The Morning Dispatch: A Breakthrough on the COVID Treatment Front

Happy Thursday! With the drop of the puck on the NHL season this week, we’re reminded that October is the best sports month of the year. The NBA is tipping off later this month. Baseball playoffs are underway. College football season is nearing its midpoint. And with the arrival of fall football weather across much of the country, the heart of the NFL season. We’ve even caught some professional cornhole on ESPN. 

Quick Hits: Today’s Top Stories

• In a speech Wednesday, President Joe Biden addressed the continuing supply-chain issues plaguing the nation’s economy and announced plans to shorten the delays. Biden said the Port of Los Angeles will work 24/7 to address the backlog of ships yet to unload, and large logistics corporations including UPS, Walmart, and FedEx will be adding hours as well. 

• The Social Security Administration announced Wednesday that Social Security recipients will receive a 5.9 percent bump to their payments in 2022—the biggest cost of living adjustment in nearly 40 years. Over the last decade, the average annual cost of living adjustment was 1.65 percent.

• A school district in Loudoun County, Virginia, is under fire after a Daily Wire story that alleged a boy wore a skirt into a girls bathroom and sexually assaulted a female student earlier this year. The father of the alleged victim was arrested at a school board meeting earlier this year for disorderly conduct and resisting arrest after he became upset during a debate about transgender bathroom policies. Yesterday, Loudoun County Schools released a statement about the alleged assault, saying officials alerted authorities when the incident occurred and could not comment until the investigation was completed. 

• A federal judge overseeing the trials of defendants jailed on charges related to the Capitol riot on January 6 has called for the Justice Department to investigate whether D.C. jails have violated defendants’ civil rights. The judge also found jail officials in contempt of court this week after they refused to turn over medical records about a defendant with a broken wrist.

• Jeff Rosen, who served as acting attorney general in the final days of the Trump administration, testified before the January 6 committee yesterday, according to Politico. Rosen previously testified publicly about the waning days of the Trump presidency before the Senate Judiciary Committee.

A Breakthrough on the COVID Treatment Front

Over the last year, the how-are-we-doing-in-the-fight-against-COVID conversation has been dominated by two questions: How are the vaccines holding up against an ever-mutating virus, and how is the country doing at getting people vaccinated? The  vaccines have been the best weapon in our arsenal against COVID, and continue to provide strong protection against hospitalization and death even as more concerning variants have spread.

But how we treat those who get sick remains an important part of the story too—particularly given the unfortunate but indisputable fact that a significant minority of the population remains dug-in against vaccination, but still requires treatment upon getting sick. It’s been nearly a year since America’s first major pharmaceutical breakthrough on this front—the FDA’s emergency use authorization for an “antibody cocktail” produced by the company Regeneron, which was famously taken by then-President Donald Trump when he fell ill with COVID last October.

While antibody treatments like Regeneron’s significantly reduce the risk of serious COVID illness, they also have real drawbacks—they’re expensive (although the government has so far been picking up the tab) and need to be administered intravenously, requiring the assistance of a medical professional. This is complicated by the fact that antibody treatment needs to be given early in a case of COVID to be effective: If you’re not very sick yet, you might pooh-pooh the idea of heading down to the hospital to get an IV needle in your arm, and by the time your disease gets worse, it might be too late for antibodies to help much.

To cap it all off, monoclonal antibodies have in recent weeks replaced last year’s hydroxychloroquine and this year’s ivermectin as the MAGA-coded COVID treatment du jour. While in many respects this is an excellent development—unlike those other drugs, monoclonal antibodies have been clinically shown to have real COVID-fighting value—it’s also caused demand for the drug to spike recently, leaving the Biden administration scrambling to buy more while cautioning it might get harder to find the treatment in the weeks ahead.

All of which is why it’s big news that there’s a new COVID drug contender on the scene. Earlier this month, pharma giant Merck released extremely promising Phase III trial data for a new oral antiviral, molnupiravir, which reduced the risk of hospitalization or death by as much as half in trial patients who began taking it while they had a mild to moderate case of COVID. This week, Merck asked the FDA for emergency authorization for the drug, which could be available in pharmacies by the end of 2021.

The Merck antiviral has been flying somewhat under the radar until now, but doctors treating COVID have been looking forward to it hopefully for months. As Andrew noted back in February, Merck dropped out of the vaccine arms race at the beginning of this year to concentrate its efforts on its antiviral treatment—a move that now seems on the verge of paying off.  

Both the COVID vaccine and antibody treatments work by bolstering your body’s ability to fight off the virus. An antiviral like molnupiravir works differently, inhibiting the virus’s own ability to reproduce itself in human cells.

But the biggest difference between Merck’s treatment and previous ones isn’t in how it works, but in how you take it in the first place. Molnupiravir is an oral medication—a pill. Assuming the drug gets FDA approval, this will have huge ramifications for how doctors shape treatment of early COVID.

“This is going to be a very impactful new therapeutic option,” Dr. Megan Ranney, an emergency physician and professor at Brown University, told The Dispatch. “Right now, if you get sick and you’re high-risk, the only thing we have to give you are monoclonal antibodies, which require an infusion, which are really expensive, and which are really complicated to get to people. This is just a series of pills, which is a really different thing, right? I can write you a prescription, you can go fill the prescription, and you can take them in the comfort of your own home. So this is just going to be a dramatic improvement in what we as healthcare providers have to offer patients who get sick.”

Ranney did caution that Merck’s pill, while promising, is still a treatment, not a cure, and shouldn’t dissuade anyone from getting the vaccine. But substituting a simple at-home treatment like an oral antiviral for a complicated outpatient one like an antibody treatment has all sorts of benefits beyond the obvious ones.

“From my experience as an emergency physician, I see a lot of COVID patients who don’t need to be hospitalized,” Ranney said. “Of those who do not need to be hospitalized, the only thing I can currently provide them is a referral to an outpatient infusion center, which has long waits, and I have no way to know whether or not the person actually gets it or not. Do they have transportation to get there? Are they able to arrange for a home infusion service? Is the wait too long? Are they going to be outside the window of time for treatment before there’s actually monoclonal antibodies available? Is the service going to be able to get in touch with them after they leave? … With a pill, I would send them home from the ER with a prescription. And then of course it’s up to them whether they go to the pharmacy and fill it. But it takes out a whole lot of steps to get the treatment.”

China’s Housing Market Is on Course to Crash

When your Morning Dispatchers last wrote to you about the Chinese property sector’s economic woes, we warned that the impending debt crisis for Evergrande, the giant real estate company headquartered in Shenzhen, presaged bad things for the overall health of the country’s housing market. China’s second-largest developer had failed to issue the $83 million in interest payments to holders of its U.S. dollar bonds on schedule last month, setting off a cascade of plummeting shares and crippled home buyer confidence. The cash-strapped Evergrande Group, meanwhile, blamed some of its hardships on the ongoing media coverage about its accruing debts.

Several other property giants are also in trouble now, as lowered contracted sales contribute to ballooning debt. According to the Wall Street Journal, China’s real estate developers hold more than $5 trillion in debt all told, “more than the entire economic output of Japan.” An impending housing market crash is bad for any country, of course, but given the outsized shares the property sector holds in China’s economy—about 30 percent of its total GDP—financial analysts are waiting to see if the government intervenes to head off an economic meltdown. 

Beijing-based Longfor Properties, which manages several splinter companies in real estate development, reported that its contracted sales revenues were down 33 percent—or $3.1 billion—from a year earlier. China Resources Land, a Chinese residential property manager, saw its contracted sales fall by just shy of 24 percent. Modern Land, another developer out of Beijing, on Monday requested several additional months from investors to pay back a bond worth more than $250 million due October 25. 

What’s causing this unfolding crisis among Chinese real estate giants? A few things. Foremost among them is the sheer magnitude of the cash flow into new construction over the past several decades, which for years had created massive growth in the world’s biggest housing market.

“A major source of the problem is that Chinese leaders allowed unbridled property development to fuel much of China’s economic expansion this past decade or so,” Patrick Cronin, Asia-Pacific Security Chair at the Hudson Institute, told The Dispatch. “Now, declining property sales are creating a crunch for a sector already heavily in debt. Evergrande and other Chinese property developers can’t pay the bills.”

So what conditions set the stage for rapid, debt-driven growth in the property sector? And why weren’t investors and buyers more concerned about overleveraging by developers before the current downturn? 

“In part this is because of restrictions on other types of investments and capital flows. At the same time, the property ladder has become a veritable obsession for society at large, perhaps to a greater degree than it has here in the United States, in part because of the social implications of owning (or not owning) an apartment,” said Fred Rocafort, a legal expert on China and a former diplomat. “Moreover, there has been a certain bullish sentiment regarding housing, driven in part by confidence that the government will be able to engineer desired economic results, as well as by the lack of recent negative precedents that would caution investors.”

But when Chinese regulators imposed “three red lines” last year, aimed at restricting debt-fueled growth by setting certain conditions for borrowing, many real estate companies couldn’t keep up with the new guidelines. 

For some, the imposition of new rules on developers are part of Xi Jinping’s broader efforts to crackdown on China’s private sector. For months, the Chinese Communist Party (CCP) has been consolidating state power while trying to avert an economic slump. As we wrote in September, “Xi is likely to maintain certain aspects of the capitalist model that best advantage the CCP while still pulling many of the levers himself.”

“Xi Jinping wants to discipline the property sector, but not at the expense of questioning his leadership in advance of the 20th Party Congress next year,” said Cronin. “Xi will pull the levers of state power to ensure he is credited with creating his vision of ‘common prosperity,’ even if in reality China’s economy both takes a hit and continues to conceal one of its biggest vulnerabilities—namely, trillions of dollars in property debt.”

The top-down creation of a problem, then intervention to resolve it, is a unique feature of China’s rapidly emerging, quasi-state controlled, quasi-free market economy.

“This is one more example of how China, in particular its economy, must be viewed through its own prism. Comparisons to the United States and other market economies must always be mindful of the fundamental differences between them and China’s,” Rocafort said. “Phenomena in China might have a familiar ring, but underlying conditions are often far different.”

Worth Your Time

• Administrators at Yale Law School repeatedly chastised a second-year law student who sent an email last month to classmates inviting them to an event jointly sponsored by two groups on campus. The student, a member of both the Native American Law Students Association and the conservative Federalist Society, wrote, “we will be christening our very own (soon to be) world-renowned NALSA Trap House,” and promised Popeye’s chicken and “basic-bitch-American-themed snacks” including apple pie. An exhaustively reported story from Aaron Sibarium at the Washington Free Beacon details how administrators, acting on complaints from students that the email had “triggering associations,” repeatedly badgered the student to admit wrongdoing and apologize for being insensitive. Administrators pressured the student to apologize publicly and scolded him for using a term—“trap”—that they claimed had “triggering associations.” The school’s representatives insisted that a “fried chicken reference” could be offensive and even admonished the student for being associated with the Federalist Society, which administrators said “was very triggering for students who already feel like FedSoc belongs to political affiliations that are oppressive to certain communities.” 

Presented Without Comment

 Also Presented Without Comment

Toeing the Company Line

• In today’s Dispatch Podcast, Sarah, David, Jonah and Steve discuss Texas Gov. Greg Abbott’s vaccine anti-mandate, the growing body of evidence showing Donald Trump had a plan to try to steal the 2020 presidential election, the polling woes (and governance problems) of Joe Biden and the elections next month, next year and in 2024.

• In his column this week, Jonah suggested the possibility of starting a conservative third party, which generated negative reactions from several conservative writers who are also his friends. Fortunately, the midweek G-File was made for such occasions. “I’d rather see Republicans lose than see them win by abandoning conservatism,” he writes. “And I’d rather see Republicans I despise win than abandon my own conservatism.”

• On the site today, Richard Goldberg and Jacob Nagel detail all the ways that the Biden administrations’ campaign of “maximum deference” toward Iran’s nuclear program has backfired.

Let Us Know

While putting together the Merck item today, one of your Morning Dispatchers, who hates needles, had an interesting conversation with his significant other, who hates swallowing pills. Which is the less worse method of getting pharmaceuticals inside you?

Reporting by Andrew Egger (@EggerDC), Charlotte Lawson (@lawsonreports), Audrey Fahlberg (@AudreyFahlberg), Haley Byrd Wilt (@byrdinator), Ryan Brown (@RyanP_Brown), Harvest Prude (@HarvestPrude), and Steve Hayes (@stephenfhayes).