Just weeks after President Donald Trump said the industry was “getting away with murder,” tensions seem to have cooled. Cheered by Trump's promises to cut taxes, slash regulations and speed up drug approvals, top pharma execs say they're ready to work with the White House.
After Trump’s meeting with drug industry leaders at the White House Tuesday, some CEOs left with a positive outlook for growth. At the meeting, Trump said he wanted to knock down regulations, speed up FDA approvals, change the tax code, bring prices “way down” and move manufacturing back to the States.
In fact, pharma chiefs are now saying that Trump's proposals would amp up growth—and create new jobs. In an industry where the biggest companies have slashed payrolls by tens of thousands over the past several years, that would be quite a turnabout.
For one, industry group PhRMA’s CEO, Stephen Ubl, said afterward that changes to trade agreements and to the U.S. corporate tax code, plus fewer regulations, “will translate to up to 350,000 new jobs over the next 10 years as a result of growth in the biopharmaceutical industry.”
Pfizer CEO Ian Read, for his part, also touted job growth. “I think we can be a very positive part of the story of creating jobs in the United States if we get the tax reform,” Read said during the company's Q4 earnings call. Read did not attend the meeting because of the earnings release.
And Eli Lilly CEO David Ricks said in an interview with CNBC that he was “most encouraged” that the president “clearly understood and was listening to the message of innovation.” Ricks said Lilly is ready to “work with the White House and Capitol Hill over the coming months to look at some more market-based solutions to help consumers.”
The message strikes a contrast from last month, when Trump—then president-elect—castigated pharma during his first press conference since last summer. He said the U.S. should implement “competitive bidding” on drugs to save billions in healthcare expenses, one of several statements that quickly sent pharma shares south.
Others aren’t convinced, however. After Trump on Tuesday pledged to slash regulations to speed up drug approvals, Rep. Rosa DeLauro said that’s a “dangerous idea.” Analysts and other industry-watchers pointed to past safety scandals, including Merck & Co.'s Vioxx, pulled from the market because of cardiovascular risks.
“Millions of Americans across the country rely on the FDA to ensure that the drugs that they take each day are safe and effective,” DeLauro said. “These regulations are in place for a reason.”
Public Citizen echoed that sentiment, saying the proposal would “fundamentally destroy the ability of the agency to protect patients” and lead to “countless preventable deaths, injuries and illnesses across the U.S.”
It’s worth pointing out that pharma had far and away the largest lobby in 2016, with total spending north of $244 million, giving the industry an ability to effectively push its argument.
Despite all of the attention on the topic, drug pricing isn’t as large a focus in Washington right now as is repealing and replacing Obamacare, according to a note by Cowen & Co. analysts tweeted by Wall Street Journal reporter Jonathan Rockoff. If Democrat Hillary Clinton had won the election, drug pricing would be more important now, according to the firm, as there wouldn’t be a large repeal effort drawing attention away.
President Trump's meeting w/ CEOs Tues was seen as a positive for branded-drug industry. Should it have been? Cowen's interesting analysis: pic.twitter.com/W3iXF1DHaO— Jonathan Rockoff (@jonathanrockoff) February 1, 2017
But lawmakers could turn to drug prices this summer, according to the note, potentially making pharma companies more reluctant to take regular July price hikes.
Ken Frazier, CEO at Merck & Co., attended the Tuesday meeting, and he told reporters afterward that Trump is “very much focused on how we can actually do better for patients, giving them more choice, helping them to deal with the medical bills that they have in a way that also stimulates innovation," according to CNN.
Frazier added that there’s a “real opportunity if we actually work on all those things.”
Meanwhile, Read said on the conference call that his company isn’t changing its pricing strategy. However, he believes there are “lots of ways we can work with the administration to ensure that patients have affordable drugs.”