With the conclusion of the November 5 election and the successful election of Mr. Donald Trump as President, the pharmaceutical industry is bracing itself for four years of uncertainty.
Mr Trump was declared the winner in the early hours of Wednesday morning, winning more than half of the popular vote, and with it, the future of healthcare.
In addition, Republicans gained a slim majority in the Senate and appeared to have a majority in the House of Representatives as well, although the final results were not yet in place as of Friday afternoon.
The task at hand is to analyze Mr. Trump's priorities in the area of health care, some of which remain vague or unclear.
These include a plan to repeal the Affordable Care Act and install anti-vaccine activist Robert F. Kennedy, Jr., in a key public health policy post.
Numerous industry stakeholders and policy experts have a hunch about what could happen, including a possible rollback of antitrust measures, which would open up room for more deals in the healthcare sector, especially the pharmaceutical sector.
With regard to the latter, experts point out that Mr. Trump's victory has both positive and negative aspects for drugmakers.
First, Mr. Trump is expected to push for new corporate tax cuts and a more lenient policy on mergers and acquisitions (M&A). However, they also warn that he may stick to his past stance of calling on big Pharma to lower drug prices.
Zachary Baron, director of the Center for Health Policy and Law at the O 'Neill Institute at Georgetown Law, said that given these conditions in the pharmaceutical industry, these conflicting policy implications could cancel each other out.
"Some of these tax changes could be huge wins for the pharmaceutical industry," Mr. Baron said. "The Trump administration is likely to take a hard line on drug pricing and helping the elderly while taking steps through corporate tax provisions, which would be a big win for pharmaceutical companies, so the result could be a net gain."
As a clearer policy picture emerges, here are some of the potential implications of the 2024 election for the pharmaceutical industry.
The Biden administration passed the Inflation Reduction Act (IRA) in 2022, which included a provision allowing Medicare to negotiate the price of certain Part D drugs.
Earlier this year, the federal government launched the program and released the final prices of the first 10 drugs selected after negotiations with participating pharmaceutical companies. Those drugs include Merck's Januvia, Astrazeneca's Farxiga and Johnson & Johnson's Stelara.
The program is considered the most historic drug pricing reform in decades, in line with Democrats' promises to lower drug costs and cap insulin prices for Americans.
In theory, this is not too far from Mr. Trump's previous position on drug pricing.
The former president broke with Republican drug policy tradition by seeking to issue an executive order in 2020 that would lower Medicare Part B payments for specific drugs to match prices in other countries.
His order states that it is "unacceptable" for Americans to pay more than other countries for the same drugs.
Although Mr. Trump has been silent on drug pricing in 2024 compared to 2016, it is still part of his agenda, according to his campaign website.
His website promises that the federal government will tell big drug companies, "We will only pay the best price they offer to foreign countries that have been taking advantage of us for too long - and America is tired of being ripped off."
However, despite Mr. Trump's populist stance on drug pricing, some Republican lawmakers expressed a desire earlier this year to repeal the IRA's Medicare negotiating provisions.
Mr Trump has yet to officially reveal a formal opinion on the future of the IRA, but Mr Baron said the future of the provision could play out in several different scenarios under a Trump administration.
"With a slim Republican majority in the House, this does unlock the potential for certain legislative changes that could impact the pharmaceutical industry," Mr. Baron noted. "Republicans and the Trump administration may seek to fully repeal the drug bargaining program, as some Republicans have called for, or they may try to make certain reforms that water down the program or make it more friendly to drug companies."
However, repealing bipartisan reconciliation bills like the IRA is notoriously difficult, and Mr Baron believes it will be difficult for Republicans to do so.
However, the question remains as to whether the Trump administration is likely to take additional steps to delay the implementation of the new price policy in 2026. It would mark a major advance in the ongoing litigation battle between big pharmaceutical companies, including Merck, Novo Nordisk, Bristol-Myers Squibb and Johnson & Johnson, and the federal government, which have sued Medicare's negotiating terms, arguing that they are unconstitutional.
So far, the courts have generally favored the federal government's position in these cases. However, Baron believes that the Trump administration may take a different tack in the litigation battle.
"The open question is, 'Will the Trump administration vigorously defend this law in court?'" '" Barron asked. "Do they refuse to defend certain aspects? Are patient groups or other stakeholders likely to intervene in these cases to defend the law against these constitutional challenges?"
He further noted that if the Trump administration refuses to implement these negotiated prices, it could trigger its own separate lawsuits.
On the other hand, Evan Siegman, a biopharmaceutical analyst and head of healthcare investment research at BMO Capital Markets, believes the Trump administration may not make major changes to the negotiating process for IRAs or Medicare. He noted that this is not a policy priority for Trump and stressed that the reconciliation act is difficult to change.
"The IRA is likely to continue to exist, and that's probably where the drug pricing headlines and the Trump administration's wins continue to come from," Siegman said. Since US President Joe Biden appointed Federal Trade Commission (FTC) Chair Lena Khan in 2021, the antitrust agency has been publicly vocal about cracking down on high medical costs by pharmaceutical companies and pharmacy benefit managers (PBMs).
Siegman pointed out that it is entirely possible that the Trump administration will remove Khan, a prominent liberal leader, in favor of appointing a more "permissive" FTC on mergers and acquisitions, which would be good for small and mid-sized biotech companies. However, he noted that it may not have as much impact on the pharmaceutical industry as expected, as Khan's FTC has only succeeded in blocking one major pharmaceutical deal - Sanofi's attempted acquisition of Maze Therapeutics.
The main difference, Siegman added, is that the Republican-led FTC will be "more supportive of mergers and acquisitions" and deals will have an easier time getting approved.
Going forward, the biggest uncertainty facing the pharmaceutical industry may be RFK Jr. 's presence on the federal public health scene. Experts generally agree that Kennedy Jr., who has held top positions at the FDA and the Centers for Disease Control and Prevention at the U.S. Department of Health and Human Services, could bring a great deal of uncertainty and confusion to the regulatory system.
RFK Jr. has been an outspoken anti-vaccine activist for the past two decades and has previously criticized federal guidelines on childhood immunizations and vaccine efficacy research, raising concerns that he might reform the way the FDA approves vaccines and other products.
He also touted his "Make America Healthy Again" (MAHA) plan, which includes declaring war on processed foods that fuel chronic disease and purging scientists from federal public health agencies.
Leslie Isenegger, director of the pricing and public affairs practice at Real Chemistry, noted that Kennedy's involvement could undermine the regulatory status quo in the pharmaceutical industry. Real Chemistry is one of the 100 winners of the 2024 MM+M Institute.
"Other former Trump advisers have talked about denigrating career civil servants, rethinking the way these agencies are staffed, rethinking the drug approval process, such as reducing regulation of various products," Eisenegger said. "But what that actually means and what will replace the system is unclear."
She added that if the new government reduces regulation, it could create a more business-friendly environment, but warned that if it reduces too much, it could create too much uncertainty and people would be reluctant to invest.
At the same time, Barron noted that the Trump administration's potential "sabotage and disruption" of the FDA or CDC could be harmful to the pharmaceutical industry and the public health community at large.
Siegman agreed, expressing his concerns about future leadership at the Food and Drug Administration (FDA) or the Centers for Medicare and Medicaid Services (CMS).
"At CMS, and especially the FDA, we expect a leader who is focused on science and keeps politics at arm's length," Siegman noted. "Looking at the work of former FDA Commissioner Scott Gottlieb and current FDA Commissioner Robert Califf, they are both committed to science, free from political distractions, and committed to accomplishing the mission of the FDA." Crucially, we need people who believe strongly in the value of scientific processes and treatments to help the public. I worry that Kennedy Jr. might not have had the same worldview."
There appears to be a rare bipartisan consensus on PBM reform.
Over the past four years, lawmakers from both parties have increasingly focused their attention on PBMS and their role in driving up drug prices.
Leadership on Capitol Hill questioned the ceos of major pharmacy benefit managers like CVS Caremark, Express Scripts and OptumRx in depth.
Over the past year, lawmakers have also released a series of pharmacy benefit management reform bills targeting spread pricing, a practice in which pharmacy benefit managers charge insurers more than they pay pharmacies.
Siegman believes PBM reform may be one of the few areas where Republicans and Democrats in Congress can find common ground, and he expects that scrutiny to continue.
"No one is happy with PBMS," he says bluntly.
Ultimately, Baron will be keeping a close eye on changes to the regulatory system, and believes this is a major area that pharmaceutical companies should pay close attention to.
"The pharmaceutical industry may find some new and unexpected Allies," he argues. He is concerned about how those groups that care about patient rights and women's rights can work with industry to ensure that the damage to this area is minimized, which will be a development to watch.
