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    Disney CEO Bob Iger says he prefers to stay only two years, calls streaming ‘the future’

    Disney CEO Bob Iger appeared on CNBC’s “Squawk on the Street” to discuss the company’s reorganization and quarterly earnings results.
    Iger, who returned to Disney’s helm in November, said he had no plans to stay longer than two years in his post.
    More “Frozen” and “Toy Story” sequels are on the way, Iger said.

    Disney CEO Bob Iger appeared Thursday on CNBC’s “Squawk on the Street” following the company’s announcement it would cut 7,000 jobs and slash $5.5 billion in costs as part of a larger reorganization.
    Iger, who returned to Disney’s helm in November, said Thursday he had no intention to stay longer than two years in his post.

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    “Well, my plan is to stay here for two years, that’s what my contract says, that was my agreement with the board, and that is my preference,” Iger told CNBC’s David Faber on Thursday.
    Iger acknowledged he has a lot to do in that short period of time, in addition to helping the board “succeed at succession.” The board ousted Bob Chapek as CEO last year. He was Iger’s hand-picked successor.
    “We thought we made the right decision when we chose Bob [Chapek] in 2020. The board decided in November he wasn’t the right person for the job and made a change,” Iger said, declining to comment further on what led to the abrupt departure.
    On top of the list is Disney’s streaming strategy and making the business profitable, Iger said Thursday. He called streaming “the future.”

    Disney announced this week that as part of its cost-cutting measures, it would slash $3 billion in content costs. Iger’s moves also settled a dispute between Disney and activist firm Trian’s chief, Nelson Peltz.

    Peltz called into CNBC immediately after the Iger interview to declare the two sides’ proxy fight over.

    ‘Intoxicated by our own sub growth’

    Disney also said that as it will focus on getting its streaming business to profitability by the end of 2024, it would no longer give guidance on its subscriber numbers and instead focus on revenue.
    “We got maybe intoxicated by our own sub growth,” Iger said Thursday, noting the low price point of $6.99 that Disney+ entered the market with.
    On Thursday, Iger said the company had “pricing leverage” for its streaming strategy.
    Disney reported this week that its direct-to-consumer business had once again posted an operating loss for its most recent quarter. “We’re still losing money on streaming,” Iger said Thursday. “We need to turn that around.”

    Media executives have begun increasing the cost of streaming services in an effort to grow profit. Disney’s recent price hike likely led to the loss of about 2.4 million Disney+ customers during the quarter. 
    Disney announced this week it would lean into its franchise strength with sequels to fan-favorite films like “Frozen” and “Toy Story.” Iger said Thursday that general entertainment, particularly on pay TV and streaming, wasn’t a “differentiator.”
    In addition to Disney+ and ESPN+, Disney also runs Hulu and has until 2024 to buy Comcast’s 33% stake in the streaming service to take full control over it. Whether Disney will acquire the stake remains a question.
    “Everything is on the table right now,” Iger said Thursday. He added that leverage isn’t currently a concern for Disney, although the company is “intent on reducing our debt over time.”
    Shares of Disney rose Thursday following the restructuring announcement and the company’s earnings report.
    Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.

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    General Motors signs deal with GlobalFoundries for exclusive U.S. semiconductor production

    GM has signed a long-term agreement with GlobalFoundries to establish exclusive production capacity of U.S.-produced semiconductor chips, the companies announced Thursday.
    The deal comes as automakers continue to battle through a yearslong global shortage of semiconductor chips that has sporadically idled factories during the Covid pandemic.
    The exclusive production of chips for GM will be an expansion of the New York-based company’s operations, according to GlobalFoundries CEO Thomas Caulfield.

    The global chip shortage will continue, and consumers will have to pay for it, an analyst from the International Data Corporation said.
    Sasirin Pamai | Istock | Getty Images

    General Motors has signed a long-term agreement with GlobalFoundries to establish exclusive production capacity of U.S.-produced semiconductor chips, the companies announced Thursday.
    The deal, which they’re calling an industry first, comes as automakers continue to battle through supply chain problems, including a yearslong global shortage of semiconductor chips that has sporadically idled factories during the Covid pandemic.

    The chip manufacturer will establish dedicated production capacity exclusively for key auto suppliers of the Detroit automaker at its semiconductor facility in upstate New York, according to the companies.
    “The supply agreement with GlobalFoundries will help establish a strong, resilient supply of critical technology in the U.S. that will help GM meet this demand, while delivering new technology and features to our customers,” Doug Parks, GM executive vice president of global product development, purchasing and supply chain, said in a statement.
    The deal is a win for the Biden administration, which has been pushing for companies to reestablish American production of semiconductor chips, including the CHIPS Act that was signed into law in August.
    Parks said GM expects its usage of semiconductors to more than double over the “next several years” as it increases the technological capabilities in its vehicles, specifically all-electric cars and trucks that require more chips than traditional vehicles.
    The companies declined to disclose details such as cost and the amount of added capacity. They expect the deal will enable chip production in higher volumes as well as offer “better quality and predictability, maximizing high value content creation for the end customer,” according to the release.

    The exclusive production of chips for GM will be an expansion of the New York-based company’s operations, according to GlobalFoundries CEO Thomas Caulfield.
    The deal could be a framework for other deals for GlobalFoundries, according to Caulfield. It provides the best economics for both companies and a road map for future materials needed to produce the chips.
    “This is a first-of-a-kind deal, not a last of its kind. This is a solution to a problem,” he told CNBC. “We believe it’s a framework for others to leverage as well.”
    Caulfield said the exclusive production for GM is expected to take two to three years to really ramp up.
    Automakers have historically not directly worked with chip suppliers. Instead, allowing their larger auto suppliers to handle such negotiations. However, the shortage of semiconductor chips has companies such as GM reaching further into their supply chains in an attempt to better secure parts for their vehicles.
    Semiconductor chips are extremely important components of new vehicles for areas like infotainment systems and more basic parts such as power steering and brakes. Depending on the vehicle and its options, experts say a vehicle could have hundreds of semiconductors. Higher-priced vehicles with advanced safety and infotainment systems have far more than a base model, including different types of chips.
    The origin of the chip shortage dates to early 2020 when Covid caused rolling shutdowns of vehicle assembly plants. As the facilities closed, the wafer and chip suppliers diverted the parts to other sectors such as consumer electronics, which weren’t expected to be as hurt by stay-at-home orders.
    Correction: The origin of the chip shortage dates to early 2020. A previous version misstated the timing.

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    Chick-fil-A will test a cauliflower sandwich in its first plant-based pilot

    Chick-fil-A will test a cauliflower sandwich in three markets, starting Monday.
    The new sandwich closely resembles its famous chicken sandwich, but uses breaded and pressure-cooked cauliflower in place of meat.
    The fast-food chain said it’s been working on a plant-based sandwich for nearly four years.

    Chick-fil-A is making its cauliflower sandwich the same way as its original chicken sandwich.
    Source: Chick-fil-A

    Chick-fil-A will test its first plant-based entree: a cauliflower sandwich.
    The new sandwich closely resembles its famous chicken sandwich, but uses breaded and pressure-cooked cauliflower in place of meat.

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    Starting Monday, the privately owned chain, which is the third-largest in the U.S. by sales, will test the menu item in Denver; Charleston, South Carolina; and the Greensboro-Triad region of North Carolina.
    Chick-fil-A said it’s been working on a plant-based sandwich for nearly four years, right around when chains like Dunkin’ and Restaurant Brands International’s Burger King were putting Beyond Meat and Impossible Foods substitutes on their menus.
    But meat alternatives that closely resemble the real thing have fallen out of favor with consumers after a surge in popularity during pandemic lockdowns. Both Beyond and Impossible have recently laid off about a fifth of their workforces.
    “We explored every corner of the plant-based space in search of the perfect centerpiece for our plant-forward entrée,” Chick-fil-A Culinary Lead Stuart Tracy said in a statement. “Time and time again, we kept returning to cauliflower as the base of our sandwich.”
    Over the last decade, cauliflower has become a popular substitute for a plethora of different foods. Buffalo Wild Wings and countless bars serve fried cauliflower smothered in buffalo sauce as an alternative to chicken wings. Cauliflower has also popped up in pretzel form and – when finely chopped – as a rice substitute.

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    Activist investor Nelson Peltz declares Disney proxy fight is over after Iger unveils restructuring

    Nelson Peltz dropped his proxy fight against Disney after CEO Bob Iger unveiled a vast reorganization, job cuts and cost-reduction plans.
    “Now Disney plans to do everything we wanted them to do,” Peltz told CNBC’s Jim Cramer.
    Peltz had criticized Disney’s $71 billion acquisition of Fox in 2019 and failed succession planning.

    Nelson Peltz declared his proxy fight with Disney was over Thursday after the entertainment giant unveiled a vast restructuring plan, cost cuts and 7,000 layoffs.
    “Now Disney plans to do everything we wanted them to do,” Peltz told Jim Cramer on CNBC’s “Squawk on the Street” on Thursday. “We wish the very best to Bob [Iger], this management team and the board. We will be watching. We will be rooting.”

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    “The proxy fight is over,” said Peltz, who heads Trian Fund Management. He had been seeking a board seat.
    Disney said it appreciated Peltz’s decision.
    “We are pleased that our Board and management can remain focused without the distraction of a proxy contest, and we have tremendous faith in Bob Iger’s leadership and the transformative vision for Disney’s future he set forth yesterday,” the company said in a statement Thursday.
    In January, Trian launched a proxy fight with Disney, pushing for Peltz to gain a seat on the board. The activist firm said at the time it owned about 9.4 million shares valued at roughly $900 million, which it first accumulated a few months prior.
    Peltz had criticized Disney’s $71 billion acquisition of Fox in 2019 and failed succession planning. He had also called out “weak corporate governance” over the years that has eroded shareholder value.

    The activist investor raised the white flag on Thursday after Disney announced a sweeping reorganization this week. The company said that it would be looking to slash $5.5 billion in costs, and will cut 7,000 jobs.
    Disney is also restructuring its business into three divisions, and will focus on bringing its streaming business to profitability by 2024. In addition, Iger said he aimed to ask the board to approve the reinstatement of its dividend–which had been suspended since early 2020 due to the pandemic–by the end of the calendar year.
    The changes, which were part of Iger’s first major actions since he returned to the helm of Disney in November, addressed many of Peltz’s concerns.
    Disney’s annual shareholder meeting is set for April 3.
    –CNBC’s David Faber contributed to this report.

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    Fast food reigns supreme as inflation weighs on pricier restaurants

    Chains like Chipotle Mexican Grill and Chili’s are struggling to attract customers, but fast-food chains haven’t had the same issue.
    McDonald’s and Yum Brands have reported solid U.S. demand as inflation-weary customers trade down to fast food.
    The likes of Red Lobster and Applebee’s have turned to offering deep discounts or spending big bucks on advertising.

    A girl waiting in line to pick up an order at a McDonald’s restaurant.
    Oleksii Chumachenko | SOPA Images | Lightrocket | Getty Images

    Fast-food chains are looking like the big winners in the fourth quarter — and beyond — as fast-casual and casual-dining restaurants struggle to attract customers.
    Many publicly traded restaurant companies haven’t reported their latest quarterly results yet, but for those that have, a pattern is emerging. Inflation-weary customers pulled back their restaurant spending during the holiday season, just as they spent less than expected at retailers. Savvy fast-food chains appealed to those consumers with value menus and enticing promotions, drawing in customers across the income spectrum.

    Generally, the fast-food sector fares better than the rest of the industry during times of economic uncertainty and downturns.
    Take McDonald’s, for example. The fast-food giant said U.S. same-store sales climbed 10.3%, helped in part by low-income consumers returning more frequently than they had for the prior two quarters. Executives also credited the success of its Adult Happy Meal promotion and the annual return of the McRib for its strong sales growth. Its U.S. traffic increased for the second consecutive quarter, bucking the industry trend.
    Likewise, rival Yum Brands reported solid U.S. demand. Taco Bell’s domestic same-store sales climbed 11%, boosted by increased breakfast orders, the return of Mexican Pizza and its value meals. Pizza Hut’s U.S. same-store sales grew 4%, while KFC’s ticked up 1% as it faced tough year-ago comparisons.
    More fast-food earnings are on deck in the coming weeks. Burger King owner Restaurant Brands International is slated to announce its fourth-quarter results on Tuesday, while Domino’s Pizza will post its earnings Feb. 23.

    ‘We just didn’t see that pop’

    In contrast to McDonald’s and Yum’s strong results, Chipotle Mexican Grill on Tuesday reported quarterly earnings and revenue that fell short of Wall Street’s estimates for the first time in more than five years. CEO Brian Niccol maintained that the burrito chain’s price hikes haven’t led to “meaningful resistance” from customers.

    Instead, Chipotle executives presented a laundry list of reasons why its performance disappointed: bad weather, the underperforming launch of Garlic Guajillo Steak, tough comparisons to the previous year’s brisket launch and seasonality.

    Customers order from a Chipotle restaurant at the King of Prussia Mall in King of Prussia, Pennsylvania.
    Mark Makela | Reuters

    “As we got around the holidays, we just didn’t see that pop, that momentum, that we normally see … frankly, we started the quarter soft, and we ended the quarter soft,” Chipotle Chief Financial Officer Jack Hartung said on the company’s conference call, comparing the decline in December to weaker retail sales at that time.
    Chipotle said that traffic turned positive in January. However, the chain is facing easy comparisons to a year earlier, when Omicron outbreaks forced Chipotle and other chains to shutter early or temporarily close locations. And Bank of America analyst Sara Senatore noted in a research note on Wednesday that January’s unseasonably warm weather has been supporting demand for the broader industry.
    Rival fast-casual chains haven’t reported their fourth-quarter earnings yet. Shake Shack is set to share its results on Feb. 16. However, in early January, it announced preliminary same-store sales growth that fell short of Wall Street’s estimates. Sweetgreen is slated to report its results on Feb. 23, while Portillo’s is scheduled for March 2.

    Casual-dining concerns

    Fast-casual restaurants’ struggles are an even worse sign for the casual-dining segment.
    For more than a decade, casual-dining restaurants have struggled to attract customers as Chipotle, Sweetgreen and Shake Shack have stolen their customers. So the likes of Red Lobster and Applebee’s have turned to offering deep discounts or spending big bucks on advertising.
    Soaring inflation has compounded the issue, particularly for restaurant companies like Brinker International, which is trying to turn around Chili’s Grill and Bar.

    A customer walks towards the entrance of a Brinker International Inc. Chili’s Grill & Bar restaurant in San Antonio, Texas.
    Callaghan O’Hare | Bloomberg | Getty Images

    At the start of the month, Brinker reported that Chili’s traffic fell 7.6% for the quarter ended Dec. 28. Brinker CEO Kevin Hochman, the former head of KFC’s U.S. business, told analysts on the company’s conference call that the decline was expected as it tries to shed less profitable transactions. Chili’s has hiked its prices and cut down on coupons as part of the strategy.
    More full-service restaurants are expected to report their results later this month. Outback Steakhouse owner Bloomin’ Brands is slated to make its announcement on Feb. 16.

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    As record rocket launches crowd airspace, the FAA fights to limit travel disruptions

    Space companies like SpaceX and Blue Origin are launching more rockets than ever, ratcheting up competition for air space.
    The FAA managed U.S. airspace for a record-breaking 92 space missions in 2022, up 33% from the year prior, and is working to mitigate delays and disruptions.
    The demand is particularly strained in Florida, which is already crowded with travelers and comes with unique challenges.

    The SpaceX launch pad is seen from the window of Air Force One at Kennedy Space Center, Wednesday, May 27, 2020, in Cape Canaveral, Fla.
    Evan Vucci | AP

    WASHINGTON — Space companies are launching more rockets than ever, ratcheting up competition for air space just as travelers return to flying in droves — and leaving the Federal Aviation Administration in the middle to keep things moving.
    The FAA has long been responsible for overseeing U.S. airspace, mitigating air travel disruptions due to weather, military events or technical glitches. Add in the rapidly expanding space launch market, and the complicated puzzle-work of making room in the skies gets all the more delicate.

    Some of the agency’s strategies for addressing the growing demand include minimizing the time airspace is closed and expanding beyond popular travel spots like Florida to launch sites as far away as Alaska.
    “Space is cheap now. Operators can get to space and it’s not just nation states, it’s now private companies — that’s a huge change in the paradigm,” said Duane Freer, manager of the FAA’s Air Traffic Organization Space Operations office.
    “We’ve made significant strides in lessening the impact and managing the airspace much more efficiently for launch and reentry missions,” Freer told CNBC. “It wasn’t that long ago that SpaceX was a new company and these were all notional ideas.”
    The FAA managed U.S. airspace for a record-breaking 92 space missions in 2022, up 33% from the year prior, and it expects to top that this year. That number includes both rocket launches and capsule reentries, and has been steadily climbing.
    Most of last year’s missions launched from Florida, straining airspace in a state that already has a unique air traffic control challenge: the Sunshine State has drawn more and more travelers in recent years and faces frequent thunderstorms several months a year.

    Airlines operated 722,180 flights to, from and within Florida last year, marking a faster recovery to pre-pandemic flying levels in the state than the national average. Miami International Airport announced 2022 was a record-breaking year for passengers.

    That airline volume means a rocket launch, even one that’s routine and on schedule, can pose a significant challenge to passenger airlines. Disrupting airspace out of Florida affects routes over the Atlantic Ocean, Freer said, calling those flights the “really big, heavy hitters.”
    That can swing the airspace priority tug-of-war in the airlines’ favor: In one instance, Freer recalled, his office talked down the National Aeronautics and Space Administration when the space agency was considering an attempt to launch its lunar Artemis I mission in the days immediately before and after Thanksgiving. 
    “We worked very collaboratively with NASA on mitigating those impacts and actually eliminating those launch opportunities, because the impact to aviation would have been far too great,” Freer said.

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    And the need to balance the influx of spaceflights against the needs of airlines isn’t letting up. Even if airspace is closed briefly, travel delays could last much longer as the impact cascades to congested airports and crews time out for the day.
    The FAA has spent the last five years debuting new tools and modernizing systems for its teams and controllers. It met with airlines last year to discuss initiatives to alleviate congestion in Florida, and its Space Collaborative Decision Making committee, which works to integrate space operations into the national airspace system, will meet with airline executives at Southwest Airlines’ headquarters next month, the FAA said.

    Competing priorities

    The majority of last year’s space missions were by Elon Musk’s SpaceX – which set a new annual launch record for the company of 61 in 2022. It’s kicked off this year at a blistering pace, too, with a launch every four days.
    The rest of last year’s launches were made up of missions by NASA, Rocket Lab, United Launch Alliance, Blue Origin, Astra, Virgin Orbit, Northrop Grumman, Boeing and Firefly.
    Freer’s office acts as a liaison between space companies, ranges or spaceports, and air traffic controllers, though the FAA also plays a role in licensing and regulating launches. Crucially, the FAA talks regularly with the airlines, to closing wide swaths of airspace leading up to, during, and after a launch.
    “Generally the impact to the aviation community is in reroutes,” Freer said. “We don’t see the traditional delays – with ground delay programs or ground stops – associated with launches.”

    A Falcon Heavy rocket launches the USSF-67 mission on January 15, 2023 from NASA’s Kennedy Space Center in Florida.

    Rerouting means flying additional miles, which increases costs to airlines. Some airline CEOs have called out rocket launches as an additional obstacle in airspace that’s already crowded with flights, as well as military activity.
    “Every time there’s a new change or a wrinkle, say, we’re dealing with many more rocket launches and satellite launches out in the Florida coast … that impacts airspace,” American Airlines CEO Robert Isom said at a U.S. Travel Association conference in September.
    “Air space is going to be a critical, critical issue,” Isom said, calling on new industries to contribute to the cost of air traffic control.
    Airlines kick in funding for the federal agency through air ticket and fuel taxes. General aviation also contributes through fuel taxes. The space industry doesn’t have a formalized system for supporting air traffic control.
    United Airlines CEO Scott Kirby last month, in discussing a recent FAA pilot-alert system outage that halted U.S. departures for several hours, said the agency has been stretched thin by the added workloads of dedicating resources to space launches, drones and aircraft certification.
    “They’ve had to rob Peter to pay Paul,” Kirby said on his company’s earnings call last month. “They were asked to do more, and they’re doing it with less money.”

    Reducing disruptions

    Freer said the FAA doesn’t track know how many flights are rerouted due launches, saying “it’s impossible to determine” due to a variety of potential factors, such as weather, military activity, or an airline’s own decisions.
    Since 2018, the FAA has cut airspace closures in half for launches: From an average of more than 4 hours to just over 2 hours today – even as short as 30 minutes in some cases – with airspace reopened as quickly as three minutes after a rocket travels through the closed area. The agency has recovered an average of 127 minutes per launch, Freer said.
    The FAA is also increasingly licensing launches in more geographical areas. In 2022, the agency licensed 50 space launches from Florida, 13 from California, nine from New Zealand, four from Texas, two from Virginia and one from Alaska.

    A graph of FAA-licensed or permitted commercial space launches (excludes launches licensed by other U.S. government agencies, such as NASA or the Department of Defense).

    Among a number of variables, there are two significant time-sucks the FAA has to manage when it comes to rocket launches: Windows and scrubs.
    Both may be rocket lingo, but they represent considerations that are just as important as a liftoff itself. A launch window refers to a period of time, often several hours long, during which a rocket needs to get off the ground in order to reach its intended destination in space. A scrub represents when a countdown is postponed, and often leads to delays of a day or more.
    Together they create a moving target for space launches and the commercial airlines eyeing the same air space.

    A traffic situation display showing both aircraft, blue, and a airspace closure area for a rocket launch, red and yellow.

    Over the last five years, the FAA implemented eight major efforts to improve airspace closure efficiency around launches. It’s introduced systems to help reroute as few aircraft as possible — only those that are flying into the planned flight path of a rocket — to reduce the time that airspace is closed on either end of the window, and to highlight key mission triggers, such as when rocket fuel is loaded, to better know when to close and open airspace.
    Short of a successful launch, scrubs can be just as disruptive to air traffic. A rocket countdown can be postponed or canceled up until the final moments.
    In 2022, the FAA counted 61 scrubs, which it defines as a launch that is canceled within 24 hours of an intended liftoff time. But overall, the on-time performance of launches improved in 2022 – at 76%, up from 62% three years prior, according to the FAA.
    Two years ago the FAA debuted one of its most helpful tools yet: the “Space Data Integrator.” It tracks a rocket in near real-time, through data shared by the launch operator, and keeps the FAA updated in real time on the health of the rocket.

    A demonstration of the Space Data Integrator tracking a rocket launch.

    SDI “was a big step forward for us,” Freer said, noting in the case of a rocket failure his teams can hit a malfunction button and instantly create a debris area to keep aircraft away.
    “We now have the [rocket’s] position on that same piece of glass with our aircraft … that’s a significant step forward for air traffic, and that really points us to the future where we’re truly integrating,” Freer said.
    SpaceX currently participates in the FAA’s SDI to mitigate disruptions, and Freer emphasized that “a lot of newer operators are working through that process.” Blue Origin and Firefly are part of an onboarding process, he said, and are likely to joining the program next.

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    Biden proposal to cap all insulin prices at $35 a month has little chance of passing Congress

    President Joe Biden called on Congress during the State of the Union to cap insulin prices at $35 for all diabetes patients.
    The Inflation Reduction Act capped insulin prices for Medicare recipients at $35 per month, but people with private insurance or without insurance were left out.
    Biden’s proposal is unlikely pass the narrowly divided Congress.
    Senate Republicans killed a proposal last year to cap out-of-pocket costs at $35 for people with private insurance.

    President Joe Biden delivers the State of the Union address to a joint session of Congress on Feb. 7, 2023
    Pool | Getty Images

    President Joe Biden used the bully pulpit during the State of the Union address this week to call for a universal price cap on insulin for all diabetes patients but the proposal is very unlikely to pass the current Congress.
    Biden’s signature legislative achievement, the Inflation Reduction Act, has capped insulin prices for Medicare recipients at $35 per month but the law does not shield younger diabetes patients with private insurance or without insurance from higher prices.

    “Let’s finish the job this time. Let’s cap the cost of insulin for everybody at $35,” Biden told Congress Tuesday night.
    As the president spoke, Sen. Jeanne Shaheen, D-N.H., called on Congress to pass the Insulin Act which would expand the $35 price cap to people with private insurance. Shaheen co-sponsored the bipartisan legislation with Sen. Susan Collins, R-Maine, last July.
    The average price of insulin in the U.S. in 2018 was 10 times higher than the average price in other wealthy nations, according a report from the Rand Corp. in 2021.
    Though there’s some bipartisan support for a universal insulin price cap, the proposal will face a tough battle and is unlikely to pass in a narrowly divided Congress where Democrats hold a slim majority in the Senate and Republicans have tenuous hold on the House.
    Even when Democrats controlled both chambers last summer, Senate Republicans managed to kill a measure that would have capped insulin prices at $35 a month for people with private insurance. Should the Senate pass the Insulin Act, it would still face a House that’s now in GOP hands.

    Rep. Cathy Rodgers of Washington, the Republican chair of the House Energy and Commerce Committee, wasted no time dismissing Biden’s proposal in real time, decrying government price caps on insulin across the board as “socialist” and a “federal mandate” that hurts competition.
    “It’s time for the President to abandon his socialist price-schemes and work across the aisle to make insulin products more affordable without jeopardizing insulin competition and innovation,” Rodgers said in statement released during the president’s address Tuesday night.  

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    Lisa Murdock, chief policy officer at the American Diabetes Association, acknowledged that extending the insulin price cap to people with private insurance will be an uphill battle in the current Congress. But Murdock noted that seven Republicans voted for the cap in the previous Senate.
    “We’ve seen Republicans step out and step up in support of taking this action, so I don’t want to say that we think it’s unachievable — we’re still very committed to working with members on both sides of the aisle to do this,” Murdock said.
    The insulin market is dominated by Eli Lilly, Novo Nordisk and Sanofi. Industry reaction to Biden’s proposal was mixed.
    Lilly supports extending the $35 price cap to all Americans, said spokesperson Kristiane Bello. The company has a program to provide insulin to patients for $35 or less a month regardless of their insurance status, Bello said.
    Sanofi also supports a universal $35 price cap on insulin and already provides the medication to the uninsured at that price through a savings program, a company spokesperson said.
    Novo Nordisk is concerned the government setting drug prices will ultimately reduce patient access to new therapies, said spokesperson Nicole Araujo.
    Stephen Ubl, CEO of the Pharmaceutical Research and Manufacturers of America, called insulin cost caps “a band-aid on a broken system that’s forcing people to pay more for medicines than health insurers and pharmacy benefit managers pay.”
    Last month, California sued insulin manufacturers and pharmacy benefit managers CVS Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum alleging they are leveraging their market power to overcharge patients.
    CNBC has reached out to the pharmacy benefit managers for comment on the president’s remarks.
    About 40% of people with diabetes have private insurance and 5% are uninsured, according to the American Diabetes Association. One in 5 diabetes patients with private insurance are paying more than $35 per month for insulin, according to a survey from the Kaiser Family Foundation.
    Although insulin prices vary depending on a patient’s insurance policy, Murdock said in some cases people are paying hundreds of dollars per month for medication they need to survive.
    Among people taking insulin with insurance through their employer, about 9% of them were paying more than $200 out of pocket in 2019, according to an analysis from the Health Care Cost Institute. These individuals were spending $403 per month on average, according to the analysis.
    An estimated 1.3 million adults in the U.S. had to ration their insulin in 2021 due the price, according to a Harvard study published in the Annals of Internal Medicine. Patients rationed by skipping doses, taking less insulin, or delayed buying the injections to save money.
    States have been taking matters into their own hands in the absence of a federal price cap on insulin across all forms of insurance. So far, 22 states and Washington, D.C., have capped the price of insulin. The cap ranges from $25 in Connecticut for a month’s supply to $100 in other states.

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    The pitfalls of loving your job a little too much

    Back in the dim and distant past, job candidates had interests or hobbies. Those interests could be introspective: reading a book was a perfectly acceptable way of spending your spare time. No longer. Today you will probably be asked if you have a “personal passion project”, and the more exhausting your answer sounds, the better. Go white-water rafting, preferably with orphans. Help build motorway crossings for endangered animals. If you must read, at least do so in the original. Listen to this story. Enjoy more audio and podcasts on More