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1. Implications of the Inflation Reduction Act for the Biotechnology Industry

Author:
Cody Hyman, Henry Dao, Gregory Vaughan, and Fred D. Ledley
Publication Date:
07-2024
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The Inflation Reduction Act of 2022 contains landmark provisions authorizing the government to negotiate the price of selected drugs covered by Medicare Part D. The biopharmaceutical industry has criticized these provisions as a threat to innovation arguing that reducing future revenues could disincentivize equity investment in biotechnology. This research examines the sensitivity of private and public equity investment in the biotechnology industry to drug price indices and market conditions from 2000-2022. The analysis shows that equity financing and valuation in the biotechnology industry were strongly associated with equity market conditions but not indices of either producer or consumer drug prices. These results do not support claims of an association between changing drug prices and the availability of equity capital to emerging biotechnology companies, which currently sponsor the majority of all clinical trials. These results add to evidence that the IRA may not have a negative impact on pharmaceutical innovation.
Topic:
Economics, Health, Inflation, Innovation, Biotechnology, Public Investment, and Inflation Reduction Act
Political Geography:
North America and United States of America

2. Lessons from the Nuclear Waste Negotiator Era of the 1990s for Today’s Consent-Based Siting Efforts

Author:
Matt Bowen
Publication Date:
09-2024
Content Type:
Special Report
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
Nuclear power is being weighed in energy transition plans around the world, as countries seek to replace fossil fuels with low-carbon alternatives while also meeting growing energy demand and maintaining reliability and affordability. When considering extension of existing nuclear reactor licenses as well as approving new ones, there is an ethical obligation for today’s users to develop plans for long-term management of the resulting nuclear waste and not defer its disposition to future generations. In the United States, the federal government is contractually obligated to take ownership of the spent nuclear fuel (SNF) produced at power plants, but this has not happened. The one deep geologic repository project named in law by Congress for potential disposal of SNF—Yucca Mountain in Nevada—has reached a stalemate, with Congress appropriating no money to move the project forward since 2010 due to Nevada’s opposition. Negotiations with US states and tribes to host storage and disposal facilities have been sensitive in the past due to both a stigma around nuclear waste and a perception of risk associated with such facilities. A federal “nuclear waste negotiator” role existed in the early 1990s to overcome these difficulties and find a state or tribe willing to host a repository or interim storage facility, though this short-lived, volunteer-based program did not lead to deployment of either. This report, part of a series of publications on nuclear waste policy at the Center on Global Energy Policy at Columbia University SIPA, reveals lessons learned from the experiences of the two prior negotiators that could benefit a recent, congressionally directed effort at the Department of Energy (DOE) to begin a “consent-based” siting program for nuclear waste. Those individuals were authorized to negotiate terms and conditions—including financial and institutional arrangements—with a state or tribe in a written agreement that would then have to be approved by Congress. Importantly, a state or tribe was assured it could explore the potential of hosting a site while retaining the right to withdraw at any time, and if it did proceed, would have a measure of power in setting terms for the project.
Topic:
Negotiation, Nuclear Waste, Inflation Reduction Act, and Consent
Political Geography:
North America and United States of America

3. Outlook for Pending Generation in the PJM Interconnection Queue

Author:
Abraham Silverman, Zachary A. Wendling, and Kavyaa Rizal
Publication Date:
05-2024
Content Type:
Special Report
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
The United States is witnessing rapidly growing interest in clean electricity generation, driven by soaring consumer demand for clean energy and the country’s goal to reduce greenhouse gas emissions. In parallel, the time it takes for new, clean generation projects to move from design to execution in the US has lengthened, meaning that the rising interest has not been matched by supply. The country’s largest grid operator, PJM Interconnection (PJM), has experienced the most severe delays and backlog in new generation—projects entering the queue today have little chance of coming online before 2030. It is widely understood that an increasingly lengthy interconnection process, which involves a series of studies and upgrades grid operators must take to ensure projects can connect to the grid safely and reliably, is responsible for this state of affairs. It is not clear how this longer process interacts with other known project development challenges—such as siting and permitting issues, supply chain constraints, and inflationary pressures—and to what extent such interactions may lengthen the timeline for bringing projects online. Understanding these dynamics can help answer critical questions about grid reliability going forward, including whether it will be necessary to delay or cancel the planned retirement of aging fossil fuel-fired generation resources that the new generation is intended to replace. This report attempts to fill this knowledge gap. It presents results of an author-developed survey of those best positioned to understand the impacts of interconnection process delays: project developers in the PJM market. The key finding from the survey is that PJM’s increasingly lengthy interconnection process is exacerbating siting and permitting challenges and leading to knock-on delays in equipment procurement and financing decisions, suggesting the timeline for new generation in this market will likely remain long for the foreseeable future. Given the importance of new entry to keeping prices competitive and maintaining reliability amid the retirement of older fossil resources, PJM will need to find ways to reduce interconnection delays or reconsider when those fossil resources should be retired.
Topic:
Electricity, Carbon Emissions, Connectivity, and Inflation Reduction Act
Political Geography:
North America and United States of America