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Novartis AG (NVS) Rejects Trump's Proposition to Create More U.S Jobs

6/21/2017 5:41:00 AM

Novartis AG Rejects Trump's Proposition to Create More U.S Jobs June 21, 2017
By Mark Terry, Breaking News Staff

Toward the end of January, U.S. President Donald Trump held a meeting with executives from several big pharmaceutical companies and the head of PhRMA, the industry lobbying group. Trump pushed for lower drug prices in the U.S., and urged the companies to create more jobs in the U.S.

For the most part, industry chief executives have kept their opinions to themselves, at least publicly. However, in recent interviews with Der Landbote and Bernet Zeitung newspapers, Joe Jimenez, chief executive officer of Novartis (NVS) and head of PhRMA, responded to both key points.

Jimenez noted that the Trump administration’s approach to immigration is counter to providing more Americans jobs. Those approaches include restricting temporary work visas for foreign nationals. “This makes the country a less attractive location for investment,” Jimenez told the papers. “By contrast, Switzerland and Europe will become more attractive.”

Novartis, based in Switzerland, employs about 118,000 people in 155 countries. More than 22,000 of them are employed in the U.S., with 13,000 in Switzerland.

Last month the company indicated it was cutting 500 jobs in Basel, Switzerland, its headquarters, but vowed to create 350 new jobs in Switzerland.

In terms of drug pricing, Swissinfo wrote, “Addressing Trump’s other concern—that drug prices are too high—Jimenez blamed the high costs on inefficient healthcare systems. In the newspaper interviews, he repeated views he cited last year that a quarter of healthcare costs are pure waste that do nothing to improve life for the sick.”

Novartis and Jimenez aren’t the only companies and executives to push back—at least a little bit—on President Trump’s somewhat vague assertions. At the World Economic Forum in Davos, Switzerland in mid-January, Pfizer (PFE)’s chief executive officer, Ian Read suggested that Trump doesn’t understand that good drugs cost a lot of money to make.
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“The pill is not the point,” Read said. It’s only a “delivery mechanism for knowledge” to cure a disease or illness.”

The Trump administration to-date hasn’t had much impact on drug pricing or healthcare in general, although the U.S. Senate is currently trying to have a vote on a new healthcare bill, even though the bill has been kept secret from the public and the media, for the most part.

However, the President Trump recently drafted an executive order on drug pricing, which The New York Times obtained today. The Times notes that the draft, like much of Trump’s policies so far, is “light on specifics but clear on philosophy: Easing regulatory hurdles for the drug industry is the best way to get prices down.”

The executive order draft is four pages long, and includes, per The Times, “strengthening drugmakers’ monopoly power overseas and scaling back a federal program that requires pharmaceutical companies to give discounts to hospitals and clinics that serve low-income patients.”

Overall, the executive order focuses on rolling back regulations, rather than making specific changes. One aspect of the draft “directs the United States trade representative to conduct a study of price differences between the United States and other countries,” as well as to review and possibly revise trade agreements towards more intellectual property protection and global competition.

The order also targets the 340B program, that forces the pharma industry to give hospitals and clinics with large proportions of low-income patient discounts.

“That’s one that sticks out as a bit of a head scratcher,” Joshua Sharfstein, a professor at Johns Hopkins Bloomberg School of Public Health, told The Times. “This is the executive order to lower drug prices—why would you put in a provision that would raise drug prices?”

What is not clear is what effect the executive order would actually have, once signed. The New York Times writes, ‘It was unclear how much issues could be addressed through administrative or regulatory changes. Indeed, many of Mr. Trump’s most aggressive statements on the issue—including allowing Medicare to directly negotiate the prices of drugs—would require legislative action.”

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