Pharmaceutical companies expected to benefit from Trump’s health care plan

Pharmaceutical companies appear to be hopeful about their growth under a Trump administration, after former President Joe Biden took a hardline stance on the industry for the last four years.

Like his predecessor, President Donald Trump will make lowering health-care costs for Americans a priority. It’s a popular bipartisan issue in a nation where patients pay two-to-three times more for prescription drugs than people in other developed countries. Trump has not yet outlined specific health policy plans, but his new administration will likely take a different, more pro-business approach than Biden’s did.

Drugmakers hope Trump will focus more on cracking down on middlemen called pharmacy benefit managers, while taking heat off the prices the pharma companies themselves charge, promoting drug innovation and improving patient access to treatments. Those companies are particularly eager to see changes to Biden’s Inflation Reduction Act, which includes landmark provisions that aim to make medicines more affordable — but that the industry views as a threat to innovation and its profits.

That was the sentiment during the JPMorgan Health Care Conference in San Francisco this month, the largest gathering in the U.S. of pharma and biotech executives and investors. The annual conference gives a pulse on the industry’s outlook for the year ahead. To no surprise, health policy questions dominated many of the conversations as Trump was heading into office.

Trump isn’t exactly a friendly face to the U.S. pharmaceutical industry, as he targeted companies and high drug costs during his first term through proposals like linking government payments for medicines to lower prices paid abroad. Still, executives stressed they are ready to work with Trump, who some described as being willing to hear out their grievances.

“There are several people that think for our industry, the risks outweigh the opportunities. There are other people, among them myself, which they think that the opportunities outweigh the risks. I guess we’ll see,” Pfizer CEO Albert Bourla said during a presentation at the conference.

“What we do as an industry, and as Pfizer, is engage with the new administration,” he later added. “We have very productive engagements and we try to explain the positions, I think that are well-understood.”

Still, some executives acknowledged uncertainties around the new administration, such as the anti-vaccine views of Robert F. Kennedy Jr., Trump’s pick to lead the Department of Health and Human Services. Health experts have said that Kennedy, if confirmed by the Senate, may not do much to stop vaccine approvals, but could deter more Americans from taking recommended shots.

“I think he represents the caution when it comes to the Trump administration,” BMO biotech analyst Evan Seigerman said. “You got to figure out how to work with him, right?”

PBM reform is top of mind for drugmakers. They argue that the middlemen overcharge insurance plans for which they negotiate medication rebates, underpay pharmacies for dispensing prescriptions and fail to pass on savings from those discounts to patients.

Congress stripped out bipartisan PBM reforms in the final federal government spending package late last year, even after lawmakers for years introduced bills and held hearings to scrutinize them.

But the pharmaceutical industry is “optimistic” that it will see PBM reform this year, as Trump, lawmakers and lawmakers from both parties are concerned about their practices, said Stephen Ubl, CEO of the Pharmaceutical Research and Manufacturers of America, the industry’s biggest lobbying group in the U.S.

“I think there continues to be significant momentum behind PBM reforms, and there will be … legislative vehicles available this year to move them forward,” Ubl said in an interview with CNBC.

He also pointed to a previous Trump proposal that the president could revisit: To eliminate the so-called safe harbor for rebates – a rule that sought to stop PBMs from keeping rebates and instead ensure that any discounts from drugmakers would directly reach patients.

Trump has signaled that he will target PBMs, saying at a news conference in December, “We’re going to knock out the middleman. We’re going to get drug costs down at levels that nobody has ever seen before.”

But Trump still has to figure out if he will change the Biden administration’s approach to PBM reform, said Seigerman. Biden’s FTC Chair Lina Khan carried out an extensive investigation into the middlemen and then sued them for allegedly inflating insulin prices.

“The fact that it was a Lina Khan priority makes it harder for Trump because he’ll either outright reject something from the Biden administration or say, ‘We did it better,’ and…