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 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
&, Celgene Corp, Eli Lilly & Co, Amgen Inc and Switzerland's
Novartis AG <NOV N.S> 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and removing "outdated regulations that drive up costs and slow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.
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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.”
(Additional reporting by Eric Beech, Ben Hirschler, John Miller,
Chuck Mikolajczak, Rodrigo Campos, Susan Heavey and Caroline Humer;
Editing by Lisa Von Ahn and Cynthia Osterman)
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