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# Novartis CEO Brushes Off Tariffs but Says Trump Pricing Controls Would Be ‘Devastating’
April 29, 2025 \|
3 min read \|
[Annalee Armstrong](https://www.biospace.com/annalee-armstrong)
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# Novartis CEO Brushes Off Tariffs but Says Trump Pricing Controls Would Be ‘Devastating’
April 29, 2025 \|
3 min read \|
[Annalee Armstrong](https://www.biospace.com/annalee-armstrong)
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## Vas Narasimhan said on Tuesday that if the U.S. adopts international drug pricing, all companies would have to “relook at their medium- to long-term outlook.”
Novartis has adjusted inventory levels and attempted to tariff-proof its supply chain, leaving CEO Vas Narasimhan confident that the Swiss pharma can navigate the murky waters ahead.
But the real threat, according to Narasimhan, is the possibility that President Donald Trump could revive efforts to lower U.S. drug prices [in line with other nations](https://www.biospace.com/policy/trump-wants-to-bring-back-international-drug-pricing-policy-reuters).
Speaking on Novartis’ first quarter earnings call Tuesday morning, Narasimhan said the “Most Favored Nations” rule “would be devastating to the industry.” Trump unsuccessfully attempted to raise the policy in his first term, but he recently revisited the idea, suggesting he may try to match U.S. drug prices to other nations where the products are cheaper.
The policy threat comes at a time that Narasimhan and his fellow EU pharma leaders are pushing the European Union to raise drug prices.
Narasimhan told analysts on the call that if the U.S. adopts international pricing, pharma companies writ large would have to “relook at their long-term, medium- to long-term outlook.”
“It goes without saying, but I think it’s really important that we keep advocating that the United States should not import European price controls and the European anti-innovation . . . environment into the United States,” Narasimhan said.
The full impact of the pricing controls would depend on how broad the program is, Narasimhan said. “Of course, the devil’s in the details with these things.”
The rule could apply to Medicare Part D, which would see cuts to rebates and other discounts for patients; it could also apply to Part B and “spill over” into Medicaid 340 B pricing controls, Narasimhan said. If it applies to the private market, that scenario would be “painful,” he added.
“We’re well positioned, relatively speaking, but that still doesn’t mean that we would in any way want this to happen given the damage it would do to our ability to invest in R&D, invest in manufacturing, invest in a future pipeline of medicine for patients around the world,” Narasimhan said.
The other pressure on Novartis’ U.S. operations has of course been Trump’s tariffs, which have yet to officially hit the industry. Nevertheless, companies have been reporting [some impacts](https://www.biospace.com/business/tariff-uncertainty-reigns-over-q1-earnings-with-merck-taking-200m-blow-so-far) during their first quarter calls and executives have been [peppered with questions](https://www.biospace.com/business/roche-in-very-very-good-position-to-weather-trump-tariffs-but-m-a-may-suffer) from analysts on how they are managing the potential scenarios.
Novartis is considering the potential disruption, Narasimhan said, but he downplayed the impact in light of the drug pricing policy threats. The company announced a [$23 billion investment](https://www.biospace.com/business/novartis-pledges-23b-boost-to-us-ops-as-trump-intensifies-tariff-threats) over five years into U.S.-based manufacturing earlier this month. The cash will go towards a biomedical research innovation hub in California and two radioligand manufacturing plants in Florida and Texas.
The pledge followed peers Eli Lilly, Johnson & Johnson and others who have similarly earmarked [billions in spending](https://www.biospace.com/business/with-pharma-throwing-billions-at-us-manufacturing-where-is-the-cash-going) on manufacturing expansions in the U.S. in an effort to appease the president.
“Our goal in the coming years is to have 100% of our key U.S. products fully produced, end to end, in the U.S., and we’re on track to do that,” Narasimhan told investors Tuesday.
But he admitted that Novartis could have been boosting its U.S. operations sooner, given the importance of the market.
“We could have done this earlier. I mean, this is a strategic decision to say that \[the\] U.S. is our most important single market from a growth and revenue standpoint,” the CEO said. “We should have recognized it sooner, but now we have recognized, and I think independent of who’s president, it is prudent for us to be able to have our supply chain stable inside the United States.”
Because of the major manufacturing outlay, Narasimhan said Novartis did not feel the need to headline its earnings call with the tariff impacts. “We think it’s manageable. . . . Hence, we don’t place a lot of emphasis on it.”
At the same time, the company has been involved in pressuring the European Union to take drastic steps to boost pharmaceutical innovation in the region. Narasimhan [co-authored a letter](https://www.ft.com/content/de921b3c-988c-4d60-aca1-def85c70d299) sent to the EU with Sanofi CEO Paul Hudson last week.
“We believe there is an opportunity right now . . . to hopefully make the commission consider doing something more proactive to ensure that we have a better environment in Europe,” Narasimhan said.
The CEOs have urged the EU to raise drug prices to better reward innovation. This of course clashes with Trump’s potential Most Favored Nations effort.
“Clearly, prices in Europe have continued to decline, no longer reflecting the innovation that we deliver,” Narasimhan said. “The combination of capping market growth, penalizing new indications \[and\] low prices at launch has really led to 30% of medicines not being launched in Europe or being delayed in Europe. That number will only grow over time.”
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[Drug pricing](https://www.biospace.com/drug-pricing) [Earnings](https://www.biospace.com/earnings) [Tariffs](https://www.biospace.com/tariffs)
[Novartis](https://www.biospace.com/employer/551985/novartis)
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[Annalee Armstrong](https://www.biospace.com/annalee-armstrong)
Annalee Armstrong is senior editor at _BioSpace_. You can reach her at [annalee.armstrong@biospace.com](mailto:annalee.armstrong@biospace.com). Follow her on [LinkedIn](https://www.linkedin.com/in/annalee-armstrong/).
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