Trump, Drug Prices and Deregulation

Posted in BioBusiness, BioEducation, BioJobBuzz

Donald Trump met with pharmaceutical leaders and their lobbyists yesterday. At the outset of the meeting he castigated executives for the high prices of prescriptions drugs in the US. Then, he mentioned that he thought that the regulations guiding new drug approvals by US Food and Drug Administration (FDA) are overly complex and are interfering with discovery and development of new life saving molecules for the American public.

While pharma execs may have cringed at the mention of high drug prices (Republicans never think that drug prices are too high), a majority were emboldened by the mention of loosening FDA regulations for new drug approvals. Drug makers have historically complained that overly aggressive FDA regulations drive up the costs associated with new drug development. What they fail to mention is that the regulations imposed by FDA on drug development are necessary to ensure drug efficacy and public safety.  And if you look at the overall track record of FDA for new drug approvals over the past 40 years the agency is clearly doing its jobs (less than 3% of approved drugs have been recalled from the market). Prior to implementation of modern FDA regulations and current good manufacturing practices (CGMP), the efficacy and safety of new drugs could not be accurately determined or guaranteed.

Now let’s talk about new drug discovery and development prices. Current estimates suggest that it takes  $1.0-2.0 billion to bring a new prescription drug to market. While the actual costs may vary, what the drug companies do not tell you is that included in those cost are the manufacturing, marketing and sales of the drug once it is approved. That said, the actual discovery and development of the drug is much less costly. Nevertheless, the high costs of discovery and development is the explanation that pharma executives give to justify high drug prices. Also, they frequently justify high prices because the high failure rate of new molecules i.e. we spend a lot of money on drugs that we want to advance but since so many of them fail we have to charge high prices for the ones that successfully garner regulatory approval.

While these arguments may be compelling let’s take the example of Lipitor, a cholesterol-lowing drug that has been on the market for about 20 years.  The graph below shows the sales history of Lipitor from 2003-2015.

As you can see the return on investment by Pfizer for Lipitor far exceeded the $1.0 billion development costs of the molecule. Also, the graph shows that Lipitor sales drastically fell off in 2012.  This is because Lipitor lost patent protection in 2011 and several generic competitors appeared on the market. Yet, despite the appearance of low cost generic alternatives, Lipitor sales were almost $2.0 billion in 2015.  Of course, you can argue that Lipitor is an extraordinary example and there are not that many $1.0 billion drugs out there. However, you would be wrong

Next, let’s consider how drug companies determine their retail price for the drugs that they sell. For those of you who may not know, the US government including its agencies, FDA and the Centers for Medicare and Medicaid Services (the largest provider of prescription drugs in the US) are not legally allowed to negotiate drug prices with their manufacturers. That right….you heard right. Instead, drug companies are required to tell FDA how much they plan to charge and then it is up to insurance companies/third party payers to determine whether or not they will reimburse patients costs for those drugs.  Put simply, the drug companies and insurers set drug prices in the US. This is in marked contrast with the rest of the world (possibly excluding New Zealand) where governments negotiate with drug companies to set drug prices that are affordable and consistent with the economic realities of their countries.

You may be asking what does all of this have to do with Trump and his news conference yesterday?

First, Trump essentially put drug companies on notice that he thinks US prescription drug prices are too high. Second, Trump also acknowledged that overly aggressive FDA regulations are responsible for the rise costs of prescription drugs in this country. Therefore, according to Trump, the best way to lower drug prices in the US is  to lower the regulatory requirements for new prescription drug development and approval. Theoretically, lowering regulatory requirements ought to help reduce drug discovery and manufacturing costs which, in turn, should translates into lower prescription drug costs. However, as previously mentioned, the government has no leverage over drug companies when it comes to drug prices. That said, less than mandatory price controls would have no noticeable or little effect on containing rising prescription drug prices in the US.

Ironically, the Affordable Care Act (aka Obamacare) is lowering drug prices by holding drug manufacturers more accountable for the drugs that they develop and try to bring to market. To wit, based on certain provisions of the ACA (which have nothing to do with the retail insurance part of the Act) drug manufacturers must meet certain clinical and safety benchmarks before the Centers for Medicare and Medicaid services will reimburse its patients for approved prescription drugs. To that point, the ACA stipulates that the government will not reimburse patients for new prescription drugs unless they demonstrate quantifiable improvements to clinical efficacy or safety!  In other words, the government will not pay a higher price for new prescription drugs if its efficacy or safety is not markedly better than existing cheaper alternatives.  Not surprisingly, these regulations have forced drug makers to think more strategically and to only advance drug candidates that are superior to already existing drugs. 

So, what does this all mean?  First, if the ACA is repealed or modified it will weaken the ability of the federal government to prevent drug prices from rising.  Second, if FDA regulations are relaxed or reduced, it may lower drugmaker’s overhead costs but it will not necessarily lower drug prices (remember drug companies set drug prices and government cannot approve or not approve drugs based solely on price).  Third, before FDA modernized itself in the late 1930s the US drug supply was not safe and there were many drugs on that market that offered no clinical benefits). Consequently, deregulation may be good for drug companies but not necessarily good for the American public.

Until next time….

Good Luck and Good Job Hunting!!!!!!! 

The Trump Effect? Macy’s to Shed 10,000 Jobs and Close Stores

Posted in BioBusiness, BioJobBuzz

Over the past few weeks, President-elect Donald Trump has taken much credit for saving several hundred US manufacturing jobs in Indiana. Also, he has excoriated car marker executives ranging from General Motors to Ford to Toyota for planning to build manufacturing facilities in Mexico. While it is not clear how many jobs Trump actually saved or whether his twitter rants prevented car manufacturers from setting up production plants in Mexico, it is clear that he cannot or will not save large numbers of American jobs in the retail/service sectors. To that point, Macy’s, last week, announced that it was shedding 10,000 jobs and closing 100 stores to cut costs to improve its bottom line.

You may ask why saving a few hundred air conditioning jobs at taxpayer expense more important than saving 10,000 American retail jobs? As you may recall, in the summer of 2015 Macy’s CEO Terry Lundgren  said that he would stop selling Donald Trump’s clothing line in all of its stores.  Lundgren decided to take this action because then candidate Trump said many Mexican immigrants were rapists or murderers. Shortly after Lundgren announced his decision, Trump called on his supporters to boycott Macy stores.

While it is unlikely that the Trump boycott was responsible for Macy’s decline (all department stores are are getting hammered by online retailers), I do not expect Trump to help Macy’s (like he helped Carrier) save any of the 10,000 jobs that will be lost.  This is because Trump is a vindictive and hateful man who will not help anyone unless they shower him with adulation or do as they are told. Further, he likely considers Terry Lundgren a “loser’ because his business is failing. And, if Donald was in charge,  Macy’s would be a HUGE and GREAT success. Put simply, Macy’s got what it deserves for dropping Trump’s clothing line and not reinstating it after Trump was elected President. And, as for Lundgren, he said

“We made our decision about a year and a half ago, and stand by our decision,”

It’s going to be a rocky ride for the next 4 years.  So buckle in and hold on for your life!

Until next time…..

Good Luck and Good Job Hunting!!!!!!!!!!

Trump, Once Again, Falsely Takes Credit for New US Job Creation

Posted in BioBusiness, Career Advice

As  you may recall, one of Trumps major campaign messages to his followers was to”force corporate America to focus on job creation at home rather than abroad.”  In my opinion, Trump’s possible success as President is and will continue to be inextricably linked to fulfilling his promise to create new jobs for out-of-work or underemployed Americans. That said, Trump will do or say anything, including taking false credit, to show his supporters that he can indeed create US jobs.

Yesterday, Trump announced:

I was just called by the head people at Sprint, and they are going to be bringing 5,000 jobs back to the United States,” Mr. Trump told reporters at his Mar-a-Lago estate in Florida. “They have taken them from other countries. They are bringing them back to the United States.”

Later in the day, Sprint said that the jobs were part of a previously announced commitment by Japan’s Soft Bank, which owns a controlling interest in Sprint, to invest $50 billion in the US and create 50,000 new jobs. As you may recall, shortly after electoral college win, Trump met with Masayoshi Sun, the CEO of Softbank who made the announcement and quickly took credit for the announced investment. Interestingly, the investment and job creation plans predated the election. Put simply, the deal was forged long before Trump got involved.

Not withstanding Trump’s penchant for mendacity, it is important to note that since the election, Sprint stock price has risen by 40%, partly on the hopes that it will be acquired by its rival cellphone carrier T-Mobile. While the Obama administration frowned upon telecom mergers because of anti-trust concerns, Sun and his investors believe that the Trump administration may look more favorably on any potential deals with T-mobile or other players in this sector.

Moreover, last January, as part of a restructuring effort, Sprint cut 2,500 jobs in call centers throughout the US and its corporate headquarters. This means that there will be a net gain of only 2,500 new Sprint jobs in the US if the announced positions are ever created or filled (supposedly by the end of fiscal year 2017). In any event, if a merger ultimately does take place between Sprint and T-Mobile, there are likely to be massive job cuts which typically occur after most mergers to reduce duplication of effort at both the technical and administrative levels.

Sadly, it is becoming increasingly evident that Trump is willing to lie or take credit for deals that have little or nothing to do with him when it comes to job creation (or anything else for that matter).  To that point, be wary of anything Trump says or does when it comes to job creation during his administration.  When the smoke clears and mirrors are removed, any announced job “deals”are likely to be in the best interests of corporate America; not hard-working or job-seeking Americans.

Until next time….

Good Luck and Good Job Hunting!!!!!!

Trump’s Corporate Tax Holiday Proposal Will Hurt Job Creation

Posted in BioBusiness, BioJobBuzz

The notion that corporate tax holidays– congressional orders that allow corporations like Apple, Microsoft, Pfizer and others to bring overseas profits back to the US without penalty–create jobs is misleading and, based on previous such tax holidays mostly untrue.

According to an article in today’s NY Times Business section (a reliable source of real news), corporate tax holidays typically result in mergers and acquisition that typically result in job cuts.

…the last time Congress initiated a tax holiday, in 2004. The top 15 repatriating companies brought home $150 billion but reduced their work force by 20,931 jobs, according to a 2011 study commissioned by the Senate Permanent Subcommittee on Investigations.

In the coming months, Trump and his minions will be pushing for a new corporate tax holiday so that new jobs can be created. While this is certains to send shivers down the spines of most Trump supports, any jobs that will be created or not lost will not be the ones that midwestern small town employees or coal mines will benefit from. For example, the  corporations with the largest amounts of overseas monies are Apple and Microsoft, two technology companies that are unlikely to create new jobs for coal miners, service employees or blue collar workers.

While many Trump supporters believe that Barack Obama and the Democrats were responsible for manufacturing job loss in the US, the real reasons for their loss was mechanization/robotization and globalization. The lost manufacturing jobs are never coming back–despite Trump’s assertions that they are—and the only way unemployed factory workers will find new work is through retraining or moving to urban centers where jobs for unskilled workers appear to be on the rise.  Corporate tax holidays, income tax cuts and reduction in social programs will not lead to new job creation but to job loss.

Don’t let Trump destroy the economic recovery that President Obama brought to this nation.

Until next time…

Good Luck and Good Job Hunting

Want to Keep Your Job and Get a PhD in the Trump Era? Unionize!!!!!!

Posted in BioBusiness, BioEducation, BioJobBuzz, Career Advice

It should come as no surprise that Donald Trump is anti-union and his recent cabinet pick for Secretary of Labor is clearly not a friend of working people.  Put simply, Trump is on the side of big business and employers. And if he and his billionaire friends can squeeze more work out of employees for lesser pay, then he and his administration gladly propose legislation to accomplish those goals. Also, don’t be shocked when Trump cuts the budgets of federal agencies that offer research grants, fellowships and teaching assistantships to American colleges and Universities.

It’s no secret that graduate students and postdocs are overworked and underpaid and long term career prospects continue to dwindle.  Further, during the course of my career advising graduate students and postdocs about job opportunities, I have heard too many horror stories about PIs who refuse to let their students or postdoc do anything outside of their laboratories to enhance careers or job opportunities.

While the public and private union movement is dying in the US, unions still offer exploited workers to negotiate their fates, working conditions, pay and benefits with employers.  Sadly, we in the academic community have been taught to be anti-union because of the high costs associated with union labor. Ironically, that is the point….why  should graduate students and postdocs not be fairly compensated for the long hours that they work?  Sure, you can say that graduate students will get a degree and postdocs need the experience to get a job but, while a degree and a postdoc in the past meant a good paying job in the end, no such guarantees exist today.  Basically, you are on your own!

Last week, graduate students at Columbia University overwhelmingly voted to unionize. According to a newspaper article in the NY Times:

The union will be the first to represent graduate students since the National Labor Relations Board ruled in August that students who work as teaching and research assistants have a federal right to unionize.

 

The vote to unionize was 1,602 to 623, according to the United Automobile Workers, which will now represent some 3,500 Columbia graduate students.

While the vote to unionize will undoubtedly upsets PIs, Deans and University Presidents, it is in the best career interests and lifestyles of graduate students and research assistants. For example, unions typically negotiate the salaries for 40 hour work weeks. We all know that postdocs and graduate students work more than 40 hours weekly. Therefore, any time over 40 hours ought to be overtime pay, or to avoid overtime hourly pay, base salaries have to be set a certain levels (according to Federal salary guidelines ) which are substantially more than what graduate students and postdocs are currently paid. Also, unions negotiate with employers about vacation times, benefits (health and life insurance,401K plans etc) and establish guidelines that protect employees from being abused by employers and create rules that guide whether or not an employee can be fired “for cause” (not simply because your employer does not like you).

As I previously mentioned, research budgets and public unions will likely be under constant attack during the Trump regime.  Because of this, it is time that everyone begins to think about ways in which they can protect their jobs and keep their career aspirations alive. I know it won’t be easy but as someone once said “desperate times require desperate measures” (or something like that).

Until next time….

Good Luck and Good Unionizing!!!!!!

Alternative Energy and Innovative Technologies: How Trump Might Be Able to Create New Jobs

Posted in BioBusiness, Career Advice, Uncategorized

Trumps ideas around job creation center around saving jobs before they leave or possibly bringing back old manufacturing/ mining jobs to the US. We just witnessed how effective Trump was convincing the Carrier Corporation to not outsource jobs to Mexico or close factories in Indiana and move them south of the border. Further, many of the jobs that Trump talked about during his scorch-the-earth campaign (both figuratively and possibly literally), are obsolete because much of what humans did in these jobs is now automated and their participation is no longer required.  Put simply, Trump needs to think outside of his box (which will be extremely difficult but necessary) for him to fulfill one of his major campaign promises of creating new jobs for workers in the financially-devastated American heartland.

To that point, Ross Sorkin suggested a possible strategy in an editorial in today’s NY Times business section. In the opinion piece, Sorkin suggests that Trump model his job creation strategy divined by Elon Musk, the founder of Tesla, the electric car company; SolarCity, the solar power provider; and SpaceX, the rocket company..  According to Sorkin, Musk has nearly 35,000 new jobs (most of which are manufacturing jobs) in the past decade. This is an outstanding accomplishment for a single individual entrepreneur. However, instead of naming Musk to advise him on job creation, Trump decided that he was going to rely on the advice of people like Jamie Dimon, of JP Morgan Chase, Robert Iger of Disney and Mary Barra of General Motors all of whom benefitted from President Obama’s government bailout and are not exactly paragons of innovation. LIke Trump, these business leaders represent the old guard that want things to remain the same to help them maintain their power bases, corporate stock prices and large oversized CEO compensation packages (Musk takes $1 dollar a year in salary and has paid as much as $600 million in taxes annually).

Not surprisingly, Musk is a Democrat and despite creating tens of thousand of new American jobs, he is under assault and being vilified by conservative groups. This is because Musk believes in climate change. According to Sorkin:

…Conservative groups and individuals have taken to the internet with a litany of real and fake stories attacking Mr. Musk for the government subsidies Tesla receives, and for his vocal warnings on climate change.

Even worse, Sorkin reported:

Robert E. Murray, chief executive of Murray Energy Corporation, the largest privately owned coal company, called Mr. Musk “a fraud” for accepting $2 billion in government subsidies for Tesla.

Yet despite this hateful and untrue assault by Trump supporters, Musk suggested to Sorkin that even though he did not support Trump, that he would be “happy to talk with him” about job creation and climate change.

If I were Mr. Musk, I would not hold my breath.

Until next time….

Good Luck and Good Job Hunting

 

The Truth About Trump and Manufacturing Jobs: Part 2

Posted in BioBusiness, Uncategorized

While Trump has been on a so-called victory tour to convince his supporters that he fulfilled (sort of) one campaign promise to keep jobs in America (middle America really), he set a couple of dangerous precedents.

First, every US CEO worth his/her salt will be calling Trump to negotiate or renegotiate deals for tax breaks, incentives and guarantees of government contracts to keep manufacturing jobs in America.  And ,while Trump/Pence saved some jobs for Carrier employees (around 1000) another 1100 are still moving to Mexico. Surprisingly, to keep less than 50% of Carrier’s low tech manufacturing jobs in Indiana, Pence, Indiana’s governor, had to guarantee Carrier an additional $7.0 million in tax breaks and incentives. Great deal for Carrier and those employees, but not such a great deal for other Indiana citizens who may have to pay more to pay for the tax shortfall.

Second, Trump has other things besides jobs to focus on; like foreign affairs, national security, legislation and other Presidential things that he so desperately wanted to do after becoming President.  Because of this, Trump does not have the time to intervene and negotiate with every US company that threatens to move jobs (manufacturing or otherwise) to lower cost labor markets. His intervention in the Carrier situation set a bad precedent and pretty much invited other companies to see what kind of deal that they can get to keep jobs in the US (kind of sounds like corporate blackmail to me).

Put simply, Trump engineered this deal and set out on his victory tour to placate his supporters in the heartland and also to draw attention away from his cabinet picks and campaign promises that he made and will never fulfill.

Trump needs to start thinking more presidentially and finally  understand that governments cannot be run like businesses.  There is more to running a government than making money.

Until next time,

Good Luck and Good Job Hunting

Trump and Manufacturing Jobs

Posted in Articles, BioBusiness, BioJobBuzz, Career Advice

The big news today is that Donald Trump and Mike Pence negotiated a deal with United  Technologies (owner of the big air-conditioner company Carrier) to keep 1000 of the 2,000 Indiana-based jobs that were slated to be moved to Mexico.  Of course, the terms of the deal were not announced (and possibly will never be). That said, it is likely Trump promised Carrier management tax breaks and incentives and other perks to keep 50% of the announced jobs in the US (why not all of them?).

While Trump supporters may see this as fulfillment of a campaign promise made by the Donald, it is nothing more than a PR stunt to suggest that Trump is able to keep jobs in the US and not move jobs to lower cost manufacturing markets like Mexico, Vietnam, Malaysia, Bangladesh, Indonesia and others. Notice that I did not mention China in the list of lower cost manufacturing destinations. That’s because, over the past 10 years, labor and manufacturing costs have skyrocketed in China and manufacturing there no longer makes fiscal or economic sense. Anyway, the Carrier story will be used to show that Trump unlike President Obama is able to stem or reverse the loss of US manufacturing jobs to foreign countries.

The reason for the post is twofold.  First,  most of the manufacturing jobs in the US have already been lost and they will not be coming back home anytime soon.This is because moving these jobs to lower cost markets has increased corporate profits and elevate public company stock prices. Nevertheless, it is important to note that over 200,000 US pharmaceutical manufacturing, marketing and sales jobs have been lost since 2001 because of outsourcing to lower cost foreign markets. Despite bleeding job losses, neither the Bush nor Obama administrations directly intervened to keep these jobs in the US. Both Bush and Obama likely believed that the US government ought not meddle with or tell private companies how to run their businesses.

Second, despite all of the hoopla, Trump/Pence were only able to save 50% of the 2000 jobs slated to be moved to Mexico. And, putting things in perspective saving 1,0000 “blue collar” jobs is peanuts as compared with the lost of over 200,000 pharmaceutical and life sciences jobs.  While saving 1,000 Indiana jobs may seem like a “win” for Trump supporters, I think the whole deal was really designed to distract said supports from other campaign promises that Trump has failed to live up to. For example, his decision to not investigate and possibly jail Hillary Clinton, his appointment of Washington lobbyists and Wall Street insiders to cabinet posts and advisory positions (whatever happened to “cleaning out the swamp?) and considering Mitt Romney for Secretary of State.

Finally, in my opinion, Trump’s personal involvement in negotiations with private companies sets a dangerous precedent because the Executive branch ought not be able to directly manipulate or negotiate private business transactions. To that point, I believe that oversight of US corporate transactions and business deals are best left to regulatory agencies like the Federal Trade Commission and the Justice Department rather than President of the US.  That said, President-elect Trump ought to be focused on running the US government; not negotiating business deals with private US corporations.

Until next time,

Good luck and Good Job Hunting!!!!!!