After the upset

More than most ascendants to the White House, Donald Trump, in his stunning Nov. 8 victory over Hillary Clinton, has left the U.S. business community in a quandary. What can it expect from a candidate who, during an unorthodox campaign, hinted at overturning the policy apple cart in areas such as international trade, environmental management, and health care?

Yet Trump’s win did not immediately upset the pharmaceutical industry as much as it did some others. Indeed, drugmakers may well have breathed a sigh of relief, given Hillary Clinton’s more strident comments on the need to rein in drug pricing.

And pharmaceutical stock prices rose on the news of Trump’s election, even as other health-care-related stocks trended downward. Shares spiked 8% for Pfizer and 6% for Novo Nordisk, while others, such as those for Roche, GlaxoSmithKline, and Sanofi, moved up between 2% and 5%.

A Trump presidency does hold risks for the drug industry. He has made clear that he intends to repeal and replace the industry-backed Affordable Care Act (ACA), which he and others refer to as ObamaCare. There is little doubt his Administration and Congress will move forward to obliterate much of President Obama’s signature health care legislation, but they have provided no hint as to what would replace the program, the repeal of which would strand 20 million people without benefits.

Trump has claimed he’d like to retain elements of ACA such as guaranteed coverage of preexisting conditions. The feasibility of extracting certain features from a scrapheap is, however, questionable.

Moreover, Trump has floated several policy options that would pit his Administration against the pharmaceutical sector. While battling for the Republican nomination in January, for example, he suggested to a crowd in New Hampshire that Medicare could reap $300 billion in savings by negotiating prices with drugmakers. “Why don’t we do it?” he asked. “Because of the drug companies.”

On the other hand, Trump has pitched a business-friendly tax plan that would benefit drug companies, especially those interested in repatriating cash parked overseas. Trump vows to cut the business tax rate from 35% to 15% and provide a one-time tax rate of 10% for repatriated profits. Pfizer, which was blocked by the Obama Administration from moving its headquarters to Ireland to cut taxes, currently banks about 49% of its cash outside the U.S. The figure is 88% for Eli Lilly & Co. and 91% for Amgen.

Whereas Trump has suggested he would virtually eliminate EPA in a broad move to rein in business regulation, he is thus far mum regarding FDA. Critics, however, note a bulletpoint on the President-elect’s health care policy webpage—worded similarly to statements on innovation from the major pharmaceutical manufacturers’ associations following his election—as a potential red flag.

“That type of language, when used in the past, has signaled an effort to deregulate the FDA and to lower its standards for approving new drugs and approving and clearing new medical devices,” says Michael A. Carome, director of the health research group at Public Citizen. “That type of language worries us.”