Before Donald Trump accused them of “getting away with murder”, the mood among pharmaceutical executives was buoyant as they gathered in San Francisco for the industry’s biggest annual gathering last week.
Not even the torrential rain could damp their spirits as they darted between meetings with investors and presentations in the historic Westin St Francis hotel, the venue for the JPMorgan healthcare conference.
The bull case was that the election of Mr Trump as president and the dominance of Republicans in Washington had saved the industry from Hillary Clinton, who had pledged to crack down on the soaring price of prescription medicines that cost the US system $325bn in 2015, a 9 per cent increase on the previous year.
“The good thing about Trump is he’s not Hillary, and the good thing about Congress is they’re not Trump,” said Tim Walbert, chief executive of Horizon Pharma, in an interview before the president-elect’s intervention.
For the first part of the week, investors sent healthcare stocks higher on the assumption that drugmakers would be able to continue charging premium prices.
Meanwhile, analysts predicted that forthcoming Republican tax reforms would enable large pharmaceutical groups to repatriate roughly $100bn of offshore cash, leading to a spate of dealmaking and share buybacks that would push valuations higher still.
But on Wednesday the party was interrupted by Mr Trump, who kicked off his first press conference in months with an unprompted broadside against drugmakers. His remarks wiped nearly $24bn from the value of biotech companies listed on the Nasdaq stock exchange.
Some executives were particularly aggrieved by the president-elect’s characterisation of the industry as “murderers”.
“Getting away with murder is exactly the opposite of what the industry does, which is saves lives,” said David Brennan, interim chief executive of Alexion, which makes a drug for rare blood disorders that costs roughly $500,000 a year per patient.
Executives and investors could probably live with fiery rhetoric from Mr Trump were it not for his pledge to “start bidding” for medicines.
“We’re the largest buyer of drugs in the world. And yet we don’t bid properly,” the president-elect said during the press conference. “We’re going to save billions of dollars over a period of time.”
The message [from Trump] is clear: heal thyself or we’ll help you get healed
Analysts interpreted the remarks as a sign that Mr Trump intends to enable Medicare, the taxpayer-funded healthcare scheme for retirees, to directly negotiate drug prices, something it has been prohibited from doing since a 2003 law passed during the presidency of George W Bush.
Medicare is the largest buyer of prescription medicines in the world, and so pharmaceutical profits would undoubtedly suffer were it able to drive down the price it pays for drugs. Some executives also fear that government-negotiated prices could serve as a reference for the amount they can charge private health insurers.
“This is the second time since being elected president that he has discussed the need for pharma reform, and thus we believe it should be taken with a measure of seriousness,” said Ronny Gal, analyst at Bernstein.
Some executives say they can stave off government intervention by policing themselves, and several companies have recently pledged to cap future price increases or launched assistance schemes to help Americans struggling with their healthcare costs.
However, there is disagreement within the industry on what form that self-policing should take, perhaps unsurprisingly so given the many different business models within the sector.
Dr Leonard Schleifer, chief executive of Regeneron, the New York-based biotech group, says drugmakers should stop implementing large annual price increases for medicines that have already been launched.
Many pharmaceutical groups kicked off 2017 by hiking the price of their existing medicines by about 10 per cent, well above the rate of inflation, while others, such as Pfizer, increased the cost of some products by 20 per cent.
“The message [from Trump] is clear: heal thyself or we’ll help you get healed,” said Dr Schleifer. “Arbitrarily every year increasing prices by egregious amounts isn’t going to work — those days are over.”
Mr Trump’s flirtation with a border tax is also causing consternation among some pharma companies, which import a large percentage of the drugs they sell in the US.
“In our industry I would say the vast majority of manufacturing is done outside of the US,” said Mr Walbert. Even when drugs are made in US factories, the active pharmaceutical ingredient is often sourced from other countries, especially India, he added.
Even before Mr Trump’s press conference there were nagging concerns inside pharmaceutical groups over some of his positions on healthcare, such as his scepticism towards vaccines.
Robert Kennedy Jr, a nephew of John F Kennedy and a long-time critic of vaccines, said last week that he had been asked to head a commission on the safety of the treatments during a meeting with the president-elect at Trump Tower.
Mr Trump has a history of scepticism over vaccines, especially the combined measles, mumps and rubella (MMR) vaccine given to children, which has been erroneously linked to autism. In 2012, he called on the medical establishment to “stop giving monstrous combined vaccinations”.
Dr Olivier Brandicourt, chief executive of Sanofi, one of the “big four” vaccine manufacturers, said it was unusual for a prominent political figure to express concerns over the life-saving products.
“That type of anti-vaccine campaign, we’ve seen that in Europe, in France — there was always a background of low noise — but usually political figures are very much in favour of vaccines,” Dr Brandicourt said.
A spokesperson for the president-elect later said no final decisions had been taken but that Mr Trump was “exploring the possibility of forming a committee on autism, which affects so many families”.
Additional reporting by Eric Platt in New York