The Pushback Against DEI Enters a New Realm: Medical Care
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This message comes from Wall Street Journal sponsor C3.ai. C3 generative AI enables rapid access to secure, traceable, hallucination-free insights from enterprise systems, all while using any LLM, helping enterprises turn the invisible into the obvious. Learn more at C3.ai. This is Enterprise AI. U.S. retail sales jump in July as Walmart says U.S. consumer spending is steady.

And the fight against DEI programs is shifting to medical care. This is part of a broader set of challenges that are being brought by conservative and other activist groups, basically looking at diversity programs of all kinds and saying these are illegal. Plus, the U.S. government negotiated lower prices for medicines for the first time. It's Thursday, August 15th. I'm Chip Cutter for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

American households boosted their retail spending last month, led by strong vehicle sales. The Commerce Department said that retail sales, which is a measure of spending at stores, online and in restaurants, rose a seasonally adjusted 1% in July from the month before. However, companies like McDonald's, Disney, Airbnb and others have said in recent days that they're concerned about slowing spending among consumers.

Not Walmart, though. The country's largest retailer posted today strong sales in its latest quarter, and executives said they don't see signs of fraying demand.

Walmart said that its U.S. comparable sales, which measures both stores and e-commerce, rose 4.2% in a three-month period that ended on July 26th. Wall Street Journal retail reporter Sarah Nassauer joins me now. So, Sarah, Walmart's earnings don't show any of the weakness we see in other retailers. What's going on here? Walmart is selling a very different set of stuff to different folks at different times. People go to Walmart to buy groceries, and they associate Walmart with getting low prices. Yeah.

So Walmart's kind of ideally positioned for lots of different kinds of shoppers at a time when people are saying, hey, you know, on the stuff that I don't want to spend money on, I want to look for the cheapest option. So as we said, the latest retail sales data suggests consumers started the third quarter on pretty solid footing. How would you characterize how Americans are spending overall right now? It's probably in line with themes we've heard for over

over a year now, which is people are still spending, but they're spending on the things that they need or being very careful and highly considerate of bigger purchases. And I think that's what, you know, when you look at the retail sales numbers, it reflects some spending. When you look at Walmart, it obviously reflects

reflects spending. And then when you look at other retailers like a Home Depot that is not doing as well, you can see those are very different types of purchases. And that's in line with, I think, what we're seeing from the consumer. That's Wall Street Journal retail reporter Sarah Nassauer. Sarah, thanks for being here. Thanks for having me.

The news about retail spending growing last month led the U.S. stock indexes to rally as it eased some investor fears about an economic slowdown. The S&P 500 climbed 1.6 percent, rising for a sixth consecutive session. The tech-heavy Nasdaq Composite added 2.3 percent, while the Dow Jones Industrial Average rose 1.4 percent, or about 550 points. For the first time, the U.S. government has negotiated lower prices for medicines in its efforts to rein in heavy health care costs.

The federal government released the new prices that will pay for 10 prescription drugs covering serious conditions including cancer, diabetes, and blood clots. The lower prices should save Medicare, the government's health insurance program for older people, billions of dollars.

WSJ reporter Jared Hopkins joins us. Jared, break this down for us. What's the significance of this and is it going to make a difference to most consumers? The government has estimated that in this first year of this program, Medicare itself is going to save $6 billion in savings. For actual seniors, when they go and pick up their drugs, it's a little bit more complicated. For seniors who pay sort of

expensive drugs, might pay high out-of-pocket costs through something called coinsurance. That could actually go down, but for those who pay for copays, which are specific set amounts, those may or may not change. We don't really know. And how are pharmaceutical companies responding to all of this? The drug companies have said that these prices in general will have a minimal impact on their businesses.

But companies have come out today and they've

really come swinging at the federal government saying that these price negotiations are unconstitutional, that the only reason they accepted them is because they would have faced financial penalties and their drugs would not have been available under Medicare. But analysts have said that what was announced today was largely in line with what was expected. And in some cases, some analysts thought that it actually wasn't so bad.

The most significant of what today represents is that this is actually the first set of negotiations between the drug industry and the federal government. This process is going to begin again for a second round of drugs, for 15 additional drugs. In a few years from now, there's going to be a bunch of drugs that will have been negotiated directly by Medicare. That was WSJ reporter Jared Hopkins.

Coming up, the fight against race-based programs enters untested legal territory. That's after the break. This message comes from Wall Street Journal sponsor C3 AI. C3 generative AI enables rapid access to secure, traceable, hallucination-free insights from enterprise systems, all while using any LLM, helping enterprises turn the invisible into the obvious.

Learn more at C3.ai. This is Enterprise AI. Black men and women are at least two times as likely as white Americans to die from strokes, and hospitals around the country have developed programs and services to help bring those numbers down. But two activist groups, the Wisconsin Institute for Law and Liberty and Do No Harm, have filed a complaint against the Cleveland Clinic for programs aimed at minorities.

The allegation pushes the fight against race-based programs into untested legal territory. My colleague Anthony Bansi spoke with Wall Street Journal reporter Tao Francis and asked him about those programs Cleveland Clinic offers and why the two organizations object to them.

There's two programs. One is a minority men's health center, and what they do is they essentially help direct black and Latino men primarily to treatment for diabetes or kidney disease, all kinds of different conditions that statistically are more prevalent among men and minority populations. The other one is the minority stroke program, which helps minority patients, both men and women, who are at risk of stroke or have suffered a stroke.

So again, statistically, Black and Latino and Pacific Island patients are at a higher risk of stroke and have higher mortality rates for strokes. The activists don't dispute that. But what they're saying is you can't identify these patients to help them using their race. That is illegal.

This edges into new territory because they aren't saying, look, your criteria for fellowship or for grants or for small business contracting is discriminatory. They're saying you have programs designed to treat, prevent or educate patients about specific conditions that are more prevalent in minority populations than they are in the population as a whole.

And they're saying that even if the care is exactly the same, even if nobody is being denied care, simply segregating care, saying this clinic or this program is for minorities, that on its own, in and of itself, is illegal. What is the Cleveland Clinic saying in response? The Cleveland Clinic just found out about this, of course. And at this point, they haven't had a lot of time to look at it.

But they do say that they treat patients regardless of race, ethnicity, or other characteristics as part of their mission to provide medical care and education to all patients.

So they are very clear that they see what they're doing as being even-handed and fair and non-discriminatory. So what brought about this challenge? This is part of a broader set of challenges that are being brought by conservative and other activist groups, basically looking at diversity programs of all kinds and saying these are illegal. The general argument is no program, no companies, no hiring, etc., should take race into account in any way.

And this really got a boost last summer when the Supreme Court found that Harvard and the University of North Carolina, by extension, universities and colleges generally, should not use race in college admissions. So it really is part of this overall effort to, as the proponents see it, take race out of all of these kinds of decision-making processes.

So, Tao, what now? Are more challenges like this to be expected? Well, we've seen in other areas that when these kinds of complaints or in some cases lawsuits are filed, it definitely sends reverberations throughout other parts of the same industry or companies and nonprofits and so on. Cleveland Clinic is one of the biggest and most prominent hospitals in the country, and it definitely sends a message that other similar programs could be next.

Exactly where it goes from here is a little bit up in the air. A complaint was filed with the Federal Health and Human Services Department's Office of Civil Rights. First, they have to figure out, is this in their jurisdiction? If it is, they investigate and they determine whether there is discrimination. Hospitals and other organizations, many of them because they take federal funds,

they are subject to anti-discrimination rules. And if they're found a vile item, they have to fix it, or they can be subject in some cases to fines, or even they can be excluded from federal funding. That was Wall Street Journal reporter Tao Francis speaking to my colleague Anthony Bansi.

In other news, authorities said today that five people, including Matthew Perry's assistant and two doctors, were charged in connection with the death of the Friends actor last year. Perry struggled with addiction for much of his life and got hooked on ketamine last fall. The 54-year-old Perry was found unresponsive in a pool at his Los Angeles home in October. Federal prosecutors said that five people faced various charges, including ketamine distribution and falsifying records related to the investigation into Perry's death.

New Jersey Governor Phil Murphy is set to appoint his former chief of staff, George Helmy, to represent the state in the Senate, filling the coming vacancy prompted by the resignation of disgraced Senator Bob Menendez. That's according to a person familiar with the decision. Helmy is 44 years old and was the Democratic governor's chief of staff from 2019 until last year. Murphy told Fox 5 New York on Thursday that he would announce his choice to replace Menendez in the next few days. A spokesman for the governor didn't return messages seeking comment.

And a Russian court sentenced a dual U.S.-Russian national to 12 years in a penal colony after finding her guilty of treason for donating funds to aid the Ukrainian army at the start of the war. The sentencing of Zeynep Karelyna came two weeks after wrongfully convicted Wall Street Journal reporter Evan Gerskovich and more than a dozen others in Russian prisons were freed in the largest East-West prisoner exchange since the Cold War. Karelyna's attorney told the Journal today that his client intended to appeal.

And that's what's news for this Thursday afternoon. Today's show was produced by Anthony Bansi with supervising producer Michael Cosmedes. I'm Chip Cutter for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening. This message comes from Wall Street Journal sponsor C3.ai.

C3 Generative AI enables rapid access to secure, traceable, hallucination-free insights from enterprise systems, all while using any LLM, helping enterprises turn the invisible into the obvious. Learn more at c3.ai. This is Enterprise AI.