Josh Nathan-Kazis
President-elect Donald Trump's proposed lineup to lead the government's health agencies look like bad news for vaccine companies, and for GLP-1 weight-loss-drug makers Eli Lilly and Novo Nordisk.
They could be good news for the companies selling copycat versions of GLP-1 weight-loss drugs, and for some health insurers.
Healthcare stocks were up a bit on Monday as the incoming administration's healthcare team came into sharper focus.
The latest picks, the outspoken surgeon Dr. Marty Makary to lead the Food and Drug Administration, and former member of Congress and vaccine-safety skeptic Dr. Dave Weldon to lead the Centers for Disease Control and Prevention, are set to work under Robert F. Kennedy Jr., who Trump has named to lead the Department of Health and Human Services.
The selection of Makary as FDA commissioner appeared to settle some worries sparked by earlier, less-traditional picks, such as the selections of Kennedy, and of daytime TV host Dr. Mehmet Oz to lead the Centers for Medicare and Medicaid Services.
Whether all the senior health officials will be confirmed by the Senate, never mind how they will actually govern when Trump takes office early next year, remains an open question.
The backgrounds of the four top officials named so far, however, offer some hints as to what the healthcare industry could face over the coming years.
Here's what the appointments appear to mean for the healthcare sector.
Bad news for vaccine makers
Kennedy's long history of vaccine skepticism is well-known, but Friday's naming of Weldon to lead the CDC adds another vaccine skeptic to Trump's roster.
Weldon, while in Congress, had pushed to create an independent agency within HHS to monitor vaccine safety, and had pushed to ban a vaccine preservative that was incorrectly linked to autism.
Shares of the world's largest drugmakers are uniformly down since the day before Trump's victory amid worries over Kennedy. Weldon's selection to run CDC seems an even more direct indication that the Trump administration could take a sharply different approach to vaccination.
While Kennedy's role is removed from the nitty-gritty of vaccine policy, it's the CDC director who is tasked with accepting or rejecting the recommendations for vaccine use laid out by the agency's powerful vaccines advisory committee.
Kennedy has said he does not plan to "take away anybody's vaccines." That's cold comfort for the vaccine industry, which in the coming years is looking to defend uptake of embattled Covid-19 vaccines, continue the rollout of new respiratory syncytial virus vaccines, and launch new combination respiratory vaccines.
Bad news for Novo and Lilly
One theme uniting Trump's healthcare picks is a degree of skepticism over the enthusiastic cultural and scientific embrace of the new GLP-1 weight-loss medicines, Lilly's Zepbound and Novo's Wegovy.
Massive interest in these drugs sent Lilly shares up nearly 250% from the start of 2022 to the end of this August, and made Novo the most valuable company in Europe. Both stocks have wobbled this fall amid growing worries that sky-high assumptions for obesity-drug sales may be overly optimistic.
The final proposed lineup of Trump's public-health leadership won't ease those worries.
Kennedy has expressed suspicion about the cost burden of the weight-loss drugs, though his comments have been marked by vast misstatements of the numbers involved.
Makary has also aired concerns about the GLP-1 drugs. "Right now, I have serious concerns about just giving out GLP-1s like candy," he said on a podcast interview in August, citing the muscle loss the drugs can cause.
Good News for the Copycats
In another worrying sign for Novo and Lilly, there are indications that the new Trump administration might be well-disposed to the telehealth companies and compounding pharmacies selling cheap, legal copycat versions of the GLP-1 weight-loss drugs.
The FDA is currently in litigation over whether compounders can keep making Lilly's Zepbound, but meanwhile has allowed them to continue.
As the healthcare news website STAT first reported Sunday, Makary is an executive at Sesame, a telehealth company that sells a compounded version of semaglutide, the medicine Novo sells under the brand names Wegovy and Ozempic.
Elon Musk, meanwhile, who Trump has said will co-lead an as-yet-undefined entity called the Department of Government Efficiency, has mused frequently in posts on X about the benefits of making GLP-1 drugs "super affordable."
Shares of Hims & Hers Health, a publicly traded telehealth company that also sells compounded semaglutide, were up 22% Monday following Makary's appointment.
Lilly has said the compounded drugs aren't having a financial impact on the company, but that might change if the limits on compounding were eased or eliminated.
Good for (some) insurers
The managed-care companies offering government-funded Medicare Advantage plans for seniors have suffered this year, as seniors have sought more care than expected, and CMS has cracked down on quality ratings and payment rates.
CMS under Oz could take a friendlier posture to the industry.
Oz has, at various points, proposed vastly expanding the Medicare Advantage program. Shares of Humana, a Medicare Advantage pureplay, have rallied since Trump named Oz, climbing 13.1%.
It's too early to say how those policy stances Oz has taken might translate once he is at the helm of CMS, but the rally is roughly in line with the broader theory that a Trump administration would go easier on Medicare Advantage than the Biden administration has.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 25, 2024 14:38 ET (19:38 GMT)
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