What President Trump Means for Big Pharma

The long awaited news conference from then President-Elect Trump in early January didn't disappoint in terms of drama, nor bode well for the country's most well-known and financially-lucrative pharmaceutical companies.

Only Merck remained unscathed among the top-tier drug manufacturers in the Dow--stock was up 2.6%. Merck was the Dow's best performer in the sector, due to the US Food and Drug Administration's (FDA) acceptance of a bid for an accelerated review of an immune-system drug to be used with chemotherapy for advanced lung cancer patients.

Today via NPR, Mr. Trump inferred that many drugs are manufactured outside the US, and that , "A lot of industries are going to be coming back. We have to get our drug industry coming back. Our drug industry has been disastrous. They’re leaving left and right. They supply our drugs, but they don't make them here. To a large extent. And the other thing we have to do is create a new bidding procedures for the drug industry because they're getting away with murder."

"Pharma has a lot of lobbies, a lot of lobbyists and a lot of power. And there's very little bidding on drugs. We’re the largest buyer of drugs in the world, and yet we don't bid properly. And were going to start bidding and were going to save billions of dollars over a period of time", stated Trump.

Does this mean Medicare will negotiate drug prices in the future?

With more people entering the Medicare system over the next eight years, this will be more than just a radical shift in a federal program that is already financially burdened beyond its capacity. Medicare is the largest buyer of drugs in the US, and that means all private insurance companies that participate in the Medicare marketplace will be able to negotiate prices with the drug companies. Estimates are the federal government could save as much as $16 billion annually by negotiating prices directly--which is way below the $300 billion figure mentioned by Trump when he was a candidate.

All pharmaceutical stakeholders will be impacted -- but can Medicare give a price ultimatum that drug companies must take? We don't know yet. Trump has said that pharmaceutical organizations have a responsibility to the public, even though they are privately-owned entities. The end result will hopefully be a compromise.