Sector Spotlight: Trump executive order targets drug prices

Welcome to the latest edition of “Sector Spotlight,” where The Fly looks at a new industry every week and highlights its happenings.

PHARMACEUTICAL SECTOR NEWS: Novo Nordisk (NVO) shares were down in New York trading on Friday after the company announced changes to its executive leadership and board of directors. As per mutual agreement with the Novo Nordisk Board, Lars Fruergaard Jorgensen will step down from his role as CEO of Novo Nordisk. He will continue as CEO for a period to support a smooth transition to new leadership. A search for Lars Fruergaard Jorgensen’s successor is ongoing, and an announcement will be made in due course. In connection with the change, Lars Rebien Sorensen, chair of the Novo Nordisk Foundation, will join the Novo Nordisk Board, initially as an observer.

The Department of Health and Human Services, led by Secretary Robert F. Kennedy Jr., is expected to remove the Centers for Disease Control and Prevention’s recommendations that pregnant women, teenagers and children get COVID-19 vaccines as a matter of routine, people familiar with the matter told The Wall Street Journal’s Liz Essley Whyte.

A new letter from the House Judiciary Committee shows that the panel is seeking information from Pfizer (PFE) and from a former Pfizer scientist, Philip Dormitzer, who alleges that he was part of an effort to “deliberately slow down” sharing results of the COVID vaccine in 2020 until after that year’s presidential election, reported The Wall Street Journal’s Annie Linskey and Josh Dawsey.

Septerna (SEPN) and Novo Nordisk announced an exclusive global collaboration and license agreement to discover, develop and commercialize oral small molecule medicines for obesity, type 2 diabetes and other cardiometabolic diseases. The companies will initially commence four development programs for potential small molecule therapies directed to one or more select G protein-coupled receptor targets, including the GLP-1, GIP and glucagon receptors. Under the terms of the agreement, Septerna is eligible to receive approximately $2.2B from Novo Nordisk across an upfront payment and research, development and commercial milestone payments. This includes more than $200M in upfront and near-term milestone payments. Septerna is also eligible to receive tiered royalties on global net sales of marketed products. Novo Nordisk will cover all research and development expenses for partnered programs under the collaboration. The companies will jointly conduct research activities from discovery through development candidate selection. Starting at IND-enabling activities, Novo Nordisk will have sole responsibility for all global development and commercialization activities. In addition, Septerna has the right to opt in to a worldwide profit share for one program in the collaboration in lieu of future milestones and royalties for that product candidate. The agreement is subject to customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Closing is expected to occur in the second quarter of 2025.

Some U.S. biotech companies are debating on relocating their early-stage trials of new medicines outside the U.S. due to worries that layoffs and policy changes at the FDA by the Trump administration may lead to delays in regulatory reviews, Maggic Fick of Reuters wrote.

President Donald Trump signed an Executive Order intended “to bring the prices Americans and taxpayers pay for prescription drugs in line with those paid by similar nations,” the White House announced. “The Order directs the U.S. Trade Representative and Secretary of Commerce to take action to ensure foreign countries are not engaged in practices that purposefully and unfairly undercut market prices and drive price hikes in the United States. The Order instructs the Administration to communicate price targets to pharmaceutical manufacturers to establish that America, the largest purchaser and funder of prescription drugs in the world, gets the best deal. The Secretary of Health and Human Services will establish a mechanism through which American patients can buy their drugs directly from manufacturers who sell to Americans at a “Most-Favored-Nation” price, bypassing middlemen. If drug manufacturers fail to offer most-favored-nation pricing, the Order directs the Secretary of Health and Human Services to: (1) propose rules that impose most-favored-nation pricing; and (2) take other aggressive measures to significantly reduce the cost of prescription drugs to the American consumer and end anticompetitive practices,” the White House stated.

President Trump’s executive order aimed at lowering prescription costs, on the surface, appears to be an ambitious attempt to rein in America’s high drug spending, David Wainer of The Wall Street Journal reported. Yet, Trump’s announcement reportedly lacked policy detail and the pathways to overhauling drug spending in the U.S. mostly run through congress. As with much of his other deals, Trump’s threats can give way to negotiated settlements with minor concessions that will allow him to declare victory, according to the article.

Many Americans will soon be forced by their health insurance to switch from one obesity drug to another that produces less weight loss, Rebecca Robbins and Reed Abelson of The New York Times wrote. CVS Health’s (CVS) Caremark made the decision to exclude Eli Lilly’s (LLY) Zepbound from its coverage in spite of research that found it resulted in more weight loss than Novo Nordisk’s Wegovy, which will still be covered.

ANALYST COMMENTARY: Jefferies analyst Akash Tewari notes that new Medicare Part B & D draft guidance has been released and that Merck (MRK) and Bristol Myers (BMY) are trading down due to updated language on single source qualifying drugs. The updated language on single source qualifying fixed dose combo products in the draft makes it seem as if subcutaneous Keytruda/Opdivo will be eligible for negotiation in 2028, but “We’re not sure this is true,” says the analyst, who is not seeing a significant impact to Merck and Bristol. The firm thinks subQ Keytruda/Opdivo may be exempt from IRA negotiation on biosimilar entry, similar to HD Eylea, and believes changes may create an opening for Merck to settle with some biosimilars before Keytruda’s ’28 loss of exclusivity and “therefore be EXCLUDED from IRA negotiation.” Since subQ and IV Keytruda are now both “considered the same drug,” theoretically subQ Keytruda “may never get IRA negotiated,” the analyst added.

Following President Trump’s Executive Order on “most favored nation” pricing for pharmaceuticals in the U.S., JPMorgan analysts Richard Vosser and James Gordon provided initial thoughts on the potential impact to European Pharma Large Cap drugmakers, arguing that the changes would likely require Congressional support and cannot be implemented through just the EO, with the program likely to face challenges in the courts. Overall, the firm sees the path to implementation of this Executive Order as “challenging and likely to face significant push back” from Congress, pharma companies, PBMs and hospitals, which it contends likely limits the impact on EU drugmakers.