Regeneron CEO Leonard Schleifer on tariffs: Let's make sure the Europeans pay their fair share

Summary of Leonard Schleifer Interview

Key Concepts:

• Health Defense Industry
• Fair Pricing vs. Price Controls
• European Drug Pricing
• Innovation Ecosystem
• Copay Assistance
• Tariffs as a Solution
• Open Market Access

The "Health Defense" Industry

Schleifer argues that the biotech/biopharmaceutical industry should be rebranded as the "health defense industry" to emphasize its critical role in national security and public health, especially highlighted by its response to the COVID-19 pandemic. He points out the industry's economic impact, citing Regeneron's growth from a small startup to a 15,000-employee company investing over $5 billion in R&D. He emphasizes that the industry "saved the world" during the pandemic, referencing Regeneron's monoclonal antibody treatment and the rapid development of vaccines by Pfizer and others.

The Problem: Unequal Burden of Innovation Costs

Schleifer's central argument is that European countries are "ripping off" the US by not paying their fair share for pharmaceutical innovation. He claims they benefit from American innovation without investing adequately in their own research and development, instead prioritizing social programs. This creates an uneven playing field where the US shoulders the majority of the financial burden for drug development.

The Danger of Price Controls

Schleifer strongly opposes price controls, arguing that they stifle innovation. He uses the example of European drug prices, which are lower due to government price controls. He contends that if the US adopted similar price controls, there would be no incentive for companies to invest in developing new drugs. "If we got those deals here and we lowered the prices just like they were in Europe, there'd be nothing to pay for. There'd be no innovation."

Potential Solutions: Tariffs and Treaties

Schleifer suggests tariffs as a potential solution to address the imbalance in pharmaceutical spending. If European countries refuse to open their markets to US drugs in a fair way, the US could impose tariffs on their goods. The revenue generated from these tariffs could then be used to offset the cost of drugs in the US. He also mentions treaties as another possible avenue for achieving a more equitable distribution of costs.

Copay Assistance for Seniors

Schleifer proposes a solution to improve drug affordability for seniors. He suggests allowing drug companies to directly assist patients with their copays for doctor-administered (Part B) drugs, particularly for expensive treatments like cancer drugs or drugs for blinding eye diseases. He criticizes the current system, where copays can be a significant barrier to access, arguing that the concern about overuse is unfounded. He believes a presidential action could remove the restrictions preventing drug companies from offering this assistance.

RFK Jr. and the FDA

When asked about RFK Jr. potentially leading the FDA, Schleifer expresses cautious optimism. He acknowledges that RFK Jr. "thinks outside the box" and has interesting ideas about food but believes he needs more expertise and better advisors on scientific matters. He hopes RFK Jr. will be open to learning and receiving input from the scientific community.

The Importance of a Healthy Innovation Ecosystem

Schleifer emphasizes the long-term investment required for pharmaceutical innovation, citing Regeneron's 25 years of losses before becoming profitable. He highlights the importance of investors, scientists, and a supportive ecosystem for fostering innovation. He stresses that new drugs don't "just fall down and land in our laps" but require years of research, development, and financial risk-taking.

Conclusion

Schleifer advocates for a multi-pronged approach to ensure the continued health of the US pharmaceutical industry. This includes addressing the issue of unequal burden-sharing with Europe through tariffs or treaties, and improving drug affordability for seniors by allowing copay assistance. He believes these changes are possible and necessary to maintain a thriving innovation ecosystem and ensure access to life-saving medications. He reiterates that President Trump has the power to enact change, particularly regarding copay assistance.