Executives from pharmaceutical companies including Johnson & Johnson (NYSE:JNJ), Amgen (NSDQ:AMGN), Merck (NYSE:MRK) and Eli Lilly (NYSE:LLY) met with President Donald Trump today to discuss issues ranging from drug pricing to regulatory approval for pharmaceuticals. The president called on the company execs to increase U.S. production and lower “astronomical” drug prices.
Although Trump doubled down on his calls for the executives to do more to lower drug prices, the meeting seemed to signal a defusing of tensions between the 2 groups. Pharmaceutical stocks tumbled last month after Trump said the companies were “getting away with murder.”
“We have to get prices down for a lot of reasons. We have no choice, for Medicare and Medicaid,” Trump said.
“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,”market strategist Quincy Krosby said, according to Reuters.
During the meeting, Amgen CEO Robert Bradway reportedly committed to adding 1,600 U.S. jobs at his biotech.
Trump cited currency devaluation by other countries as a motive for drugmakers to outsource their production, while calling on the companies to bring their production back to the U.S.
“We’re going to end global freeloading,” he said, adding that foreign countries should pay fair share for drug development costs.
Eli Lilly and Merck told Reuters that they were encouraged by the President’s focus on innovation and that the meeting also touched upon issues like negotiating stronger trade agreements, tax reform and getting rid of outdated regulations.
“Tax, deregulation – those are things that could really help us expand operations,” Lilly CEO Dave Ricks said.
It remains to be seen exactly how Trump’s recent executive order to cut 2 regulations with every new 1 will impact the pharmaceutical sector. But the industry’s drug pricing problem has been on the forefront of public discussion and it is unlikely to go away soon – yesterday, insulin makers including Lilly were named in a class-action lawsuit claiming that the companies conspired to raise their list prices to get access to pharmacy benefit managers’ preferred lists.
“Regulations – great, streamlining the FDA, perhaps,” Jack Ablin, BMO Private Bank chief investment officer, 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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