2016 has been a year of surprises, particularly in the political sphere, which has left many wondering what might be ahead for 2017. Political affiliations aside, what will the inauguration of Donald Trump as the 45th President of the United States mean for the pharmaceutical industry? Judging by the pace at which executive orders have been tumbling from the White House in the first few weeks of his Presidency, the general feeling is that change could well be afoot.
In his first press conference since winning the election on the 11th January, Trump called the drug industry "disastrous," claiming it was "getting away with murder." Although in typical fashion, Trump’s discourse lingered only briefly upon a vast range of subjects, this appears to have been a specific reference to the pricing of drugs. During campaigning, he made multiple statements about plans to make the government negotiate purchase prices with manufacturers (interestingly enough, a position he shares with Hillary Clinton!).
The strong rhetoric employed so far has certainly caused some key industry players to take strategic measures. Allergan (AGN) CEO Brent Saunders, who predicted a more "vicious" attack from Trump on drug pricing than Clinton would have delivered, pledged to limit price increases to single digit movements and offered an expanded patient access program. Mylan (MYL) CEO Heather Bresch, who has already weathered a storm of backlash about EpiPen prices, took to the stage in San Francisco to insist that the "pricing model has to change," - though she hasn’t yet provided specifics on what this might entail. The CEO of Regeron, Leonard Schleifer has also spoken up about drug price hikes being used to disguise a lack of innovation in the field. All of this is strategic, one would think, with industry bigwigs hoping that by making the right noises now they can avoid some potentially troublesome legislation from the government in future.
On the morning of Tuesday 31st January, the President sat down with key members of the drug industry (including the CEOs of Novartis, Merck, Johnson & Johnson, Lilly, Celgene, and Amgen), where he reiterated his interest in tackling US drug prices – particularly for Medicare and Medicaid. Trump said that US drug companies have produced ‘extraordinary results’, but that ‘the pricing has been astronomical for our country’. In a similar protectionist vein to the rhetoric of his campaign, he also announced that medical products needed to be made in the US, and that other countries should pay ‘their fair share’ for US-manufactured drugs. As regards the FDA, he announced plans to ‘streamline’ the drug approval process and to announce his nomination for commissioner soon.
Also of interest has been the recent update to Trump’s website, outlining the six key priorities the new administration has for healthcare. Although lacking in specifics, one of them was “Reform the Food and Drug Administration, to put greater focus on the need of patients for new and innovative medical products.” Sounds positive on paper, but the jury’s out until the specific legislation begins to file through. One thing we know for certain will be central to these plans will be the Administration’s Commissioner, a vacancy that hasn’t yet been filled by Trump.
The rumoured top choice for commissioner is Scott Gottlieb. He’s a former deputy commissioner of the FDA and a physician. He’s pushed for some time for faster drug approvals and decreasing red tape. But two fellow businessmen might also win Trump’s favour in hiring for the crucial post: Jim O’Neil, a venture capitalist who has close ties to Trump advisor Peter Thiel, of Paypal, and Balaji Srinivasan, co-founder of Counsyl, a genetics testing company, and a venture capitalist at Andreessen Horowitz, as well as chief executive of a company related to Bitcoin. Traditionally, the requirement for being appointed FDA commissioner is to have a physician background. But other cabinet choices, such as Betsy DeVos, who has never been an educator, or Rex Tillerson who enters as Secretary of State despite never having worked in government. This administration is going to be one of significant change – for better or for worse.
One of Trump’s key priorities so far across a host of key business sectors has been to win the trust of prominent business leaders. His background and commercial acumen seem to have convinced Amgen CEO Robert Bradway that the industry is in safe hands, as he pledged during a meeting with Trump on January 31st to hire approximately 1600 new employees. Bradway said the planned hires are a reflection of the company’s “ongoing confidence and the attractiveness of the environment here in the U.S. and of the outlook we have for long-term growth,”. The announcement was low on specifics about what kind of jobs these would actually be, although it’s worth noting that . One thing we can reasonably assume is that those jobs won’t be in bio-manufacturnig, however – efforts to streamline that process at Amgen began in 2014, hitting the headlines by causing the loss of 4000 jobs that year.
Overall, although we’re still only a few weeks into the Trump presidency, the signs would indicate that Trump is committed to rectifying some of the shadier aspects of the pharmaceutical industry, breaking up unfair monopolies to the benefit of consumers – without turning a blind eye to the desires of senior pharma business leaders. The markets seem to indicate a general optimism as well, with the Nasdaq Biotechnology index having risen by 24.99 in the last week. If this trend continues, hiring conditions are likely to stay strong as well, with sector growth creating a host of new jobs at companies like Amgen.
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