By: Nivaj Haque PharmD Candidate c/o 2027
The pharmaceutical industry is undergoing significant changes in the background as new government policies are affecting the development, approval, and sale of drugs. These changes are affecting the staffing at the regulatory agencies, drug pricing, and international trade. They are also affecting pharmaceutical companies, healthcare providers and patients in turn. Because many changes are occurring at once, it is worth taking a look at how these changes are affecting the industry and what they might mean in the future.
FDA Staff Cuts and Rehiring Process
In a controversial decision, the Trump administration, with the help of Elon Musk’s Department of Government Efficiency, implemented large scale layoffs at several federal agencies including the Food and Drug Administration (FDA). About 700 FDA employees and about 220 employees from the medical device industry lost their jobs.1 The concern now is that fewer regulatory staff will slow down the review of new drugs and medical devices and delay patient access to life saving treatments. Industry organizations like AdvaMed have expressed concerns that staffing cuts could reverse innovations and increase risks to public health through regulatory bottlenecks.2 The FDA has come under criticism from industry leaders and consumer advocacy groups for its hiring practices but has begun to rehire some of the affected employees, focusing first on those who oversee food safety and medical device approvals. However, the long-term implications of these workforce cuts are unclear, many experts are worried about regulatory slowdowns and uneven enforcement of drug policies.
Shifts in Leadership and Regulatory Direction
There has been a major shift in healthcare leadership with the appointment of Robert F. Kennedy Jr. as Secretary of Health and Human Services. Kennedy has openly questioned vaccines, raising concerns among medical professionals about possible changes to federal health policies, particularly in vaccine programs and drug regulation. ³ The Trump administration also appointed Kyle Diamantas, a Florida attorney with ties to Donald Trump Jr., as acting deputy commissioner for human foods at the FDA. Despite having little experience in food regulation, he now plays a key role in overseeing food safety policies. ⁴ These leadership changes have already caused tensions within the FDA. Former deputy commissioner James Jones resigned in protest, highlighting internal conflicts. ⁵ With these new officials in place, pharmaceutical leaders are closely watching for potential changes in drug approvals, regulatory enforcement, and public health policies.
Elimination of Diversity Guidelines for Clinical Trials
In early 2025, the FDA took down draft guidelines aimed at improving diversity in clinical research from its website. This decision followed an executive order from the Trump administration that instructed federal agencies to remove diversity, equity, and inclusion (DEI) policies.⁶ Originally introduced in 2024, this guidance required pharmaceutical companies to submit Diversity Action Plans, outlining strategies to increase the inclusion of historically underrepresented populations- such as racial minorities, women, and older adults-in clinical trials.⁷ The removal of this policy has led to criticism from health experts, who argue that without clear policies promoting diversity in drug trials, the results may not accurately reflect how different patient groups respond to treatments. The FDA has yet to clarify its rationale for withdrawing the guidance, leaving uncertainty about how diversity will be addressed in future clinical studies.
Rollback of Medicare Drug Pricing Negotiations
The Trump administration reversed a Biden-era policy that allowed Medicare to negotiate lower drug prices for costly medications. This policy was expected to save billions of dollars over ten years by lowering costs for taxpayers and patients. ⁸ Now that it’s gone, Medicare can no longer bargain with drug companies, which could make medicine more expensive for seniors and increase government healthcare spending. Pharmaceutical companies might make more money in the short term, but critics say rising drug prices could lead to public frustration and force lawmakers to create stricter price regulations. Some states are already working on their own plans to control drug prices by negotiating at the state level to keep medicine affordable.
New Tariffs on Pharmaceutical Imports and Supply Chain Disruptions
Another significant change is the Trump administration’s 25% tariff on pharmaceutical imports, targeting generic medications from India and China.9 Since India produces 40% of the generic drugs used in the US, this could be a major disruption to the supply chain.10 After the announcement, Indian pharma stocks fell, with Sun Pharma and Dr. Reddy’s Laboratories down 2-4%. 11 If these tariffs go into effect, drug prices in the US will rise and many essential medications will become unaffordable for consumers. Some pharmaceutical companies are already considering moving production to the US to avoid these tariffs but doing so will require significant investment and regulatory approvals- however, this will be a long-term solution and not an immediate one.
The Biosecure Act: Limiting Foreign Pharma Ties
The Biosecure Act is a proposed bill in Congress that’s expected to have major implications for pharma in 2025. The legislation seeks to limit partnerships with certain foreign companies, particularly in China, to protect American healthcare and genetic data from security threats. One of the main goals is to reduce the industry’s dependence on foreign pharma manufacturing and strengthen national security.12 WuXi Biologics, a big Chinese biotech company, has already started adjusting to this proposed policy. WuXi has recently sold a vaccine facility in Ireland to Merck & Co. for around $500 million to get ahead of the curve.13 If the bill passes, pharma companies will be under more government scrutiny of international collaborations and will have to rethink their supply chains and investment strategies.
Industry Reactions and the Road Ahead
Pharmaceutical companies are actively adjusting their strategies to keep up with these evolving policies, working to mitigate risks while capitalizing on new opportunities. Some firms have invested heavily in artificial intelligence and data analytics to streamline drug development and improve efficiency. Others are engaging with policymakers to advocate for balanced regulatory frameworks that promote innovation while maintaining consumer protection.
The pharmaceutical industry is navigating a period of significant political and regulatory change. From FDA staff reductions and leadership reshuffles to shifts in drug pricing policies, trade tariffs, and modifications to approval processes, companies and healthcare providers must adapt to an increasingly complex environment. The future of the industry will largely depend on how regulatory agencies, lawmakers, and pharmaceutical leaders respond to these challenges. As the landscape continues to shift, staying informed and adaptable will be essential for all stakeholders.
References
1. Perrone M. FDA moves to rehire medical device, food safety and other staffers fired days earlier. AP News. Published February 24, 2025. https://apnews.com/article/fda-layoffs-trump-doge-rehired-medical-devices-85d4743e4ce88dbe3b99c813bad4b702
2. AdvaMed Statement on Reports of Significant FDA Job Cuts – AdvaMed. AdvaMed. Published February 20, 2025. Accessed February 26, 2025. https://www.advamed.org/industry-updates/news/advamed-statement-on-reports-of-significant-fda-job-cuts/
3. Weber L, Roubein R. RFK Jr. confirmed, elevating anti-vaccine activist to nation’s top health post. Washington Post. Published February 13, 2025. https://www.washingtonpost.com/health/2025/02/13/robert-kennedy-hhs-secretary-confirmation-vote/
4. Betts A. Trump tasks son’s hunting pal with keeping the US food supply safe. the Guardian. Published February 25, 2025. Accessed February 26, 2025. https://www.theguardian.com/us-news/2025/feb/25/kyle-diamantas-fda
5. QA Exclusive: Food Safety Leaders React to Jim Jones’ Departure, FDA Layoffs. Quality Assurance & Food Safety. Published February 25, 2025. Accessed February 26, 2025. https://www.qualityassurancemag.com/news/food-safety-leaders-react-to-jim-jones-departure-fda-layoffs/
6. Grossi G. FDA Quietly Removes Draft Guidance on Diversity in Clinical Trials Following Executive Order on DEI. AJMC. Published January 31, 2025. https://www.ajmc.com/view/fda-quietly-removes-draft-guidance-on-diversity-in-clinical-trials-following-executive-order-on-dei
7. Commissioner O of the. Diversity Action Plans to Improve Enrollment of Participants from Underrepresented Populations in Clinical Studies. www.fda.gov. Published July 3, 2024. https://www.fda.gov/regulatory-information/search-fda-guidance-documents/diversity-action-plans-improve-enrollment-participants-underrepresented-populations-clinical-studies
8. Steinzor P. Trump Reverses Some Biden Drug Pricing Initiatives, Potentially Impacting Medicare Costs. AJMC. Published January 22, 2025. https://www.ajmc.com/view/trump-reverses-some-biden-drug-pricing-initiatives-potentially-impacting-medicare-costs
9. The White House. Fact Sheet: President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico and China. The White House. Published February 1, 2025. https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-imposes-tariffs-on-imports-from-canada-mexico-and-china/
10. https://www.bain.com/our-team/sriram-shrinivasan, https://www.bain.com/our-team/rohit-singh, https://www.bain.com/our-team/anik-ganguly. Healing the World: A Roadmap for Making India a Global Pharma Exports Hub. Bain. Published February 8, 2025. https://www.bain.com/insights/healing-the-world-a-roadmap-for-making-india-a-global-pharma-exports-hub/
11. Lisl News Desk. US Tariff Concerns Hit Pharma Stocks; Sun Pharma, Lupin, Dr Reddy’s Decline 2-4% – Lakshmishree News. Lakshmishree News. Published February 14, 2025. Accessed February 26, 2025. https://lakshmishree.com/news/us-tariff-concerns-hit-pharma-stocks-sun-pharma-lupin-dr-reddys-decline-2-4/
12. Linskens JKK Kerry B. Contini, Daniel Andreeff, Xin Tao, Oren Livne, Aleesha Fowler, Bruce J. The BIOSECURE Act: Potential Implications for Biotechnology Collaborations with Chinese Companies. Global Sanctions and Export Controls Blog. Published June 4, 2024. https://sanctionsnews.bakermckenzie.com/the-biosecure-act-potential-implications-for-biotechnology-collaborations-with-chinese-companies/
13. Dunleavy K. In €500M deal, Merck buys Ireland vaccines plant from CDMO WuXi Biologics. Fierce Pharma. Published January 6, 2025. Accessed February 26, 2025. https://www.fiercepharma.com/manufacturing/wuxi-continues-divest-sale-ireland-vaccines-plant-merck-eu500m