Analysis
Trump’s Return: Pharma Trades Disagreeable White House for Unpredictable One
By Nielsen Hobbs
by Nielsen Hobbs
Given the many travails the biopharma industry experienced during the Biden administration – from Medicare price controls to antitrust actions on mergers and partnerships – it would be natural that industry may see the return of Donald Trump as a boon to their fortunes. The first Trump Administration, for all its campaign attacks on pharma, ushered in a collaborative atmosphere that saw a record number of FDA approvals and the launch of several review-expediting pilots.
The culmination of the approach was Operation Warp Speed, the COVID-era effort to create vaccines faster than any medicine had ever been developed. The fact that it worked, but has basically been disavowed by Trump, offers a window into how his second administration could unfold.
Those hoping for a rerun of the first Trump term will be disappointed, and they need look no further than the selection of Robert F. Kennedy Jr. to head the Health and Human Services Department (HHS). Even if RJR Jr.’s expected nomination is blocked by the Senate, tapping a vaccine sceptic for the post sets a vastly different tone than the cooperation with regulated industry that pharma was hoping to receive.
No regulator is perfect, but the FDA has been consistently offering smooth, flexible reviews over the past many years.
The new GOP governing trifecta could of course help biopharma achieve key legislative priorities, such as reforms of the 340B outpatient drug discount program, revision of the Medicare drug pricing program, and limits on pharmacy benefit manager (PBM) rebating tactics.
But drug pricing will not be an immediate focus for lawmakers. Trump’s 2017 tax cuts and the enhanced Affordable Care Act insurance premium subsidies provided by the Biden Administration’s COVID-era American Rescue Plan are scheduled to expire at the end of 2025, so Congress will be preoccupied with the debate on those issues.
Even when it becomes the pharma industry’s turn for must-pass legislation, they may not like the results. The Prescription Drug User Fee agreement that funds new drug reviews at the FDA must be reauthorised by the end of September 2027 – a perfect opportunity for the dealmaker-in-chief to demand concessions from an unpopular industry.
Last time he was in the White House, Trump proposed doubling user fees to fully fund reviews, but the idea never advanced. This time, his administration will oversee the entire negotiation cycle for the new agreement, so the idea could reemerge, especially since reducing federal spending is a key rhetorical focus for him.
On the other side of the threat ledger, RFK Jr. has called users fees a corrupting influence, and if his perspective prevails during the negotiation process, that would likely mean a considerable resource loss for the FDA, which could force the departure of experienced FDA staff.
Agency employees may be under pressure regardless of the user fee situation, due to the potential for a Kennedy-infused leadership to push disruptive policy changes or even attempt to purge staff by weakening civil service protections. Beyond either of those concerns, the general uncertainly of the situation could drive staff to depart for jobs they view as more stable.
Indeed, expected FDA Commissioner nominee Martin Makary has criticised the work ethic of the FDA staff, as well as review times. Makary also has advocated for evidence-based medicine, but sometimes has distorted data to support his conclusions.
In addition, Jim O’Neill, the expected nominee for deputy HHS secretary, has suggested that medical products only should be proven safe prior to entering the market, potentially creating more anxiety inside the agency, as well as among sponsors.
No regulator is perfect, but the FDA has been consistently offering smooth, flexible reviews over the past many years. Large-scale staff changes run the risk of changing that atmosphere.
A Republican Congress could have a chance to work on some pharma-friendly legislation over the next few years, but full GOP control probably will mean more attention on China and challenges for industry’s manufacturing and development activities in the country, perhaps most immediately with the BIOSECURE legislation, aimed at breaking sponsor’s ties with Chinese contract development and manufacturing organisations (CDMOs).
If Trump imposes broad tariffs and pharma can’t get exceptions, that would be a subtle headwind for industry, but companies could get a few subtle tailwinds over the next few years. The Federal Trade Commission likely will be more flexible in its attitude toward biopharma mergers and acquisitions, which is expected to facilitate more dealmaking in the industry, even as the FTC’s enforcement action against the major PBMs probably will continue.
How many of the various policy ideas come to pass remains to be seen.
As the first Trump administration concluded, Trump himself was at a low point, condemned for encouraging the 6 January 2021 insurrection and blamed for dragging the GOP brand down enough that the party lost control of the Senate. Pfizer CEO Abert Bourla, on the other hand, seemed triumphant. His company produced a world-saving vaccine and now had a technology platform to address many diseases.
Four years later, things appear very different. Trump consolidated his control of the Republican party and convinced voters to give him a second chance. Bourla, on the other hand, has been unable to build significantly on his company’s COVID windfall and now faces an activist investor challenge.
The relative reversal of fortunes is a reminder that no trajectory is permanent, and luck can sometimes have as big an impact on events as good decision-making. Hopefully the US FDA and the pharmaceutical industry will benefit from a lot of both over the next four years.
Nielsen Hobbs writes for Pink Sheet and In Vivo.
