By Josh Nathan-Kazis

The drug industry offered its first significant sign of pushback against the Trump administration late Tuesday, after a day of dramatic cuts to U.S. public health infrastructure.

Drug stocks tumbled Tuesday amid deepening Wall Street unrest over the Trump administration's extensive job cuts at the Food and Drug Administration and the forced departure of a top FDA official -- who left amid a dispute with Robert F. Kennedy Jr., the secretary of health and human services, over vaccine safety.

Drugmakers had previously aired zero critiques of Trump and his health policies since his election, even as he appointed Kennedy, a prominent vaccine skeptic, to lead the Health and Human Services Department.

"The opportunities outweigh the risks," Pfizer CEO Albert Bourla said in January, summing up the drug industry's public messaging on President Donald Trump and Kennedy.

But as the magnitude of those risks became apparent Tuesday, the drug industry lobby group PhRMA registered some modest objections.

"The rapid and substantial changes at FDA this week raise questions about the agency's ability to fulfill its mission to bring new innovative medicines to patients," the group's senior vice president of public affairs, Alex Schriver, said in a Tuesday evening statement.

It wasn't a full-throated denunciation of Trump or of Kennedy, but it was the first significant criticism of the administration that PhRMA has issued so far.

Investors had dumped shares of U.S. drug stocks on Tuesday. Pfizer shares closed down 3.2%, Merck shares 2.9% lower, Bristol Myers Squibb shares 2.4%, and Eli Lilly shares 2.5%. The Health Care Select Sector SPDR Fund, which tracks healthcare stocks in the S&P 500, fell 1.8% while the broader S&P 500 closed up 0.4%.

The FDA terminations on Tuesday came as Kennedy's HHS began to carry out the up to 10,000 new job cuts it had promised across the FDA, Centers for Disease Control and Prevention, and other public health agencies.

Multiple top FDA leaders were sent packing Tuesday, including Dr. Peter Stein, who had been the longtime head of a key office responsible for reviewing applications for new medicines, and Dr. Peter Marks, a top FDA leader.

A well-functioning FDA is essential not only to the drugmakers, who rely on it to approve their medicines, but also to insurers, who need it to make sure they're only asked to pay for drugs that work.

Some prominent Wall Street voices have been calling on the drug industry to speak openly against Kennedy's leadership. In a note Monday, two Cantor Fitzgerald analysts wrote that the forced departure of Marks, the FDA leader, was a "step too far," and that the White House should remove Kennedy. They wrote that biopharma leaders should object to Kennedy's leadership in order to save lives.

"This has nothing to do with biopharmaceutical sales," the analysts wrote. "Several industry leaders have been playing nice with the administration in an effort to protect their businesses. It's time to take a stand against something that is more important than bottom lines."

The drug industry's strategy since Trump's victory in the presidential election in November has been to offer support and collaboration with the administration, in the hopes that Trump might take their side on issues like drug rebates.

That strategy seemed to be bearing fruit in mid-December, when Trump echoed the longstanding drug industry position that high U.S. drug prices are the fault of pharmacy benefit managers, and said he would "knock out the middleman and... get drug costs down." Shares of the large insurers that own the pharmacy benefit managers fell on the comments.

Since then, though, holes have emerged. Trump allies have, in recent weeks, sought to resurface a proposal from the first Trump administration that would slash drugmaker revenues by pegging prices the U.S. government pays for prescription drugs to the lowest prices paid in other wealthy countries. Though the president has yet to endorse the resurfaced plan, he has raised the question of drug prices, and some action on drug prices seems likely.

Now, the layoffs at FDA seem to be pushing the industry to update its approach to Trump. How the president responds remains to be seen.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 02, 2025 11:50 ET (15:50 GMT)

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