President-elect Donald Trump and his incoming administration are unlikely to attempt a wholesale restructuring of U.S. healthcare and could promote M&A activity, but controversial picks like Robert F. Kennedy could impact vaccine sales, experts say.
Heading into the November election, healthcare and prescription drugs were not exactly one of the major topics. But right off the bat, President-elect Donald Trump named a flurry of controversial picks to lead the many agencies overseeing health and life sciences, bringing the issues right back into focus.
On a call organized by Guggenheim Securities last week, David Bowen, principal at health and science consulting firm Corracloon Strategies, offered a “qualified no” to the idea that the new administration will immediately jump to restructure how healthcare is delivered in the country. But the biopharma industry could still see some changes once the White House turns over, he and others agreed.
Perhaps Trump’s most controversial Cabinet pick, long-time anti-vaccine advocate Robert F. Kenney Jr. is set to take over as Secretary of Health and Human Services (HHS), the agency that oversees the FDA. S&P Global Market Intelligence predicted in a report this week that Kennedy could attempt to slow down vaccine approvals or remove the federal government’s support for vaccine campaigns. That, in turn, could lead to lower sales for pharmas such as GSK, Pfizer, Merck, Sanofi and AstraZeneca, which have extensive vaccine portfolios. All are relying on the U.S. market for future growth.
“It could also lead pharmaceutical companies to invest less in vaccine development in anticipation of lower uptake for newly released vaccines,” the S&P report read.
While many experts have said Kennedy will mainly prioritize food safety, Bowen predicted that he could also take aim at vaccine recommendations and the “perception of regulatory capture of federal health agencies by industry.”
“He has a view that these agencies have become too enmeshed with the pharma industry and have become corrupt, because he views the pharma industry as corrupting,” explained Bowen, who previously worked for Kennedy’s uncle, former Sen. Edward Kennedy. Bowen said he believes that RFK will move to make changes to staffing at the agencies he oversees to “purge the impurity.”
Trump has also nominated Marty Makary to lead the FDA. Industry mostly breathed a sigh of relief when the name was put forward.
Bowen said that Makary could have been a pick by a more traditional Republican president. “In a more conventional Republican administration, he’d still be sort of a maverick and an outsider but he’s clearly well qualified as a practicing physician. He has views that are on the conservative side for an FDA commissioner, but certainly not I would think, from what I’ve seen, totally outside the mainstream, whereas RFK has views that are literally unprecedented [for a] health secretary.”
Last week, the outgoing Biden administration dropped a last-minute proposal to have Medicare and Medicaid cover obesity medications such as Eli Lilly’s Zepbound and Novo Nordisk’s Wegovy. Bowen called this “very clever.” He expects the measure to be popular, leaving the Trump administration in the tricky position of deciding whether to rescind the rule.
Another policy left over for Trump to deal with will be the Inflation Reduction Act, which included a provision for Medicare to negotiate certain drug prices. S&P sees a lot of uncertainty ahead for the pharma industry in this regard. While Trump himself pitched drug price negotiations in his first term, he has promised to roll-back the IRA itself, “starving it of funding,” according to the S&P report. Given the “populist support” of lowering drug prices, S&P analysts wonder if Trump will accelerate or even expand Medicare drug price negotiations.
Looking at broader policy shifts the Trump administration could bring, S&P predicts that the Federal Trade Commission will lessen its scrutiny on deals compared to what happened under Biden. Biden’s FTC chief Lina Khan specifically focused on the healthcare sector. While no major pharma deals were blocked during her tenure, several underwent protracted reviews such as Novo Nordisk’s Catalent buyout which is still pending closure.
“The administration is expected to usher in a new era of a less restrictive FTC, which will likely result in increased M&A activity,” Baird senior research analyst Mike Perrone told BioSpace by email. This, he added, would be most welcome, noting that 2024 is “the first year in recent memory that has not seen a biopharma transaction above $5B in value. . . . Ultimately any increase in large biopharma M&A would be a boost to SMID cap biotech valuations.”
More deals, according to S&P, would be “a positive for an industry that needs M&A.”
