InnovationRx: Trump's Drug Price Order Is More Bluster Than Substance
In this week's edition of InnovationRx, we look at Trump's drug pricing executive order, how the cofounder of Hims became a billionaire, the economic costs of cutting NIH spending, and more. To get it in your inbox, subscribe here.
President Trump signed an executive order on Monday aimed at getting pharmaceutical companies to lower their prices 'by 30% to 80%.' But the proposal is a lot weaker than industry analysts expected. The action makes no mention of tools such as Medicare price negotiation under the Inflation Reduction Act or a Medicare pilot allowed by the Affordable Care Act, both of which were contemplated scenarios. Both of those were Democratic initiatives.
Instead, the order gives the Health and Human Services Department 30 days to determine targeted 'most favored nation' prices–that is, prices paid for the same drug in other developed countries around the globe. Those targets are then to be communicated to pharmaceutical companies. If those companies don't actively attempt to meet those targets, the HHS Secretary is to embark on rulemaking to enforce them, a process that could take months or years–and likely would be fought in the courts, as such rules require Congress to pass legislation.
Stephen J. Ubl, CEO of industry trade group Pharmaceutical Research and Manufacturers of America, decried the order in a statement, saying that 'to lower costs for Americans, we need to address the real reasons U.S. prices are higher: foreign countries not paying their fair share and middlemen driving up prices for U.S. patients.' The Incubate Coalition, comprising venture capitalists involved in the sector, issued a similar statement, saying that 'Importing foreign price controls is a step backward for American innovation, and American patients.'
In Congress, Senator Bernie Sanders, I-Vt., offered to introduce legislation that would give Most Favored Nation pricing teeth and called on President Trump to support it. Republicans seem less inclined to support such a move, with Senator Chuck Grassley, R-Iowa, among others seeming to prefer support for bipartisan legislative proposals to rein in Pharmacy Benefit Managers, the gatekeepers on what drugs are included on approved drug lists known as formularies.
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Andrew Dudum, cofounder of San Francisco-based online pharmacy Hims & Hers, a seller of wellness products for men and women–including hair loss and erectile dysfunction pills–is now a billionaire after strong quarterly earnings and a recent deal to sell a popular weight loss drug sent the company's stock soaring.
On April 29, Hims & Hers announced that it had struck a partnership with Danish pharmaceutical company Novo Nordisk to sell its popular weight loss drug Wegovy through its online pharmacy, making it one of just three telehealth providers to do so. The company's stock rocketed up 83% since the announcement (through May 13), reversing a dramatic tumble that followed a February decision by the FDA to stop telehealth companies like Hims & Hers from making compound versions of the drug. Companies including Hims & Hers were allowed to manufacture and sell the drugs after a sudden boom in their popularity led to shortages.
The recent stock rally boosted the net worth of 36-year-old Dudum, a serial entrepreneur who helped launch the company in 2017 and has run it ever since as CEO, to $1.4 billion, according to Forbes estimates. On Tuesday, the company reported that it had issued $1 billion worth of convertible notes.
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A report from Senate Democrats found that the Trump Administration effectively cut $2.7 billion worth of NIH research grants through March of this year, including a 31% cut to cancer research. These cuts are having ripple effects throughout the industry. The cuts 'are creating a climate of deep uncertainty. We are increasingly hearing from customers that the combination of actual cuts and looming risks is making them hesitant to initiate new projects or invest in capital purchases,' Serge Saxanov, CEO of 10x Genomics, whose company produces products used by genomics researchers, told investors on an earnings call last week.
Saxonov also criticized the Administration's current approach to the NIH, stating that recent federal actions are 'severely undermining these enterprises and run the risk of fundamentally dismantling their ability to support research. And that would be a tragedy.'
Virtual chronic care company Omada Health filed to go public in what's expected to be something of a bellwether for the stagnant IPO market for digital health companies. In its filing, Omada–which was founded in 2012 and counts Andreessen Horowitz among its backers–reported $170 million in revenue for 2024, up 38% from 2023. However, the company is not yet profitable, reporting a net loss of $47 million last year compared with $68 million for 2023. Omada's IPO filing follows that of virtual physical therapy startup Hinge Health, which filed its regulatory paperwork in March. Hinge Health said on Tuesday that it was targeting a nearly $2.6 billion valuation (it priced its shares between $28 and $32)--a huge decline from the $6.2 billion valuation it reached in 2021 at its last VC funding round.
Plus: ChatGPT maker OpenAI unveiled a new healthcare initiative this week, called HealthBench. Working with 262 doctors around the world, the company hopes to better measure capabilities of AI systems for health in order to evaluate their effectiveness.
Trump picked wellness influencer Casey Means to be the next surgeon general. She and her brother Calley are right-wing favorites and promoters of the so-called Make America Healthy Again movement led by RFK Jr. Vitriol against her from more traditional MAGA types underscores a split within Trump's base. If confirmed, the proponent of raw milk who dropped out of her surgical residency program, would be the least experienced person to fill that role.
Plus: Northwell Health CEO Michael Dowling, the hospital system's first leader who's been in that role for 23 years, announced that he will step down in October. John D'Angelo, currently executive vice president of the group's central region who began his career there 25 years ago as an emergency medicine physician, will replace him. Northwell is one of the nation's largest health systems, spanning 28 hospitals in New York and Connecticut.
In the latest shakeup at UnitedHealth Group, CEO Andrew Witty is stepping down, citing 'personal reasons,' and will be replaced by former longtime CEO Stephen J. Hemsley. In a memo to employees, Hemsley said he was 'optimistic' about the company's future.
When ProPublica's David Armstrong was diagnosed with cancer, he set out to understand why a single pill of Revlimid cost the same as a new iPhone. This is what he found.
Bill Gates reshaped global health through his foundation. Now as the Trump administration slashes foreign aid, he plans to spend more than $200 billion on health and human development before winding down the foundation in 2045.
In a clinical trial that pit two blockbuster obesity drugs head-to-head, Lilly's Zepbound beat Novo Nordisk's Wegovy. The study, funded by Lilly and published in the New England Journal of Medicine, found that patients on Zepbound lost 50 pounds over 72 weeks versus 33 pounds on Wegovy. The finding is consistent with another study published last fall that also found Zepbound produced more weight loss.
Billy Evans, the partner of imprisoned Theranos founder Elizabeth Holmes, is starting a blood-testing company of his own.
A Congressional Budget Office analysis found that the the current budget reconciliation bill could cause more than 13 million people to become uninsured over the next decade than would otherwise have been the case.
A federal court ruled that the patent board should re-evaluate whether Nobel Prize winners Jennifer Doudna and Emmanuelle Charpentier are owners of CRISPR technology. The high-profile disputes dates to 2014 when a researcher at the Broad Institute at MIT and Harvard was granted key U.S. patent rights.
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