President Donald Trump in a meeting on Tuesday with pharmaceutical executives called on them to manufacture more of their drugs in the United States and cut prices, while vowing to speed approval of new medicines and ease regulation.
Trump told them the government was paying "astronomical" prices for medicines in its health programs for older, disabled and poor people and said he would soon appoint a new U.S. Food and Drug Administration leader.
"We’re going to streamline the FDA," Trump said in a statement, referring to the regulatory agency responsible for vetting that new drugs are safe and effective.
The meeting between Trump and the pharmaceutical executives signaled a defusing of tensions that have kept drug stock prices in check since the presidential election. Shares of most of the group rallied on Tuesday following the meeting, even as the broader stock market slid.
“Trump is a populist above all else, and having these (drug) prices skyrocket, he’s commented that under his administration, this is not going to happen,” said market strategist Quincy Crosby of Prudential Financial in Newark, New Jersey.
She said Trump was playing a balancing act between controlling prices and loosening regulations. "I don’t think the majority of Americans want all regulations lifted from drug makers.”
Attending the meeting were top executives at Merck & Co. Inc., Johnson & Johnson, Celgene Corp., Eli Lilly & Co., Amgen Inc. and Switzerland's Novartis AG as well as the head of the Pharmaceutical Research and Manufacturers of America (PhRMA) lobbying group.
According to a transcript of the televised portion of the meeting, Amgen Chief Executive Officer Robert Brad way promised to add 1,600 U.S. jobs at his California-based biotechnology company this year.
Amgen clarified in an email that it currently employs around 20,000 people worldwide, including 12,000 in the United States, and said the 1,600 includes new staff as well as hires to address attrition.
Celgene, Lilly, Merck and Amgen said by email after the meeting that they were encouraged by Trump's focus on innovation, tax reform and the need for a more value-driven health care system.
Lilly said discussion topics also included stronger trade agreements and removing "outdated regulations that drive up costs and slow innovation."
PhRMA echoed those points in its own post-meeting statement, adding that the policies, if enacted, would result in up to 350,000 new jobs over the next 10 years.
"Tax, deregulation - those are things that could really help us expand operations," Lilly CEO Dave Ricks said.
Officials at Novartis and J&J did not immediately respond to requests for additional comment.
Shares of the six companies were mostly higher, for an overall gain averaging 0.7 percent, compared with a 0.4 percent drop in the broad S&P 500. The Nasdaq Biotech Index was up 1.2 percent, reversing earlier losses, and the S&P 500 health care index gained 0.6 percent.
WORLD'S HIGHEST DRUG PRICES
"We have to get prices down for a lot of reasons. We have no choice, for Medicare and Medicaid," Trump said, citing the nation's government insurance programs for the elderly, the poor and the disabled.
Trump also said currency devaluation by other countries had increased drugmakers' outsourcing their production, and he called on the companies to make more of their products in the United States.
Foreign countries must pay a fair share for drug development costs, he added. "We're going to end global freeloading."
The United States typically pays more for drugs than any other developed nation. Most Western European countries, as well as Japan, have government-run health care coverage under which drug prices are negotiated.
High drug prices have become a national issue during the past two years as healthcare costs have risen Trump spooked pharmaceutical and biotech investors by saying on Jan. 11, before his inauguration, that drug companies were "getting away with murder" on what they charged the government for medicine and that he would do something about it.
Company executives, meanwhile, have tried to tread a careful line in defending their industry while expressing optimism that the United States would continue to reward scientific advances.
"Regulations - great, streamlining the FDA, perhaps," Jack Ablin, chief investment officer at BMO Private Bank in Chicago said. "But if Trump is going to address his constituency, drug prices have to come down. So I think this is maybe a Pyrrhic victory.”
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