This week has definitely been a bad one for investors and pharmaceutical companies, but disruptions stemming from the Trump administration's policies could end up having huge implications for American patients as well.

Why it matters: The future of the pharmaceutical industry is looking — at least for now — pretty bleak, thanks to a growing pile of threats.

Driving the news: President Trump said this week that pharmaceutical tariffs are still coming, and the prevailing consensus among analysts and investors seems to be that if they do, it'll be chaos. Wednesday, he seemed to signal in remarks to reporters that such tariffs could range from 50% to 200% — much higher rates than generally expected.

• "We're going to put tariffs on the pharmaceutical companies and they're going to want to come back," Trump said.
• But don't forget what this newsletter was about last week: the potential impact of massive cuts to HHS on medical innovation, and the fear that FDA and NIH reductions in particular could ultimately mean fewer breakthrough therapies coming to market.
• In Vitals this week, you read about the pending threat to the FDA user fee system, which president of HPS Group Steven Grossman called an "existential threat."
• At the end of last week, the administration announced it's dropping the Biden administration's proposed rule that would have allowed Medicare to cover anti-obesity drugs, a move praised by budget-minded observers but ultimately a blow to GLP-1 manufacturers and, arguably, the patients who need them.

And then there's the steady stream of ominous news about Health Secretary Robert F. Kennedy Jr.'s vaccine actions and opinions, though he allayed some concerns in the past week when he acknowledged that vaccines are "most effective way to prevent the spread of measles."

• Of course, that doesn't mean anti-vaccine policy is off the table or that he won't later change his tune.
• Plus, Kennedy's animosity extends beyond vaccines. When asked in a CBS interview this week which one thing he'd change about the pharmaceutical industry, Kennedy responded that "pharmaceutical drugs are the third-biggest killer of Americans."
• "Pharma has given us extraordinary inventions and extraordinary medical treatments," he added. "But the profit orientation of the industry has sometimes given us also reverse outcomes and outcomes that, you know, we need to do everything that we can to guard against."
• When asked where the statistic came from, HHS pointed to a paper from 2014. The author, controversial pharma critic Peter Gøtzsche, claims that "major reasons for the many drug deaths are impotent drug regulation, widespread crime that includes corruption of the scientific evidence about drugs and bribery of doctors, and lies in drug marketing."

Health officials have signaled — or straight-up said — they plan to continue the implementation of the Inflation Reduction Act's provision allowing Medicare to negotiate the prices of certain drugs.

• And, as this newsletter reported a few weeks ago, a very influential Trumpworld think tank has recently published a paper about how to end "global freeloading" off of U.S. investment in pharmaceuticals, a signal that some version of Trump's "most favored nation" policy from his first term may still be on the table.

Yes, but: So many of the threats listed above contain the word "potential," or are promised actions that haven't come to fruition yet, in the case of tariffs. And while key FDA officials have left the agency and thousands of positions have been eliminated, it's going to take a while to definitively know the impact.

• That leaves a lot of space for lobbying, policy reversals or for things to simply turn out better than expected.
• Novartis yesterday became the latest drug company to voluntarily announce it's expanding its U.S.-based presence — to the tune of $23 billion over the next five years.

What they're saying: Drug companies "really are in a tough bind. I think they're more screwed than they realize," said a consultant for pharmaceutical companies who is close to the administration.

• "By and large people are out of patience with them and they're screwed."

"We are committed to working with the administration to make America healthier. This will require a comprehensive strategy that includes focusing more on prevention and early intervention, promoting health and wellness and developing new treatments and cures," PhRMA spokesperson Sarah Ryan said.

• "To fulfill this commitment, we also need to retain America's leadership by protecting and strengthening our world-leading, innovative ecosystem and reducing costs for Americans by taking on middlemen and unnecessary bureaucracy."

Today's multithreat environment is the culmination of decades of building anti-pharma animus, said Tevi Troy, deputy secretary of HHS in the Bush administration and a presidential historian.

• And it's notable where many of the threats are coming from. Until fairly recently, Republicans defended the industry, whereas now a Republican administration is leading the charge on many of these policies.
• "They don't have one party that is reliably defending them. That might be why this potential moment might be worse," Troy said. "They definitely are challenged from the friends department."
• Troy recently wrote an essay titled "In Praise of Big Pharma," published in Commentary.

Yes, but: Even those sympathetic to the industry admit it brought at least some of this political isolation on itself, either through questionable business tactics or a lazy approach to political engagement.

Between the lines: Any one of today's threats to pharma would be cause for alarm from the industry on its own — look no further than the freakout over the IRA when it initially passed, despite how watered-down the policy had become from the original version.

• Industry-brought lawsuits against the Medicare negotiations are still working their way through the courts.
• But put all of these threats together at the same time and we're talking about a situation that, to borrow Grossman's term, is much more existential. And patients could end up footing the bill for at least tariff implementation at a time when the public is already fed up with drug prices.

The bottom line: Yes, this week's big topic — tariffs — has a much bigger direct impact on drug companies' wallets than last weeks' massive changes to the federal health bureaucracy. But ultimately the consequences could end up in the same place.

• Everything that we're talking about "goes into the complex decisions about whether a drug is brought to market," Troy said. The danger is in "mak[ing] it so the people who are making the investment decisions say it's not worth the investment."
• Eventually, "you could start to see an erosion of American dominance" — and the absence of medical innovations that otherwise would have come to market.

Yes, Trump delayed the big reciprocal tariffs this week, which pharmaceuticals were already exempt from. But sector-specific tariffs seem to very much still be on the table.

Why it matters: See above re: the long-term threat to new therapies coming to market. But tariffs could also sow a lot of chaos in the shorter-term, which could be felt by millions of patients.

Where it stands: The Trump administration has said the pause doesn't apply to sectoral tariffs, and it's been very clear about pharmaceutical tariffs being on the horizon.

• Trump said on Tuesday that a pharmaceutical tariff announcement is coming "very shortly." U.S. Trade Representative Jamieson Greer told lawmakers the next day that the administration plans to launch an investigation "to see what's appropriate in terms of tariffs," Politico reports.
• Although an investigation could take a while, "we believe the pharma tariffs will be announced in a dual-track approach," Leerink analysts wrote in an investor note yesterday, meaning some could be announced soon while others are announced after an investigation.

Between the lines: The Trump administration's stated intent of imposing pharma tariffs is to bring more drug production back to the U.S., a process that some companies have already initiated.

• But reshoring on a large scale will take years at best and would be very expensive.
• That's led to lots of economists and analysts trying to game out the impacts of tariffs across various time horizons — and who will bear the brunt of those impacts.

The intrigue: As readers of this newsletter know, the drug market is by no means a monolith, and one of the most important distinctions — at least when it comes to tariffs — is between branded and generic products.

• For generics, "tariff pressure ... will test their already low margins, potentially leading to product discontinuations or cost cutting that erodes quality," and shortages are also a risk, argues Brookings' Marta Wosińska in a paper exploring pharma tariffs' impact.
• Generic manufacturers in particular would likely try to pass along the cost of the tariffs, Morningstar analysts wrote in a note, and reshoring to the U.S. is less likely for generics. Branded manufacturers, which have higher margins, would be better situated to absorb some of the costs themselves, the analysts added.
• Drug companies also may not have much of a choice but to absorb the costs, given price regulations in the U.S. and elsewhere. But doing so would have downstream effects on patients if it means drug companies invest less in R&D — exactly the scenario outlined recently by Eli Lilly CEO Dave Ricks.

The bottom line: "We believe sustained tariffs would drive up U.S. drug prices for consumers, because even if companies were to redomicile manufacturing, it will take years and cost more than ex-U.S. manufacturing," Leerink analysts wrote in a separate recently published note.