While President Trump’s second term has started with political turmoil and an economic upheaval, one surprising potential winner may be the biotech industry.
At least, that’s what some industry leaders are hoping. At investment banking firm Jefferies’ recent biotech conference in Miami this week, a policy panel featuring John Crowley, CEO of the Biotechnology Innovation Organization (BIO), Joel White of Horizon Government Affairs, and Raghav Aggarwal from BGR Group said the political shift could ultimately benefit the sector.
While past speculation focused on potential regulatory rollbacks or drug pricing crackdowns, analysts and executives now see an administration more likely to target pharmacy benefit managers (PBMs) and position biotech innovation as a national security priority.
“Based on dialog in DC and meetings with the Trump administration, the panelists don't believe Trump is seeking major drug pricing reform - focus could actually shift to 'middlemen' (e.g., PBMs)," Jefferies analysts wrote in a note on their conference.
Real Policy Shift may be PBM Reform
While industry concerns have historically centered on drug pricing regulation, panelists said the real policy shift may be in PBM reform. Trump and congressional Republicans have increased scrutiny of these middlemen, a sentiment reinforced by a February 26 hearing of the House Energy and Commerce Committee.
PBMs manage drug benefits for insurers, negotiating discounts and determining formularies. Critics argue that they drive up costs by keeping portions of negotiated rebates rather than passing savings on to consumers. According to a blog post by lobbying firm Chamber Hill Strategies, recent legislative efforts have focused on increasing transparency, banning spread pricing (where PBMs charge insurers more than they reimburse pharmacies), and ensuring that negotiated rebates directly benefit patients.
One such proposal, the Pharmacy Benefit Manager Transparency Act, would require PBMs to disclose financial arrangements with drug manufacturers. Though past efforts have stalled, Republican lawmakers have become more vocal about the need to rein in PBM practices, a shift that could make reform more viable in 2025.
"There is a strong sense in the White House that the middlemen, or ‘the middles’ as President Trump calls them, are not advancing the interests of patients," Crowley said during a live March 14 Biotech Hangout event held on X.com (Twitter).
Biotech’s National Security Role
Looking beyond drug pricing debates, the panel suggested Congress may soon position biopharma innovation as critical to national security. According to the report, a forthcoming National Security Council assessment expected on April 7 could document threats from rival countries to U.S. biopharma leadership and potentially spark legislation providing capital and incentives to strengthen domestic industry.
Policy proposals that might emerge from this approach could include extending patent exclusivity periods, reducing corporate tax rates from 20 percent to 15 percent for domestic manufacturers, or delaying when drugs become subject to price negotiations under the Inflation Reduction Act.
The chemotherapy shortage of 2023-2024 demonstrated vulnerabilities in the pharmaceutical supply chain. More than 500,000 cancer patients and over 2,000 clinical trials were impacted after major international producers of critical chemotherapy medications like cisplatin and carboplatin were shuttered following FDA regulatory violations. Crowley highlighted ongoing discussions in Washington about how to create policies that bring production back to the U.S. while maintaining global partnerships.
FDA Reform Rather Than Disruption
With a new administration always comes the question of regulatory oversight. Some industry watchers have speculated that Trump’s potential appointment of Marty Makary, MD, as FDA commissioner and vaccine skeptic Robert F. Kennedy Jr. as head of the Department of Health and Human Services could lead to agency shake-ups. Indeed, Trump and the “Department of Government Efficiency,” or DOGE, have been slashing government agency workforces since the start of the administration.
But panelists at the Jefferies event said a second Trump term would likely focus on modernization, not disruption. As evidence of this separation, the panel pointed out that Kennedy and HHS excluded FDA reviewers from a recent $25,000 buyout offer extended to other department employees.
“Despite headline risk of DOGE layoffs, the panel doesn't expect major disruption in the FDA or drug approval processes,” the Jefferies analysts wrote.
Reforms, Mergers and Tailored Approaches
Proposed FDA reforms under Trump’s administration could include merging the Center for Drug Evaluation and Research with the Center for Biologics Evaluation and Research under Peter Marks, streamlining clinical trial designs, and accelerating review processes through better use of technology.
The Jefferies report noted that Makary has expressed support for "tailoring approval pathways to specific diseases" – questioning, for example, why ultra-rare conditions should require multiple large placebo-controlled trials.
Crowley echoed some of these sentiments during the Biotech Hangout event. He described BIO’s behind-the-scenes work to advocate for FDA stability and modernization, along with the need to balance regulatory efficiency with patient safety.
“I can assure you very intensely, so that people at the White House, at HHS, people within DOGE understood the critical importance of the FDA, and that we need a strong FDA.,” Crowley said. “It needs to be reformed and modernized, advanced. We need to implement very bold, bold ideas. And I will tell you, the leadership of the FDA would welcome that.”
Small Molecule "Pill Penalty" Could Be Reversed
Another specific policy area where the industry could see relief involves what's commonly called the "pill penalty" – the provision in the Inflation Reduction Act that gives small molecule drugs nine years of market exclusivity before price negotiations compared to 13 years for biologics.
Industry lobbyists have strategically framed this and other pharmaceutical provisions as "Biden Policies" that harm innovation, according to the Jefferies panel. The panel did acknowledge some continuing risks, including Trump's interest in "Most Favored Nations" pricing and potential diversion of CDC and NIH resources to vaccine safety studies. However, they expressed confidence that "ultimately good science and safety data will come through for biotech."
Political Rhetoric vs. Policy Reality
The Jefferies panelists said it is important to distinguish between political rhetoric and actual policy shifts. While Kennedy’s past statements on vaccines and pharmaceutical companies have raised concerns, the industry leaders pointed to his recent public endorsement of measles vaccinations as a sign of potential pragmatism in his role.
“Vaccines not only protect individual children from measles, but also contribute to community immunity, protecting those who are unable to be vaccinated due to medical reasons,” Kennedy wrote in a March 2 opinion column.
Similarly, while Trump has previously expressed interest in "Most Favored Nations" pricing — an approach that could tie U.S. drug prices to those paid in other countries — industry leaders see his current focus as shifting toward encouraging foreign governments to pay more, rather than dramatically lowering U.S. prices.
"We need to separate the wheat from the chaff," Crowley said during the Biotech Hangout event. "There are trial balloons, there is rhetoric, there are executive orders that may never survive a court challenge, and then there is actual policy."