RFK Jr. And Big Pharma: Health Secretary Hopeful Answers Pointed Questions On Drugs, Insurance, Trump Exec Orders

Robert F. Kennedy Jr., President Donald Trump's pick for health secretary, addressed a wide range of medical-related topics on Wednesday during a confirmation hearing with the Senate Finance Committee.

While Kennedy’s tone in each back-and-forth varied, depending on the senator, it was evident that Kennedy’s role in the new administration would have a tremendous impact on both pharma and insurance stocks.

Drug Price Negotiation

During one exchange about the high cost of drugs with Senator Catherine Cortez Masto (D-NV), Kennedy said: "Senator, my understanding is that the White House issued an executive order, I believe today, supporting the drug negotiations under the I.R.A. President Trump was very aggressive during his first term about negotiating drug prices."

In reality, Trump has not signed an executive order on the topic since he was sworn into office. A Wednesday news release from the Centers for Medicare and Medicaid Services said that lowering the cost of prescription drugs for Americans “a top priority” for the Trump administration and that he would work to improve the transparency of the negotiation process.

Perhaps Kennedy was recalling Trump’s first term. In 2020, then-45th President Trump signed an executive order on U.S. Medicare drug prices intending to reduce costs. Industry leaders, including Pfizer PFE CEO Albert Bourla, criticized the move. Pfizer was seeking regulatory approval to expand its late-stage vaccine trial at the time.

If Trump signs such an order, it would be a rare show of support from his camp for a Biden-era initiative. In addition to Pfizer, it would also impact major companies like Bristol Myers Squibb, Eli Lilly LLY, Johnson & Johnson JNJ, Merck & Co. MRK, AstraZeneca AZN, Novartis NVS and AbbVie ABBV.

Last month, the Biden administration identified the next 15 drugs as subject to negotiation. The list included Ozempic and Wegovy — two expensive drugs for diabetes and obesity owned by Novo Nordisk A/S NVO.

Insurance Providers

According to the New York Times, Kennedy wasn’t exactly familiar with Medicare and Medicaid, but expressed support for Medicare Advantage, where private insurers provide coverage for elderly Americans.

Kennedy also called out what he considered to be “rapacious behavior by insurance companies." He even suggested he would support some of the efforts undertaken during the Biden administration to crack down on abusive tactics like denying care and overcharging the government.

Traders would be wise to keep an eye on how insurance stocks — especially those tied to Medicaid and Medicare providers — react if Kennedy is sworn in. The major players in this space include:

UnitedHealth Group UNH, the largest Medicare Advantage insurer in the U.S.; Centene Corporation CNC; Elevance Health ELV, one of the largest Medicaid managed care organizations; Humana HUM; CVS Health CVS; Molina Healthcare MOH; and Cigna CI.

What’s Next: Kennedy seeks to be Secretary of Health and Human Services — a position that would put him in charge of the health of the American people.

The title also puts him in charge of the Food and Drug Administration, the National Institutes of Health and the Centers for Disease Control and Prevention.

He will appear before the Senate Committee on Health, Education Labor and Pensions on Thursday.

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