Trump Administration Doubles Down on Big Pharma Pressure

• The Trump administration is pushing to lower U.S. drug prices to match those in other developed nations through the Most Favored Nation executive order, while also proposing a 20% tariff on medicines made outside the U.S. to encourage domestic manufacturing.
• Major pharmaceutical companies, including Roche (RHHBY), Johnson & Johnson (JNJ), and Eli Lilly (LLY), have committed $50 billion, $55 billion, and $27 billion respectively to onshoring manufacturing since 2020, but Roche has threatened to reconsider its investment due to policy pressures.
• AstraZeneca (AZN) supports equitable pricing but warns that the Most Favored Nation policy needs careful implementation to avoid disrupting patient care or undermining U.S. biotechnology leadership, while Eli Lilly’s CEO suggests tariff threats have already spurred industry action.

The Trump administration’s aggressive push to lower drug prices and bring pharmaceutical manufacturing back to the United States has sparked intense debate within the industry, with companies like Roche (RHHBY), Johnson & Johnson (JNJ), Eli Lilly (LLY), and AstraZeneca (AZN) navigating a complex landscape of policy pressures and economic realities. At a joint U.S. pharma and biotech summit hosted by the Financial Times and Endpoints News in New York, Calley Means, special adviser to HHS Secretary Robert F. Kennedy Jr., emphasized the administration’s commitment to aligning U.S. drug prices with those in other developed nations, without mandating specific pricing. Means stressed that the government’s role is not to dictate prices but to ensure Americans do not pay more than their counterparts in Europe, a stance reflected in President Trump’s recent executive order, known as Most Favored Nation, which requires pharmaceutical companies to sell treatments in the U.S. at the lowest price offered in any developed nation.

The administration’s policies extend beyond pricing to reshaping the pharmaceutical supply chain. Trump has already imposed tariffs impacting medical devices and is proposing a 20% tariff on medicines manufactured outside the U.S., incentivizing companies to relocate production domestically. Since 2020, major manufacturers have responded with significant commitments to onshoring, including Roche’s $50 billion, Johnson & Johnson’s $55 billion, and Eli Lilly’s $27 billion, totaling $50 billion in investments. These pledges, initially spurred by Trump’s first term, reflect the industry’s recognition of the administration’s focus on domestic manufacturing as a means to address both economic and health security concerns. However, the recent executive order and tariff threats have elicited mixed reactions, with some companies questioning the feasibility of these policies.

Roche, for instance, has threatened to reconsider its $50 billion manufacturing commitment, a move Means called “morally reprehensible” during the summit. He criticized companies that leverage economic arguments against the administration’s goals, particularly when the U.S. faces a chronic disease crisis and a budgetary strain from high healthcare costs. Eli Lilly’s CEO echoed a different sentiment, suggesting that the tariff threats have already galvanized the industry and urging Trump to “declare victory and move on.” AstraZeneca, meanwhile, adopted a more conciliatory tone in a Monday statement, expressing alignment with Trump’s goal of equitable pricing across high-income nations while cautioning that the Most Favored Nation policy requires careful implementation to avoid disrupting patient care or stifling innovation. The company emphasized the need for stakeholder engagement to balance affordability with the U.S.’s leadership in biotechnology.

The administration’s dual focus on pricing and onshoring taps into broader economic and public health challenges. High drug prices have long been a point of contention, with U.S. consumers often paying significantly more than those in other developed countries due to differences in regulatory frameworks and market dynamics. The Most Favored Nation order aims to close this gap, but critics argue it could strain pharmaceutical companies’ profitability, potentially limiting research and development budgets. Similarly, while tariffs and onshoring incentives aim to bolster domestic manufacturing, they introduce cost pressures that could ripple through the supply chain, affecting both companies and patients. The $50 billion in commitments since 2020 demonstrates the industry’s willingness to adapt, but the threat of further tariffs and pricing mandates has created uncertainty.

As the pharmaceutical sector grapples with these policies, the tension between innovation, affordability, and economic nationalism remains unresolved. Means’ remarks at the summit underscore the administration’s view that the industry’s resistance, such as Roche’s threat to pull investments, undermines urgent public health goals. Yet, companies like AstraZeneca advocate for a collaborative approach, warning that poorly executed policies could jeopardize global health advancements. The industry’s response in the coming months, particularly from major players like Johnson & Johnson and Eli Lilly, will likely shape the trajectory of U.S. pharmaceutical policy. For now, the administration shows no signs of relenting, with Trump’s executive order and tariff proposals signaling a continued push to reshape how medicines are priced and produced in the United States.

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