RFK Jr. as HHS head is perhaps President-elect Donald Trump’s most controversial Cabinet pick now that Matt Gaetz has withdrawn as nominee for Attorney General. With Dr. Oz tapped to lead CMS and maybe Marty Makary at the FDA, it’s going to be quite the show.
Prior to his victory, President-elect Donald Trump was considered a wild card for the biopharma industry. In the past eight days, his rapid announcements of intended nominations of Robert F. Kennedy, Jr. as Secretary of Health and Human Services and Mehmet Oz as Administrator for the Centers for Medicare and Medicaid Services bear that out.
On a call with Guggenheim analysts eager with questions about this cast of potential new healthcare administrators, policy analyst Ethan Siegal spoke candidly about what he said has come to be known as Trump’s “Team of Self-Promoters,” playing off of Lincoln’s Team of Rivals.
It’s an appropriate nickname, Siegal said of Trump’s picks, specifically mentioning Kennedy and Oz in addition to Matt Gaetz, who yesterday withdrew as Trump’s nominee for Attorney General, and Tulsi Gabbard, currently tapped to be Director of National Intelligence. “They all have paper trails, lots of controversies,” noted Siegal, founder of The Washington Exchange, which conducts public policy research and political analysis. He added that with Gaetz now out of the picture, RFK Jr. is arguably “the most controversial nomination.”
As for what these appointments will—or won’t—mean for biopharma, Siegal and other analysts have downplayed industry concerns about changes to regulatory processes for vaccines and point to modest advantages such as a more friendly M&A environment and amendments to the Inflation Reduction Act (IRA) that could benefit drugmakers. For now, though, uncertainty and concern are still dominating the discussions.
“We expect more XBI volatility as this plays out and uncertainty and concern w investors may lead to increased risk w the sector,” Jefferies analysts wrote in a note to investors this week. “[We] understand increasing investor concerns on ‘stability’ of the agencies and resources....and these distractions and the unpredictability could be a factor over the near term.”
What Will an RFK Jr. Reign Mean for Biopharma?
Gaetz dropping out of Trump’s potential future Cabinet is actually a good thing for Kennedy, Siegal said on this week’s call, as Trump will blame Congress for his withdrawal and pressure its members to confirm his other appointees. “I think RFK Jr. will get confirmed,” Siegal said. “I think he’ll lose a couple Republican votes but I don’t think he’ll be defeated”—unless catastrophic news about him emerges.
That’s the downside to Trump being so fast with his picks following his electoral victory, he said. “They have to survive the media and political cycle for months, so a lot of news can come out—a lot of nuggets of information that can hurt them.”
The industry is understandably concerned about Kennedy’s history of anti-vaccine rhetoric, with shares of U.S. pharma companies, especially vaccine makers, falling on the news last week. But most experts argue there are unlikely to be substantial changes to regulatory processes, at least early on in the new administration.
“While it remains unclear how this would play out, we expect the ‘anti-vax’ sentiment to likely be digested and not impact most of the 95% of the rest of biotech,” the Jefferies group wrote.
Baird senior research analyst Mike Perrone echoed this sentiment. “His rhetoric to-date suggests a focus on vaccines, though it is hard to imagine wholesale changes to the decades long childhood immunization schedules,” he wrote in a statement emailed to BioSpace. He added that the COVID years aside, “vaccines have not represented a significant portion of biopharma profits.”
Moderna leadership appears similarly confident that Kennedy will not cause undue harm to their business, which is already suffering this year. In a fireside chat with Jefferies analysts, Moderna management said the company “believes RFK may have caused investor nervousness” but is unlikely to do “anything draconian or remov[e] vaccines,” Jefferies wrote in its summary of the event. The analysts added, “Some investors think the market is nearing short term ‘peak RFK negativity’ + could be due for a bounce.”
Siegal was even more blunt regarding Kennedy’s likely inability to make major changes on the vaccine front. “I know he can move fast with his mouth, and he can talk a lot, but whether he accomplishes a lot in the first year, I don’t know,” he said. “I think he has a very uphill climb.”
In addition to not having the authority to dismantle FDA infrastructure, Siegal said, “I don’t know how much support Bobby Kennedy’s anti-vaccine efforts will receive” from Congress. Rather, he said he believes “RFK Jr. will have more of a bully pulpit, rhetorical impact on FDA issues.”
Siegal added, however, that he’s heard “Trump enjoys talking to RFK and . . . RFK Jr. has Donald Trump’s ear. So if Trump were to get behind an anti-vaccine effort, that would be a game changer.”
Absent that, Siegal said the one thing Kennedy could do is simply create a culture unfriendly to new vaccines. “RFK’s greatest power as HHS Secretary, with regard to, say, the FDA . . . is that he can slow it all down.”
What Will the FDA Look Like Under Trump?
Another important question for biopharma is who will be appointed to lead the FDA. News emerged this week that Marty Makary, a pancreatic surgeon at Johns Hopkins known for battling medical mistakes and his criticism of COVID-19 policies, is likely to be Trump’s pick as the next commissioner of the regulatory body.
Siegal said that Makary and Stanford’s Jay Bhattacharya, who has emerged as Trump’s expected choice to lead the National Institutes of Health (NIH), are “darlings of the far right” and therefore could easily get confirmed. However, he added, “nothing surprises me. . . . You never know what’s going to tick Trump off.”
Assuming Makary will lead the FDA, there could be some shifts at the agency. “RFK and Dr. Makary have both been vocal on change and pot’l overhauling FDA - pot’l impacts might include reduced headcount (voluntary or involuntary) or otherwise reduced funding for the Agency which could negatively impact the industry and approvals,” the Jefferies group wrote.
Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research (CBER), agreed, noting at a Jefferies-hosted event this week that there may be developments “that could adversely affect the workforce. It may get difficult to hire until a lot of the dust has settled.”
However, neither Marks nor analysts anticipate major changes to the FDA’s oversight of therapeutics. “We do not see fundamental impacts to the Agency’s stance on the majority of biotech innovation (non-vaccines) and especially to key areas of unmet need including rare and orphan diseases, oncology, inflammation/autoimmune, and others,” Jefferies wrote.
Marks similarly noted that he does not anticipate changes to the regulation of other drug classes overseen by CBER, including gene and cell therapies, and given that uptake of the COVID vaccines is already low, any potential impact of the new administration on vaccine usage will likely be limited.
With regard to Kennedy’s anti-vaccine rhetoric, Marks did say that he expects there to be a vigorous and open dialogue with outside advisers to discuss vaccines, though he added, “I don’t necessarily view that as a bad thing,” Reuters reported. He also said it could serve as an opportunity for the agency to reconsider its messaging around vaccines, emphasizing their benefits and how these outweigh the risks.
Whether Makary is officially nominated, and whether any of the nominees are confirmed next year, remains to be seen, and speculation about potential impacts to the policies impacting biopharma will continue. Beyond that, there are also the logistics of running major bureaucracies, something that Siegal noted that Kennedy, Oz and Makary all lack experience with.
“None of the people . . . as far as I know, have managed anything like the agencies that they’re going to be in charge of.”
