trending Market Intelligence /marketintelligence/en/news-insights/trending/f3NUmk0WCou1N--5cZwHnQ2 content esgSubNav
In This List

Trump again vows substantial drop in drug prices; J&J CEO among dinner guests


Essential IR Insights Newsletter Fall - 2023

Case Study

A Corporation Clearly Pinpoints Activist Investor Activity


Insight Weekly: Bank mergers of equals return; energy tops S&P 500; green bond sales to rise


Insight Weekly: US companies boost liquidity; auto insurers hike rates; office sector risk rises

Trump again vows substantial drop in drug prices; J&J CEO among dinner guests

President Donald Trump made another vow that a substantial drop in prescription drug prices was coming, even though a similar pledge he made more than two months ago has yet to be borne out.

"We are announcing something next week which is going to get them down really, really substantially," Trump told a crowd of business leaders at an Aug. 7 dinner he hosted at his Bedminster, N.J., golf club.

Trump said "many drug companies are lowering their prices."

This has not happened so far.

He praised New York drug giant Pfizer Inc. for its decision last month to roll back its July 1 price hikes.

Trump also praised Novartis AG for freezing its prices until the end of the year.

Pfizer's and Novartis' pledges to hold off boosting prices for the next six months, however, came after they had initiated substantial increases earlier in the year.

Neither company has lowered their prices.

Trump cited the "powerful" office of the president as the reason behind the companies' six-month freeze.

He did not mention Merck & Co. Inc.'s action to cut by 60% the price of its once-blockbuster hepatitis C drug Zepatier. That medicine, however, has struggled to compete against other drugs from Gilead Sciences Inc. and AbbVie Inc.

While Merck said it also would trim the prices of six other drugs by 10%, that pledge rang hollow, given the patents on those medicines have expired and the company's income from them is "tiny," consisting of less than 0.1% of the drugmaker's total sales, Evercore ISI analyst Umer Raffat noted last month.

On May 30, Trump said: "We're going to have some of the big drug companies in, in two weeks, and they're going to announce, because of what we did, they're going to announce voluntary massive drops in prices."

That promise has yet to materialize.

Trump's Aug. 7 statement to expect a substantial drop in prices next week came on the same day top health officials in the administration unveiled changes aimed at allowing private insurance plans sold under the federal government's Medicare Advantage program to require seniors and the disabled to first use lower-cost drugs before trying more expensive injectable and infused medicines.

That change to a step-therapy approach, which is being opposed by the biopharmaceutical industry, would increase the use of pharmacy benefit managers — the middlemen Trump said he wanted to eliminate — by Medicare plans.

J&J CEO back in Trump's circle

The only drugmaker at the Aug. 7 dinner was Johnson & Johnson CEO Alex Gorsky, who broke from Trump last year after the U.S. president was slow to condemn white supremacists and neo-Nazis following a violent protest in Charlottesville, Va., where one bystander died.

The J&J chief followed others in departing Trump's corporate advisory panels — a retreat led by Merck & Co. Chairman and CEO Kenneth Frazier.

Gorsky initially said he would remain on Trump's manufacturing council, stating that he concluded J&J had "a responsibility to remain engaged."

But just as Trump was announcing he would disband the councils, Gorsky issued a statement, declaring he was exiting the panel.

"Good leadership requires being open to new information, and acknowledging that when circumstances change, you must reconsider your position — especially when the issue at hand speaks to your values and the values your organization is built upon," Gorsky said in the Aug. 16, 2017, statement.

But a year later on Aug. 7, Gorsky was sharing a table with Trump's daughter Ivanka and son-in-law Jared Kushner, who both work at the White House. During his public comments at the dinner, Gorsky did not mention drug prices, but instead joked about J&J's consumer products — urging Trump to use the company's sunscreen on the golf course.

Last month, Gorsky also attended a dinner with Trump hosted by U.K. Prime Minister Theresa May, though J&J declined to confirm beforehand the CEO had accepted the invitation.