Pharma industry leaders, including Novartis CEO Joe Jimenez and Merck & Co. chief Kenneth Frazier, got their marching orders from President Donald Trump on Tuesday morning. Lower your prices, deliver "better" innovation and "move your companies back" to the U.S.
The response, according to reports out of the meeting? We're already hiring—and by the way, give us tax reform, and we'll hire even more.
Eli Lilly & Co. CEO David Ricks, Celgene Chairman Robert Hugin, PhRMA president and CEO Stephen Ubl and other PhRMA board members also attended the meeting, after which Trump promised to speed up drug development and end "global freeloading" by countries that use price controls to keep their drug spending down.
"Our trade policy will prioritize that foreign countries pay their fair share for U.S.-manufactured drugs, so our drug companies have greater financial resources to accelerate development of new cures, and I think that's so important," Trump said.
What, exactly, the president meant by the "trade policy" comment wasn't clear, but he has proposed a 20% "border tax" on imports, which would hit drugmakers that make their products in other countries.
To his previous demands for lowering prices and manufacturing in the U.S., the president urged the CEOs to "move your companies back" to the U.S., perhaps referring to drugmakers, such as Allergan, which moved their headquarters to tax-friendly jurisdictions overseas through inversion deals.
According to CNBC's Meg Tirrell, Ricks told Trump that his company is hiring manufacturing workers in the U.S. "as we speak," and Amgen's CEO said his company would be adding 1,600 jobs in 2017. Amgen and Lilly have each laid off more than 1,000 workers in recent years—Amgen said it would slash 15% of its workforce in 2014—and Lilly announced 485 job cuts just last week, mostly in its Alzheimer's division.
But the prospect of a more favorable tax structure in the U.S., fewer regulations and healthcare reform that could benefit the industry prompted several of the CEOs to respond positively to Trump's directives (and criticism). "These changes are going to be great for the country," Hugin said afterward, according to the Washington Post.
$LLY CEO tells Trump tax, deregulation could really help us expand operations— Meg Tirrell (@megtirrell) January 31, 2017
It was an important meeting for the industry, beyond the usual presidential rendezvous. Trump has made a point of targeting pharma and its pricing policies, going as far as to accuse the industry of "getting away with murder" in a press conference before the inauguration.
Since then, Trump has suggested he'll use his Twitter pulpit to twist some arms in pharma, not only to bring down drug prices but also to force the industry to make more of its products within the U.S.
During the early January press conference, Trump suggested “competitive bidding” for government drug purchasing. Later, in an interview with Time magazine, he backed new drug price-negotiating powers for Medicare. The latter approach has been proposed and defeated in Congress repeatedly, and it’s anathema to many Republican lawmakers, but Trump’s backing might help push the measure through this time.
Jimenez, meanwhile, said last week that he’d like to raise his own solution for drug pricing—pay-for-performance deals that peg drug costs to their real-world results—in a face-to-face with the president.
"Obviously, we would love to in the coming months be able to sit down and talk with the administration about how we can be helpful in what is happening in the U.S. around the Affordable Care Act and also show him some of what we have done in terms of outcomes-based pricing and being a leader in that space,” Jimenez said during a company press conference.
At the time, he also hinted that he’d be on site for just such a meeting. "I'm in Washington quite frequently, because we have a large government affairs group,” he said, according to Reuters.
Editor's Note: This story was updated with quotes and news after the meeting.