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This Big Pharma CEO Thinks Trump’s Drug Pricing Threats Are All Bark and No Bite

Feb 02, 2017

President Donald Trump issued a list of assorted demands to big pharma CEOs during a Tuesday meeting, following up on his tough rhetoric against an industry he's said is "getting away with murder" on drug prices. But at least one biopharma chief isn't sweating the rhetoric.

Roche CEO Severin Schwan issued his own thesis on biopharma's pricing future in the U.S. "If you have true innovation, with true added value, the U.S. will be the first country to honor that innovation," he said during a call on Wednesday, according to Morningstar, adding that he believes that regulatory conditions in the U.S. (including those that essentially give drug makers carte blanche on pricing) will continue to be favorable.

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Roche, which encompasses the biotech giant Genentech, has heavy investments in the U.S. That's not exactly rare for pharma giants which can benefit from America's pool of academic talent and a far more lenient regulatory business environment compared to other western nations.

Schwan argued that America paying higher prices for drugs compared to European countries is a necessary tradeoff for maintaining a hotbed of pharmaceutical innovation. And, in a bullish pronouncement, he predicted the dynamic won't change anytime soon because rejecting novel drugs over high prices would be anathema to the American capitalist spirit.

This is one concrete example of why I argued that U.S. drug makers won't bend to Trump's populist will earlier this week. Barring a stunning ideological reversal in the GOP-controlled Congress, competitive bidding and drug price negotiations in Medicare are highly unlikely.

Not all drug makers share Schwan's sanguine outlook. Allergan (agn) CEO Brent Saunders has been sounding the alarm on Trump's unpredictable populism, insisting that the industry should pledge to limit their own price hikes to the single digits (an initiative which has been joined by pharma giants like Novo Nordisk, Takeda, and others). But simply limiting certain price increases doesn't mean that drug makers will enjoy much less success in the U.S. market, as Schwan is betting.

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