Some 2023 forecasts for the economy, public health and the biopharmaceutical sector

It’s that time of year again. New Year’s resolutions and predictions for the coming year. As a health economist writing on the Forbes platform, my so-called swimming lanes are health care and public health. But given the impact of the economy on the healthcare sector, I also follow developments in the US and global economy closely. We will start with forecasts for the economy.

Economy

Last year, the greatest risks to the global economy came from a number of geopolitical shocks, the most significant of which was the Russian invasion of Ukraine. Russia’s defeat in Ukraine in 2023 will not usher in a new era in which dictatorships and land grabs will disappear. But, in the short term, it will deter China from attacking Taiwan.

The impact of the war on the Russian economy – through sanctions, diversion of resources, loss of labor and human capital – will be devastating. Russia’s growing economic irrelevance on the world stage will be exacerbated by a sustained decline in oil prices.

Economies around the world will continue to be impacted by the conflict in Ukraine and the ongoing Covid-19 pandemic. While China’s end to strict lockdowns frees up its economy in some ways, it will at the same time lead to high levels of absenteeism and concomitant manufacturing constraints. In fact, I consider the current outbreak of Covid-19 in China to be the most critical threat to the global economy in the first quarter of 2023. Not only could the crisis in China cripple parts of its healthcare system, but it could have economic effects beyond its borders, including supply chain issues that would rekindle global inflation.

In 2023, inflation, rising interest rates, recession in many countries, slowdown in international trade and supply chain issues will figure prominently, especially in the first two quarters of the year. ‘year. Nonetheless, we will see a gradual improvement in most major economic indicators by the end of the year.

Remarkably, the United States will avoid a recession, one of the only wealthy industrialized countries to do so. However, this does not mean that there will be robust economic growth. It will likely remain below 1.5% year-round, with little fluctuation from quarter to quarter.

Interest rates will continue to rise in the first half as the Federal Reserve continues its anti-inflation policy, albeit in smaller increments. The Fed rate will peak in May at around 5.5%. This means that typical 30-year mortgage rates for homes could approach 8.5%.

In 2023, inflation will eventually be brought under control, but not at pre-2021 levels. On the contrary, a new normal of around 5% will be established for the foreseeable future; so not just in 2023 but well after the end of the year.

Unemployment will fluctuate between 3.7% and 5%.

The US dollar will remain strong against foreign currencies; perhaps too much from the perspective of US exporters.

After bottoming out last month, stock prices will rise in 2023. The Dow Jones and S&P 500 could rise as much as 20% overall, while the Nasdaq, with biotech leading the way, could rise by as much as 20%. 25%.

Public health

China’s abandonment of its longstanding Zero Covid policy, coupled with relatively low vaccination coverage among the elderly, is leading to an acute health crisis in China. A subvariant of Omicron, BF.7, which has both high R0 and immune evasion properties, is fueling the surge in Covid-19 infections.

Throughout 2023, however, Covid-19 will continue its gradual and gradual retreat across the world. That doesn’t mean it’s going away. Periodic waves of subvariants will emerge. But, their amplitude will be less pronounced.

In the United States, other public health problems will intensify, including persistent infant and maternal mortality, the worsening fentanyl crisis, and the uniquely American problem – at least when comparing between peer countries – of increase in the number of road deaths.

Republicans now have a majority in the House. Members will pursue formal investigations into the origins of the coronavirus — the Wuhan lab leak hypothesis, for example — and gain-of-function research. In December, House Republicans announced their intentions, saying they would begin subpoenaing Biden administration officials.

Republicans in Congress and state legislatures will also continue blocking public health funding, while promoting a so-called “parents’ rights” agenda.

Apparently, parents’ rights involve giving them more say in decisions about their children’s education and health. According to a new survey released in December by the Kaiser Family Foundation, more than a third of parents oppose requiring children to receive routine vaccinations in order to attend school. This group forms a vocal base within the Republican Party.

All 50 states and the District of Columbia currently require children to be immunized against measles, mumps, rubella and other highly contagious deadly childhood diseases. That will begin to change in 2023, with a number of Republican-led states dropping vaccine requirements.

Throughout the Covid-19 pandemic, a majority of Republicans have opposed mandatory preventative measures such as masking and vaccination mandates, and public health policies in general. And, Republican lawmakers in more than half of U.S. states have already passed laws to significantly restrict the powers of public health authorities, including the use of non-pharmaceutical interventions to prevent the spread of viruses or other contagions. . The formal limitation of the powers of public health authorities will accelerate in 2023 in GOP-led states.

Prescription drugs

New drug approvals will rebound somewhat in 2023 to between 40 and 45, compared to the decline in 2022 when there were 36 approvals. In addition, 2023 will be another record year for cell and gene therapies.

The big story with gene therapies will be the price and the difficulties of marketing. In December, it was announced that the Hemgenix gene therapy, indicated for certain patients with hemophilia B, would cost $3.5 million per single dose. Well, we probably won’t see such expensive therapies in 2023. But newly approved products in space will cost $2-3 million. Due to barriers to commercialization, however, adoption will be lower than expected.

Expect to see record introductory prices in 2023 for newly approved drugs and biologics. This is in part an unintended consequence of the drug price provisions of the Reducing Inflation Act. In 2023, the law will begin to put downward pressure on the prices of existing drugs through discounts on drugs whose list prices exceed inflation. Additionally, in anticipation of a Medicare Part D restructuring and pricing negotiations for a limited set of drugs, companies will raise introductory prices for newly approved drugs beyond what they would in the absence of legislation. After all, the law contains no restrictions or caps on introductory prices.

In 2023, there will be strong downward pressure on the prices of existing drugs. The market will continue to evolve in such a way as to curb net drug prices. Payers in commercial and public spaces will increasingly rely on the use of clinical and economic profitability to determine the price and reimbursement of prescription drugs.

Ultimately, the most significant change to net drug prices and out-of-pocket costs is reimbursement reform*. It was do not included in the Inflation Reduction Act. But the Federal Trade Commission is investigating possible anticompetitive practices associated with the discounts, with the possibility of legislative action if such practices are proven. This could lead to pharmacy benefit managers facing substantial punitive fines.

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