Big Pharma needs to get off the sidelines

Over the last two months, the pharmaceutical industry has remained on the sidelines as Health and Human Services Secretary Robert F. Kennedy Jr. and Elon Musk's Department of Government Efficiency have taken a hatchet to our nation’s public health agencies. Executives likely believed that nothing good would come from speaking up — and that their most immediate concern, the parts of the Food and Drug Administration that biotech and pharma companies rely on to review new drugs, would survive unscathed.

The stunning ouster of Peter Marks, who oversaw vaccines and cutting-edge therapies at the FDA, followed by massive layoffs should be a wake-up call.

Marks, who led the FDA’s Center for Biologics Evaluation and Research, was an architect of Operation Warp Speed, the government’s effort to accelerate the development of safe and effective COVID vaccines. He also has been a champion of patients with rare diseases, advocating for regulatory flexibility to speed the development of cutting-edge treatments like cell and gene therapies.

Those efforts have received both plaudits and critiques. Overall, there was a sense that Marks was a thoughtful, science-driven regulator willing to work with drug companies to advance cures.

That thoughtful regulator gave a scathing critique of Kennedy and the current state of affairs at the agency in his resignation letter. Kennedy has pushed for a reexamination of vaccine safety, something Marks said he had been willing to address. "However, it has become clear that truth and transparency are not desired by the Secretary, but rather he wishes subservient confirmation of his misinformation and lies."

Pharma industry executives should be worried about who at the FDA might be ousted next — along with who will replace Marks and other key leaders. They should also be concerned about how the agency’s priorities and processes might shift given the politicization of public health under the Trump administration.

Since November, biotech and pharma companies’ strategy has been to say little to nothing in public, be solicitous in private, and, above all, avoid offense. According to Endpoints News, Pfizer CEO Albert Bourla told the audience at an industry event in February, "I truly believe the opportunities clearly outweigh the risks because this is an administration, to start with, that they believe that strong business, strong private sector, strong entrepreneurship makes America great. That was not the case with the previous administration." The Wall Street Journal, meanwhile, chronicled the millions of dollars the health care industry rained down on President Trump’s inaugural and political action committees.

And so, the industry hunkered down. Company leadership remained largely silent amid a brutal attack on the National Institutes of Health, which funds and conducts the basic research that underpins nearly every innovation biotech and pharma companies develop. That support isn’t just about discoveries, though; it also provides training for the industry’s future workforce.

The industry kept quiet when key information was stripped from health agency websites in response to Trump’s executive orders on gender and diversity, equity and inclusion — including guidance on HIV, vaccines, and other infectious diseases that have been contained due to breakthrough treatments from pharma. Instead, companies fell in line by cutting language referencing DEI from their annual reports and websites.

They were mum when the first rounds of layoffs hit HHS. They were seemingly satisfied that FDA reviewers responsible for overseeing new drug approvals and inspecting manufacturing facilities were largely spared (reviewers responsible for medical devices were initially gutted but quickly reinstated). They reasoned that those jobs, paid for by pharma companies rather than taxpayers, were safe.

The overarching attitude seemed to be that everything would eventually settle down. After all, how bad could it get?

With Marks’ ouster, companies and investors appear to be waking up to the fact that it is already bad and could worsen. Underscoring that potential, Cantor Fitzgerald biotech analysts Josh Schimmer and Eric Schmidt wrote in a note to clients Monday that Kennedy "is steering this country into dangerous territory based on his own whims and invalidated beliefs." They added, "He’s ventured far outside of his swim lane. It’s time to take him out of the pool."

And Kennedy is just getting started with reshaping the agencies he oversees.

In search of a silver lining, industry watchers are relying on Marty Makary, who was confirmed by the Senate last week to lead the FDA, to name a reasonable replacement for Marks. They are looking for someone who can maintain the agency’s gold-standard science amid politicization by HHS leadership.

But even if Makary does that (a big if given Kennedy’s outsize influence), there are other concerns to consider. Other key leaders at the FDA have already left the agency, and they could be difficult to replace. Meanwhile, the dramatic cuts at HHS today are anticipated to cost some 3,500 jobs at the FDA. While the scope of the cuts is evolving, support staff appears hit hard, which could disrupt operations. Endpoint News reported that Peter Stein, who leads the Office of New Drugs, was put on administrative leave. And while those cuts might spare employees who review new drug applications, that doesn’t mean they will stay in an increasingly uncertain, even hostile, work environment. I'm told that those experts are eminently hirable by industry, and many are actively looking for other jobs.

That would create a real problem for the drug industry, particularly for biotech companies, which raise money based on a carefully mapped-out timeline for each step of the drug approval process. Now, those regulatory timelines feel a lot more tenuous. No wonder, as Bloomberg News reported, biotech stocks fell on news of Marks’ departure.

The strategy of not speaking up out of fear is not working. It’s time for companies to spell out the existential threat the upheaval at HHS poses to biomedical innovation in the U.S. and the future of an industry that employs more than 1 million Americans.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Lisa Jarvis is a Bloomberg Opinion columnist covering biotech, health care and the pharmaceutical industry.