Seizing the Storm: Why Pharma Must Plan, Not Panic in Trump’s Second Term

Published April 29, 2025

The first 100 days of President Trump’s return to the White House have been anything but ordinary. With a true “Flood the Zone” strategy, there has been a flurry of executive orders, leadership reshuffles, and a re-assertion of executive power, which has signaled the administration is interested in seeing what policy options can “stick.” While campaign rhetoric once suggested bold de-regulation with the potential for an industry-friendly reset, the governing reality has been less coherent and opens multiple fronts for potential industry intervention.

Many of the administration’s actions to date remain early-stage, and without congressional backing (or a fully staffed HHS) implementation remains uncertain. While uncertainty can shake corporate and investor confidence, lack of clear direction from the administration provides opportunities for the private sector to help shape how reforms and associated market disruption play out. The biopharma industry continues to face challenges as it relates to public perception, but public outcry has increasingly shifted towards managed care and middlemen such as PBMs who impede care and inflate costs without serving a role as critical as producing medicines or fostering innovation.

While the administration has not articulated clear policy positions to be adopted by legislators and government agencies, it has outlined key areas of interest where reformation or innovation is desired. Whether the loudest voices, best ideas, or most influential insiders ultimately steer the outcomes remains to be seen, but the board is set to see who can deliver wins for the Trump administration, while protecting their own interests.

A Closer Look at the Signals:

The administration has leaned heavily on executive orders (EOs) with two having direct relevance to healthcare and biopharma, but other policies (e.g., tariffs) having indirect impact on macroeconomic volatility. The latest pharma-related executive order signed on April 15^th (“Lowering Drug Prices by Once Again Putting Americans First”) in particular has provided a roadmap for areas of policy interest from the administration. Talking points from the administration signal several key drivers of future policy action provided there is adequate public support:

• Reducing Drug Costs:
  • Example policies: continuation/refinement of the IRA, directing HHS to identify Part B reimbursement models
  • The administration continues to signal a commitment to “bringing down drug prices” – but without introducing new legislation (yet). Given the IRA will live on – with some (potentially pro-pharma) refinements, not repeal – it may be that the administration focuses on claims of big savings that are driven by political optics vs. actually driving reduced spend
• Federal Drug Costs:
  • Example policies: HHS staff reduction
  • The administration significantly reduced staff throughout the HHS with the claim to cut government spending and increase efficiency
• Deregulation/Decentralization:
  • Example policies: Drug Importation, CGT access / value-based contracting, rescinding incentives for timely confirmatory trials for accelerated approval products, slowing public-private infrastructure investment (e.g., NIH, ARPA-H)
  • The administration’s actions consistently reflect a preference for limiting federal agency intervention and delegating decision-making to states, plans, and the private sector, rather than pushing through centralized solutions through federal programs. As states, private payers, and manufacturers will need to fill the gaps, it could create a more fragmented and variable policy environment across states
• ‘American First’ Policy:
  • Example policies: tariffs, re-introduction of Most Favored Nation ‘think tank’
  • The administration’s broader economic posture continues to link healthcare policy with national security and economic sovereignty, emphasizing the need to repatriate pharmaceutical supply chains, reduce reliance on foreign (especially Chinese) manufacturing, increase American jobs, and reduce global ‘free-loading’ on the US innovation engine
• Shifting Accountability to Intermediaries:
  • Example policies: PBM fee transparency, transparency, proposals to promote more efficient supply chains
  • The administration’s rhetoric increasingly positions PBMs, insurers, and other market intermediaries and the primary drivers of inefficiency and high costs within the pharmaceutical system. Current messaging has pivoted toward scrutinizing the pharmaceutical value chain rather than the manufacturers themselves. In practice, there is likely limited impact unless rebate guarantees are removed from the system
• Increasing Competition:
  • Example policies: acceleration of generic, biosimilar and combination product approvals, encouragement of OTC reclassification
  • Consistent with deregulatory themes, the administration is emphasizing enhanced market competition as a key mechanism for lowering drug costs, rather than relying on heavy-handed price controls

Looking Forward: Caution for Strategic Planning

As the Industry Scorecard (below) notes, several areas remain particularly impactful – and unpredictable – for the pharmaceutical industry:  

• MFP negotiation changes, particularly adjustment of time window for small molecules to align with the “biologics” timeline 
• Changes to Medicare reimbursement (e.g., reduced reimbursement for Part B products, rehaul of 340B program) timeline 
• Tariff expansion and trade policy shifts 

While several aggressive healthcare policy ideas have been floated, the administration has also demonstrated their willingness to walk back, soften, or delay policies when political costs are too high. Pharma should take this as a signal that policies are not set in stone – and to get to the negotiation table as early as possible.

Examples include:

• Softened stance on full repeal of the IRA repeal: early campaign rhetoric suggests repealing Medicare drug price negotiations entirely. In office, the administration has allowed the MFP process to proceed – with minor, pro-industry, tweaks – and has avoided direct repeal efforts
• Pausing (not eliminating) certain CMMI innovation models: initial repeal of the CMMI Cell & Gene Therapy Access Pathway did not bar the administration from directing HHS to inform other value-based care arrangements in Medicaid
• Rehiring of HHS staff: staff who were let go of accidentally were rehired from the HHS. There also has not been a structural overall of FDA or CMS leadership (yet)
• Walk-back on broad pharmaceutical tariffs: During early trade strategy discussions, the administration floated expanded tariffs on pharmaceutical products and APIs – particularly from China. Facing intense lobbying from the pharmaceutical industry, concerns from HHS, and national security advisors highlighting public health risks, the administration quietly shelved broad tariffs on medicines, and narrower trade actions

Unique Opportunity to Push Back & Propose Solutions from Within

Pharmaceutical manufacturers have a rare window to shape outcomes, rather than simply absorb them. Executives should think about both defending against immediate risks and leaning into strategic opportunities that align with the administration themes. Winners won’t just defend – they will redefine.

• Identify Risk & Opportunity:  
  • Identify exposure to policies (e.g., location of drug manufacturing, dependence on federal funding or infrastructure, etc.)  
  • Scenario plan for high-priority policy actions (e.g., those with high potential impact) 
  • Track/monitor policies to inform potential strategies to prepare for policy changes appropriately (both at the national and state-level)
• Mitigate Exposure:  
  • Identify and communicate potential negative impacts of policy proposals to reduce likelihood of adoption
  • Engage with policy stakeholders/advocacy organizations to mitigate risk of future policy action 
  • Strengthen internal policy coordination
• Be Proactive:  
  • Identify and pursue opportunities to take a proactive approach in the market and shape the vision for market evolution; prepare focused narratives on patient access, domestic investment, and supporting innovation 
  • Develop evidence for payers, employers, and the public  
  • Push for innovation or technology adoption to drive efficiency (e.g., FDA phasing out animal testing in favor of AI modeling and lab tests including organ-on-chips) 
  • Consider potential to support grassroots policy initiatives against PBMs (e.g., ending PBM rebates and/or required rebate pass-throughs, PBM ownership of pharmacies) and other middlemen which drive GTN compression and consumer dissatisfaction 
  • Evaluate opportunity to fairly reward the US for innovation, while addressing the price differential across the US and the rest of the world (e.g., global flat list pricing strategy, maintaining list to net price confidentiality, adjusting regional prioritization or commercial models)   

The first 100 days of President Trump’s second term reveal a shifting policy environment that demands agility, foresight, and resilience from the biopharma industry. While the exact changes remain uncertain, it is certain that change is upon us. The risks to the “status quo” remain real. Companies that will succeed are not those that will shelter in the storm and wait for the final policies to be enacted – instead they will plan, proactively engage, and adjust their sails to catch the wind. Industry needs to be active in shaping the vision for how changes can be positive for innovation and for patients. 

Perspectives from the Industry:

1. “The price differential that exists between the United States and the rest of the world for our innovative medicines needs to be addressed. [Merck] is open and willing to work with the administration to do that.” – Rob Davis, Merck CEO  
2. “We have to continue to encourage foreign governments to understand that they need to give fair value for the innovation that we bring [at prices that] reward us for the risk in innovation that we have.” – Rob Davis, Merck CEO 
3. “We have to eat the cost of tariffs and make trade offs within our own companies… Typically that will be in reduction of staff or research and development, and I predict R&D will come first. That’s a disappointing outcome.” – David Ricks, Lilly CEO  
4. “We do not support tariffs, to be clear. In pharma, about 70% of global R&D takes place in the United States. So we’re creating the next generation of breakthroughs and cures… But the production is heavily weighted outside the US. And that’s not unique to our industry.” – David Ricks, Lilly CEO  
5. “Europe’s largest issue is failing to properly value innovation. In the new world context, Europe’s pharmaceutical model of producing in Europe and exporting to the US cannot continue. It needs to strengthen its domestic market” – Paul Hudson, Sanofi CEO, and Vas Narasimhan, Novartis CEO 
6. “We just have to get our minds around the idea of paying a million dollars to save someone’s life, and demonstrating that if it works then the drug companies should get paid, over a period of time, to make up for the fact that they made a massive investment to make that solution.” – Dr. Mehmet Oz, CMS Administrator 
7. “This is a strategic decision to say that the U.S. is our most important single market from a growth and revenue standpoint, and we want to be in a position to be able to produce all of our key medicines end-to-end in the U.S. I think independent of who’s president, it’s prudent for us to be able to have our supply chain stable inside the United States.” Vas Narasimhan, Novartis 

Industry Scorecard:

Ordered by recency of Executive Order & Impact to Pharma 

EXECUTIVE ORDER (APRIL 15) – LOWERING DRUG PRICES BY ONCE AGAIN PUTTING AMERICANS FIRST

EXECUTIVE ORDER (APRIL 2) – REGULATING IMPORTS WITH A RECIPROCAL TARIFF TO RECTIFY TRADE PRACTICES THAT CONTRIBUTE TO LARGE AND PERSISTENT ANNUAL UNITED STATES GOODS TRADE DEFICITS 

EXECUTIVE ORDER (FEBRUARY 26) – IMPLEMENTING THE PRESIDENT’S “DEPARTMENT OF GOVERNMENT EFFICIENCY” COST EFFICIENCY INITIATIVE 

EXECUTIVE ORDER (JANUARY 20) – INITIAL RESCISSIONS OF HARMFUL EXECUTIVE ORDERS AND ACTIONS  

Authors: Max Hunt, Christian Frois, Matthew Barrett, Brenna Liponis, Nayli Ma, Jane Hentschel, Kate Balicki