Donald Trump’s first 100 days, and beyond, for biopharma

The shape of things to come for pharma during the next four years will be wrought over the coming weeks.

As Donald Trump is sworn into office today, we look at what the next 100 days and indeed the next four years could mean for the biopharma industry through his recent candidates for the top healthcare roles, his policies (which are still coming into focus), and the power that 140 characters can have.

One way we biotech journalists try to gauge these things is to ask biotech CEOs, but many, including those at this year’s J.P. Morgan event, wouldn’t even mention Trump by name (“incoming administration” just about replacing He Who Shall Not Be Named), with few willing to make any predictions about his presidency, and what mark it may leave on the industry.

Ionis CEO Stanley Crooke summed up the general attitude to me well: “I don’t and can’t hazard a guess at what the new administration will or will not do; even I’m not that brazen.”

Trump, in the way that only Trump can, came out toward the end of the J.P Morgan week with a press conference, ostensibly aimed at reassuring the American public that he did not create his own Watergate (ahem), but in what was likely not a deliberate act of timing, told reporters that pharma was “getting away with murder” on pricing, and wants to add a new bidding process to the mix.

A few days later, he went on to tell WaPo that he was hell-bent on hitting biopharma where it hurts. Cue biotech stocks taking a major hit, after many were doing well off the back of a fairly good JPM week.

Crooke again summed up the logical view on pricing, saying: “I think the processes that are affecting the industry have been with us for 30 to 40 years. And they haven’t changed. And what’s really driving the problems is a decline in productivity, and the fundamental challenge that the industry has not met adequately is to invent new, disruptive technologies that would lead to more efficiency.”

Radical choices for healthcare top jobs

Off the record, few believe this will be changed by a bidding process, or by putting tech/biotech entrepreneurs into the top jobs of the FDA or the NIH, although this is becoming an increasing likelihood after Trump met with a series of traditional, and not so traditional, candidates for these roles.

Dr. Robert Califf hands in his resignation to allow Trump to decide on whether to keep him as commissioner of the FDA, a job he has held for nearly a year, or replace him. Replacement is looking more likely given that he has met with three people, according to reports, for the agency’s top job: Dr. Scott Gottlieb, a partner at one of the world's largest VC funds but also a former deputy FDA commissioner; Balaji Srinivasan, CEO of bitcoin startup 21.co; and Jim O'Neill, M.D., at tech investment firm Mithril.

Dr. Gottlieb would fall along the lines of a traditional pick, but was not on the list of names who met with Trump in the middle of January as, according to reports from CNBC, it was Srinivasan and O'Neill who did meet with the then-president-elect. These two would be far more radical choices: Srinivasan has repeatedly criticized the FDA for holding back innovation, saying in one Tweet that insulin used to go from “bench to bedside in two years” before the agency got involved, and also believing that digital tech could help replace the agency one day.

Srinivasan deleted all of his old Tweets on the FDA (and in fact deleted everything he ever said on the site) after meeting with Trump, leaving a single Tweet saying: “Don't argue on Twitter. Build the future.” All of his old tweets are however archived here. There are reports that he is now no longer being considered, although this has not been confirmed.

O'Neill, who has no scientific or research background, also believes the FDA could do with some radical reform. He says that the FDA should greenlight meds based on safety only, not efficacy, although this will likely require a change in law to become a reality.

Both are also connected to Peter Theil, who runs Mithril and has been part of Trump’s transition team. He’s also a proponent of “progressive approval,” saying that: “We should reform FDA so it is approving drugs after their sponsors have demonstrated safety and let people start using them. … Let’s prove efficacy after they’ve been legalized.”

A new chief will likely not be picked until the nomination process for Rep. Tom Price, Trump’s pick to run the Department of Health and Human Services, has been confirmed and in place, given that the FDA head reports to this department.

According to recent news reports quoting sources from Trump’s transition team, ex-pharma lobbyist Jack Kalavritinos, who used to work at medical device company Covidien, is set to run the FDA in the interim after Dr. Califf’s resignation.

This is something of ironic post, given that Trump has said that “from day one” he would impose a five-year ban on lobbying, specifically on executive officials becoming lobbyists, part of the “drain the swamp” mantra used in the presidential campaign last year. On the broader regulation side, he’s previously said that for “every one new regulation, two old regulations must be eliminated,” although it’s unclear how and if that would work at the FDA.

And then there is the top job at the government’s largest medical research center, the NIH. Again, the candidates are reported by Nature to include the traditional, such as its current head Francis Collins, and the billionaire biotech CEO Patrick Soon-Shiong, both of whom who were said among a group of other candidates to have met with Trump, again in mid-January, for the chief’s role. Soon-Shiong, the highest paid CEO of 2015, is also said to be on Trump’s list as a potential presidential science adviser.

Soon-Shiong already has ties with the top brass in healthcare after recently launching his own 'Cancer Moonshot 2020' program in collaboration with the NIH, as well as the FDA and the White House.

Other rumored candidates include Geoffrey Ling, a retired Army neurosurgeon and former director of biotechnology at DARPA, as well as John Ioannidis, an epidemiologist at Stanford University who has pushed for reproducibility in biomedical science, according to the Nature journal. Collins is expected to stay on past today in the chief’s chair until a final decision is made in the coming weeks.

Pharma heads over the past two weeks have told journalists that, despite public perception, they actually do not want a weakened FDA, or one that focuses less stringently on medical regulation. It would seem they would typically prefer a more traditional candidate.

If Trump follows the previous pattern with his other picks outside of healthcare, he will want any new people installed as quickly as possible. Tied to all this, however, also from day one, is a hiring freeze on all federal employees to save money and reduce the workforce “through attrition,” again however it is unclear how this will affect bodies like the FDA.  

Obamacare and biosimilars

Trump also wants to repeal and replace the Affordable Care Act, a process that has already begun, but still wants to replace it with some form of universal coverage, although it’s unclear what the exact plans are here. It’s also unclear as to what will happen to the biosimilar pathway: This pathway has been provided in the part of the law known as the Biologics Price Competition and Innovation Act (a.k.a. BPCI).

Under this clause, a biological product may be demonstrated to be biosimilar if data show that, among other things, the product is highly similar to an already-approved biological product. It took five years for the first biosimilar to become available in the U.S. (Europe had its first over a decade ago) after ACA passed, but it remains uncertain as to what will happen to this pathway, which has been the subject of numerous legal spats and delays for new products, if ACA is done away with, and what “Trumpcare” will do with this clause.

Stocks

At first, there was the "Trump bump" after his shock electoral victory in November, with biotech stocks jumping, after a year of general stagnation, on the belief that he would bring de-regulation to the industry while returning money locked overseas to companies, all of which would cause a major M&A spree.

That now, however, is under greater scrutiny: Yes, it looks as though Trump and his healthcare picks, should they gain the top jobs, will move toward a lighter touch in regulatory terms, something that will cause concern for doctors but will likely be a boost for biopharma as it would theoretically allow drugs and devices onto the market more easily.

But the hand that giveth can also taketh away: Drug pricing was believed to be dead and buried when Hillary Clinton failed to become president and Bernie Sanders failed to become the Democratic nominee; Trump, however, is not looking like he will let go of the idea, and talks of its death were greatly exaggerated. This shouldn’t be a shock, given that throughout much of his campaign, he lambasted pharma’s political ties and lobbying tactics, and criticized its prices.

It may be that drugs and medical devices could get to the market more quickly, also lubricated by the 21st Century Cures Act, but they could then be hit by pricing barriers when they get there.

Antiscience administration?

There is also continuing concern over the antiscientific mood coming out of the Trump camp, and this has been made the worse with reports that a prominent antivaxxer, Robert F. Kennedy Jr., a man who has talked up the already-debunked links between vaccines and autism for more than a decade, has been asked by Trump to chair a vaccine safety panel. This has not yet been finalized, but many in the medical community were aghast that he was being seriously considered.

Trump himself has also long been a semiskeptic of certain vaccines for children, using his Twitter account to say that the current dosing can, in his opinion, cause autism in children, and has said numerous times that children should have their childhood vaccinations spread out to lower what he believes to be a heightened risk.

The power of a POTUS Twitter rant

And on the subject of Twitter, biopharma knows the power a Tweet can hold to hit stocks, and if the last few months are anything to go by, Trump appears happy to run much of his front-facing communication from his Twitter account, with every word being picked up by journalists. He’s already seemingly prompted reversals and strategy changes in the car industry with his tweets, so biopharma should be following his account over the next few months just as closely as every other industry for the day when the crosshairs fall on them.

Speaking at the Davos conference in Switzerland this month Ken Frazier, CEO at Merck & Co., said: “Pricing will remain a challenging issue for those of us who are in the research-based pharmaceutical industry, as well as a challenge for the overall healthcare system in terms of what it can afford.

“The tweets will be what they will be, but the subject matter of the tweets has been a challenge before the election and I think it will remain a challenge after the election.”

Olivier Brandicourt, Sanofi’s chief, added: “It’s very difficult to understand what all those comments and tweets will end up being. It’s going to probably be very difficult to issue legislation on drug pricing.”

So, what does Trump mean for biopharma? For now, at least, he means caution: Seeking out signals and patterns of behavior are what industry management teams and investors are all about, but this is a man and a team that has continued to defy the odds and the traditional course of politics.

There have already been some big deals early on this year, including Takeda’s $5.2 billion buy of Ariad (with other deals also being made from the Japanese pharma, although these were likely part of a long-term plan) as well as the recent merger between two Maryland biotechs, showing perhaps that M&A could in 2017, after a fairly meh 2016, be off to a good start.

But as all bets are off politically, the picture for biopharma is still coming into focus, and the next four years in healthcare will likely be shaped in the coming weeks as we see who Trump will pick for the key healthcare roles, and how far he goes after pricing.

Sad!