UPDATE: Trump tells drugmakers, including Lilly, their prices are ‘astronomical’

President Donald Trump told drugmakers on Tuesday that they were charging too much, while he promised he would get better bargains for government health programs and find ways to get new medicines to market faster.

“The pricing has been astronomical,” Trump said to chief executives of some of the world’s biggest drugmakers, including Indianapolis-based Eli Lilly and Co., who came to the White House on Tuesday. “You folks have done a very great job over the years but we have to get the prices down.”

Trump has threatened to have the government negotiate prices directly with the industry on behalf of Medicare and Medicaid, which are some of the world’s biggest purchasers of health-care products and services and cover tens of millions of Americans. “Competition is key to lowering drug prices,” the president said.

At the same time, Trump promised to slash regulations, get new treatments to market faster at the Food and Drug Administration, and increase international competition.

“We’re going to streamline FDA; we have a fantastic person” that will be announced to lead the agency soon, Trump said. He also promised to cut taxes on business and lure companies back to the U.S.

Investors appeared to respond positively to those comments. The Nasdaq Biotechnology Index was up 1 percent at 10:07 a.m. in New York, while the Standard and Poor’s 500 Pharmaceuticals, Biotechnology & Life Sciences Index rose 0.8 percent.

Lilly shares were up nearly 2 percent to $76.15 in late morning trading.

At the Tuesday meeting was Pharmaceutical Research and Manufacturers of America CEO Stephen Ubl, Merck & Co. CEO Ken Frazier, Lilly CEO Dave Ricks, Celgene Corp. Chairman Bob Hugin and others. They embraced Trump’s calls for lower taxes and fewer regulations.

“Some of the policies you’ve come out and suggested I think can help us do more—tax, regulations,” Lilly’s Ricks said at the session. Also at Tuesday’s White House meeting were Novartis AG CEO Joe Jimenez, Johnson & Johnson Worldwide Chairman of Pharmaceuticals Joaquin Duato and Amgen Inc. CEO Bob Bradway.

Frazier said the industry was ready to work with Trump. “I think all these things come together to create a system that’s good for innovation, that’s good for jobs” and for patients, he told reporters outside the White House after the meeting.

Bradway promised to add 1,600 jobs at Amgen, Sean Spicer, Trump’s spokesman, said in a tweet after the meeting. The drugmaker had previously been cutting jobs, after announcing in 2014 that it would eliminate as many as 2,900 positions. The company didn’t respond to a request for details about the job additions.

At a briefing last week, Trump’s press secretary Spicer said that lowering drug prices is going to be one of the key parts of reforming health care. The gathering with drug CEOs came after Trump said on Jan. 12 that the industry was “getting away with murder” and promised to act on drug prices. Since then, drugmakers have turned up their lobbying efforts with Congress as a potentially friendlier force that might counter Trump.

They’ve been meeting with Republican and Democratic members of Congress, including those in leadership, to make their case for more measured proposals than Trump’s, according to Ron Cohen, chairman of the board at the Biotechnology Innovation Organization, a Washington lobby group for drugmakers. “Bidding” is essentially akin to drug companies’ greatest fear: handing Medicare the power to negotiate prices. They’ve also met with people in the Trump administration, Cohen, chief executive officer of Acorda Therapeutics Inc., said in a telephone interview before the drug CEOs met with Trump.

Powerful industry

The drug industry is one of Washington’s most powerful, and each year spends hundreds of millions of dollars on lobbying, in addition to being one of the biggest donors to political campaigns, according to the Center for Responsive Politics. PhRMA, the lobby group, also launched an image makeover Jan. 23 that will feature advertising and public affairs events that focus on the value of its products.

Republicans generally have not backed proposals that require more government involvement and instead have aligned themselves with ideas that promote free-market principles. In 2009, even in the face of a Democratic president and Congress, pharmaceutical companies were able to dodge Medicare price negotiation, partly by agreeing to commit $80 billion to help fund provision of the Affordable Care Act.

Trump shocked the industry at his Jan. 12 news conference, when he said that “pharma has a lot of lobbyists and a lot of power and there is very little bidding. We’re the largest buyer of drugs in the world and yet we don’t bid properly and we’re going to save billions of dollars.” After his remarks, the Nasdaq Biotechnology Index and the Standard & Poor’s 500 Pharmaceuticals, Biotechnology & Life Sciences Index both fell by the most in about three months.

Unclear support

It’s not clear how much support Trump has from key Republicans for the harshest drug price policies, which have typically been opposed by conservatives.

“We’ll look at the issues. I’m still keeping an open mind,” said Rep. Tom Marino of Pennsylvania, a Republican and an early congressional backer of Trump. He said that drug prices will be among the topics in an as-yet-unscheduled hearing of the Judiciary subcommittee on regulatory reform that he chairs.

Other Republicans may not be so willing. The new chairman of the largest bloc of House conservatives said last week that he has “concerns” over Trump’s stated plans to bargain with pharmaceutical companies over Medicare drug prices.

“I would be cautious in affirming that is the best approach to take,” said Republican Study Committee Chairman Mark Walker of North Carolina, in a meeting with a group of reporters. The RSC had about 170 members last session—and its leaders expect to announce their membership number for this session in early March.

Trump’s own nominee to run the Department of Health and Human Services, Tom Price, wouldn’t commit to bidding last week when asked about the topic at a Senate Finance hearing on his nomination.

Drug prices

“We’re committed to making certain that drug prices are able to be afforded by individuals,” Price told senators at the hearing. The size of the savings negotiation could produce for taxpayers is the subject of fierce debate, ranging from modest to as much as $16 billion a year.

Rep. Walker indicated he isn’t comfortable with Trump being personally involved in specific policy proposals that could become part of a plan to repeal and replace Obamacare.

“I would have some concerns as far as the commander-in-chief beginning to negotiate all these different aspects of it,” Walker said.