Trump FDA Chief Gottlieb Isn't Pharma's BFF After All

Scott Gottlieb seems like the pharmaceutical industry’s idea of a dream FDA commissioner, with pharma ties and an ideological bent toward deregulation.

But he has also been the only member of the Trump administration to follow through on the president’s fiery rhetoric about rising drug prices. Pharma claims to like the free market. But in the year ahead, Gottlieb is set to prove how the free market can cut both ways for drugmakers.

Gottlieb is a physician who became the FDA’s Deputy Commissioner for Medical and Scientific Affairs in 2005. After leaving the agency in 2007, he served on pharma boards, worked in venture capital and was a resident fellow at the American Enterprise Institute, a conservative think tank.

Since rejoining the FDA in May as its leader, Gottlieb has been extremely productive. With an eye to bringing down prices, he has presided over record generic-drug approvals and a multi-year high in novel drug approvals, while also working to speed more medical devices to market. His agency has suggested it might be more flexible in approving drugs and will try to get cancer drugs to market more quickly, using data from smaller and faster clinical trials. He has also directed agency policy toward tackling the opioid crisis and curbing tobacco use.

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This is not exactly what Gottlieb’s critics expected — and it’s probably not fulfilling all of biopharma’s fondest hopes for his tenure, either. The industry isn’t monolithic; different sectors have different priorities, and Gottlieb’s impact will vary accordingly.

Specialty pharma firms — those that tend to acquire drugs rather than develop new ones and focus on complicated older medicines — may come off the worst. Gottlieb’s moves have seemed designed to rapidly create trouble for such drugs, including publishing a list of price-hike-prone medicines. Specialty-pharma products featured heavily.

Traditional generic drugmakers are feeling the heat, too. Generic approvals set a new record in the FDA’s 2017 fiscal year. New generic-drug applications surged, as well, suggesting next year may break the approval record.

One would assume the uptick in generic approvals is good news for the industry — more products on the market mean more revenue. But generics are not made equal. When there is a single generic version of a medicine, it is generally priced at a meager discount to the original and is extra-profitable.

But once there are multiple generics on the market, price war follows. And Gottlieb’s FDA loves conflict. In the past, first generics for branded medicines were the agency’s main priority. Now, the FDA also wants to prioritize applications for medicines when there are fewer than three competing generic options. As a result, the most profitable generic drugs will have a shorter lifespan and see margins rapidly eroded.