Life sciences panel sees headwinds & opportunities in emerging US trade, drug pricing, FDA policies

Trade & tariffs

Moderating the panel discussion on changes taking place under the new Trump administration, Brian Carey, partner in the Hogan Lovells health regulatory practice, framed the conversation as addressing both the challenges and opportunities that might be available to life sciences companies. Mayur Patel, partner in the Hogan Lovells trade practice and former Chief Counsel for International Trade in the U.S. Senate, provided background on the new administration's plans for tariffs, spotlighting global supply chain concerns, especially for companies located throughout Europe and Asia.

Describing how the Trump administration is focused on regulating trade in the pharmaceutical sector due to concerns over potential national security vulnerabilities, Patel identified opportunities to engage with the administration regarding supply chain complexities. When crafting new trade rules, U.S. regulators will take into account industry-specific factors, like the longer duration of time it takes to onshore manufacturing for pharmaceuticals and biological products in particular, Patel said.

Patel further explained how the administration is willing to explore novel ways to use Section 301 – a tool historically intended to address discriminatory trade practices – to tackle trade barriers and regulate drug pricing. To implement this tool, the U.S. Trade Representative could impose tariffs until discriminatory pricing structures are revised. As leverage, the administration could also impose a fee on services, Patel explained.

Patel concluded by sharing with the panel his experience with U.S. regulators being receptive to learning about how policies can be tailored in a way that stimulates domestic manufacturing without taxing trade practices where onshoring is impracticable. This administration is seeking feedback regarding the intricacies of global supply chain concerns, he said, pointing out that this openness to comments creates opportunities for manufacturers and distributors who are willing to proactively engage with U.S. regulators.

Drug pricing reform

Transitioning to considering domestic U.S. policies similarly aimed at increasing revenue for American drug manufacturers, Maura Calsyn, partner in the Hogan Lovells health practice and former HHS Acting Administrator and Assistant Secretary for Aging, provided an overview of the many ongoing Trump administration drug pricing initiatives. Calsyn discussed issues related to legal authority for the Most Favored Nation (MFN) model, explaining how the Centers for Medicare and Medicaid Services (CMS) will likely use Center for Medicare and Medicaid Innovation (CMMI) demonstration model authority to implement government drug pricing policies. This approach will allow the Administration to “target certain products or certain parts of the country” to test changes to payment, she said.

In light of the shifting global regulatory paradigms, pharmaceutical and biotechnology companies in the U.S. and Europe are adjusting their medical product launch practices, including preparing for an MFN model, and Inflation Reduction Act (IRA) drug price negotiation, Carey said. Regarding the IRA, Calsyn explained how under this law companies have some certainty in planning; for the MFN, however, there are more variables surrounding the policies, making preparation far more challenging. Pharmaceutical and biotechnology companies should create a “game plan” now to ensure compliance with potential Trump administration MFN policies, Calsyn advised. “Being proactive – and carefully planning– is critical.”

FDA's new initiatives

Another layer of complexity in planning for shifting regulatory models in the U.S. is weighing the evolving priorities of the Food and Drug Administration (FDA), including the “unprecedented challenge” of coping with the DOGE initiatives that cost FDA 20% of its workforce said Elizabeth Jungman, partner in the Hogan Lovells pharmaceutical & biotechnology regulatory practice, and former FDA Chief of Staff.

Each year there is increasing pressure on the agency to take action regarding drug pricing, but this administration has shown greater “creativity” in proposing actions on this front, she observed. For example, FDA's new Commissioner's National Priority Voucher Program (CNPV) will provide up to five vouchers—which entitle the recipient to an accelerated application review in just 1-2 months, compared to the typical 10-12—in the program's first year to sponsors of drugs and biologics that are “aligned with U.S. national priorities,” one of which is “increasing affordability.” (Our team recently analyzed updated agency guidance on that program online here). In addition, FDA has couched recent actions regarding direct-to-consumer pharmaceutical advertising – as we described online here – as efforts to lower drug pricing, Jungman informed. She emphasized the need for life sciences companies to be ready to answer questions about pricing in interactions with senior agency leadership .

In addition to FDA efforts, Carey outlined how broader HHS programs – including the Make America Healthy Again (MAHA) initiative, and the Executive Order promoting Artificial Intelligence, among other efforts – may also be geopolitical regulatory tailwinds for life sciences companies aligned with the administration's priorities. Jungman described how other perennial HHS efforts are being coupled with an interest in protecting data systems and artificial intelligence. Although emerging MAHA efforts in the FDA space are primarily focused on ingredients used the food sector, those conversations could eventually translate to the pharmaceutical space, Jungman predicted, in addition to the current emphasis on vaccines, mental health and chronic disease.

Asked about other opportunities for life sciences companies to take advantage of new Trump administration programs, Jungman pointed to ways companies can fit their existing efforts into administration priorities, including therapeutic areas of interest, onshoring manufacturing, and drug pricing policy. She noted, for example, the role FDA's newly launched PreCheck program, which is a voluntary agency initiative designed to promote onshoring by streamlining regulatory oversight and fostering early engagement in manufacturing facility development, might play for companies who are considering opening or expanding U.S. facilities. FDA recently held a public meeting to obtain feedback on that program, which we summarized online here.

Although the CNPV, PreCheck and other similar FDA programs are based on existing agency authority that is being repackaged in a new way, Jungman pointed out that some benefits of the programs are substantial, especially for demonstrating to investors that a company's manner of thinking is aligned with that of the U.S. government.

Focus on China

Regarding U.S. trade negotiations with China, Patel provided insight on how the government is “very focused” on the biotechnology industry in the PRC. On the legislative front, the Trump administration is cautious, aiming to leave room for negotiation, he said. They want to make sure there aren't critical vulnerabilities in the domestic supply chain, but the U.S. is also open to dealmaking, Patel explained, citing creative China de-risking strategies the Trump administration has employed in the past year.

Asked about the administration's focus on China, Jungman forecast that the attention to China may have impacts on everything from biopharmaceutical investment in the region to the conduct of clinical trials to sourcing of active pharmaceutical ingredients (API's) and key starting materials. Weighing a hypothetical future where global conflict escalates quickly, Jungman stressed how, in that scenario, there may be a point in time where it becomes too late for pharmaceutical and biotechnology players to start de-risking their China-based assets. Therefore, life sciences companies should start planning now for potential global trade variables, Jungman urged.

Next steps

The Horizons 2025 event hosted in Boston is part of our global series connecting professionals across offices in Zurich, Tokyo, and the U.S. If you are interested in joining future discussions focused on the intersection of business, regulatory, and political developments affecting the life sciences industry, click here to register, and be sure you are signed up for Our Thinking to receiving daily updates from our team.