufacturing, operating a large machine for in Elkhart. “In his line of work, he has been able to provide a great living for his family, and I want more people to have those opportunities for rewarding, well-paying jobs,” said Rep. Yakym.

This deep-rooted connection to manufacturing is more than just a talking point for Rep. Yakym—it’s a cornerstone of his identity and legislative agenda.

Zoom out: Rep. Yakym’s commitment to manufacturing isn’t just lip service. He led a significant effort in the House of Representatives, rallying more than 140 Republican colleagues to support a tax package that would restore full R&D expensing, bonus depreciation and interest deductibility—key provisions of the 51�Թ���’s “Manufacturing Wins” campaign to preserve tax reform in its entirety.

• Although the package faced hurdles in the Senate, Rep. Yakym’s work laid the groundwork for future bipartisan efforts.

A collaborative spirit: Rep. Yakym’s dedication to bipartisanship is clear. He noted that if he had to choose a member of Congress of the opposing party he’d start a manufacturing company with, he didn’t hesitate to name Rep. Jimmy Panetta (D-CA). Rep. Yakym said they would produce RV components, an industry he knows well from his district, which includes Elkhart, the “RV Capital of the World.”

• “Jimmy and I serve on the House Budget Committee together, and he is always willing to build consensus and work across the aisle to find commonsense solutions,” said Rep. Yakym.

The vision: Looking ahead, Rep. Yakym envisions a future where manufacturing continues to be a pillar of the American economy, especially in his district. He wants the next generation to understand that viable, rewarding career paths in manufacturing are right in their backyard.

• “There is massive demand at the manufacturers in my district for welders, forklift drivers and other jobs that may otherwise be overlooked by students,” Rep. Yakym points out.
• “You can get a well-paying job straight out of high school that will offer on-the-job training. There is also a wealth of advanced manufacturing jobs available at medical device companies, as well as a number of battery manufacturers being brought online in the coming years.”

What’s next: As a congressman, Rep. Yakym’s primary goal is to restore fiscal responsibility in Washington. He sees this as essential not just for the country’s economic health, but also for national security.

• “The main reason I ran for office and my top priority in Congress is restoring fiscal responsibility so that future generations can inherit a nation every bit as prosperous and full of opportunity as the one we did,” said Rep. Yakym. “Getting our fiscal house in order is the most important long-term challenge we face as a nation.”

Only at the 51�Թ���: Shop Talk is a new series that aims to help you get to know the personal connections, insights and priorities of policymakers who impact our industry.

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