Just a couple of weeks later, upon inviting chief executives of Novartis, Merck, Johnson & Johnson, Lilly, Celgene and Amgen as well as head of PhRMA, the industry’s lobbying group, Trump’s tone was far less antagonistic.
“You folks have done a terrific job over the years but we have to get prices down,” he pleaded.
“US drug companies have produced extraordinary results for our country but the pricing has been astronomical,” he said.
At a meeting on Tuesday 31 January, Trump made promises of stripped back regulation, streamlined FDA processes to reduce the time taken to get drugs through trials and to market, and greater innovation.
He called on the pharma giants to bring their manufacturing back to America to abolish “global freeloading” by foreign price controls, giving the sector a healthy upward nudge in the following days. Nasdaq Biotechnology was up 5% and NYSE ARCA Pharmaceutical Index was up 3% by that Friday.
But is he going to be able to make good on his promises?
Dan Mahony, portfolio manager of Polar Capital Healthcare Opportunities believes there is a fundamental habit of negotiation with Donald Trump that needs to be considered, regardless on which side of the political spectrum you sit.
He said the US pharma industry went into the White House this time last week braced for battle, and what came out was far more conciliatory than was expected.
“The way we interpret Donald Trump at the moment is unlike many politicians before him. He is not coming from any steadfast ideological position; he is coming from a position of negotiation as a real estate person.
“Therefore a lot of what he says is never intended as his end position, whereas a lot of politicians come out with a firm idea with no room for compromise because they are set in ideology.”
The difference is that people have been struggling to understand that because it is not how politics has been played before – not for years.
There has been some extortionate drug price inflation in recent years, with the most infamous case being former hedge fund manager Martin Shkreli’s HIV treatment Daraprim, which he hiked up to $750, or 5,000% immediately upon buying its manufacturer, Turing Pharmaceuticals.
But the extremes aside, pharmaceutical inflation has been down to some off-patent drugs following the FDA shutting down some manufacturing plants in 2014/15, causing a scarcity of supply.
Now the FDA is approving more plants and releasing drugs into the market, which has normalised the supply/demand dynamic.