Trump pushes pharma to boost drug production in US
- In a closely watched meeting with top pharmaceutical executives this week, President Trump stuck to themes that won him the election, telling the group to bring back manufacturing jobs from overseas and make more drugs in the U.S.
- In exchange, Trump promised to dramatically cut regulations and speed up review of new drugs by the Food and Drug Administration — a goal reflected in the rumored front-runners to head the agency under the new administration, many of whom have stirred controversy in the past with radical reform ideas.
- While Trump did push the gathered CEOs to bring down prices, his tone was less strident than previous comments, boosting the stock prices of many big pharmas following the meeting.
The industry breathed a collective sigh of relief after Trump refrained from calling for government negotiation of drug prices. Trump had previously rebuked the industry for "getting away with murder" on drug prices, killing early market optimism and raising fears he might call out specific companies on Twitter.
Trump did call drug prices in the U.S. "astronomical" and reiterated the need to bring costs down. But the focus of the meeting appeared to be more aimed at changing U.S. tax laws, cutting regulations and reshoring manufacturing.
"So you have to get your companies back here. We have to make progress back. We're going to get rid of a tremendous number of regulations. I know you have some problems where you cannot even think about opening up new plants and then you can't get approval for the plant and then you can't get approval to make the drug," Trump said.
"I expressed to the executives that I want them to move their companies back to the United States — and I want them to manufacture in the United States," read a statement posted to Trump's Facebook page after the meeting.
That kind of narrative is one pharma appears much more comfortable with than the withering charges of price-gouging many companies in the industry have faced over the past year.
Big pharma can certainly live with policies aimed at making markets more competitive if it comes with a more favorable tax code and rolled-back regulations — and falls short of direct negotiation by Medicare, price caps or other more drastic measures.
We believe @POTUS agenda on taxes, trade & regulations could create 350,000 American jobs over 10 years due to biopharma industry growth 2/3— Stephen J. Ubl (@steveubl) January 31, 2017
Amgen, whose CEO Robert Bradway attended the meeting, announced in conjunction with the meeting that it would be hiring 1,600 skilled workers in the U.S. this year. That figure, though, would also include hires to replace workers leaving the company, Reuters reported.
"I think the Republican leadership has overall tax changes that are overall favorable for the pharmaceutical industry. Certainly would allow us to create more jobs in the United States," Pfizer CEO Ian Read said on a conference call with analysts held at the same time as the meeting.
"We're driven by the tax code today to manufacture outside of the United States," he said. "If there is no penalty by the border adjustment for manufacturing inside the United States to supply your markets outside of the United States, that will encourage us to put more jobs in the United States."
Many of the large multinational drug companies have manufacturing spread across several countries, taking advantage of more favorable tax codes and skilled work forces (such as in Ireland). Geography also plays a role as companies like Pfizer sell their drugs to markets around the world.
Bringing down U.S. tax rates would certainly change that equation, although many large U.S. pharmas have been cutting jobs and streamlining labor costs for years.
Despite a rocky start in January, relations between Trump and pharma appear to have mellowed. All that could change, however, with a fired-from-the-hip Tweet.
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