Trump Wants RFK Jr. To 'Go Wild' On Health Care. What This Means For Biotech Stocks.
ALLISON GATLIN
It was a bizarre TV appearance considering the image Robert F. Kennedy Jr. has cultivated. The new health secretary, known to be hyper health conscious, was raving about the fries at Steak 'n' Shake after the fast food chain announced its plan to transition away from seed oils to supposedly healthier beef tallow.
"Steak 'n' Shake has been great," he said. "We're very grateful to them for RFKing the french fries."
But RFKing might not benefit everyone, including the biopharma industry.
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Biotech stocks have fallen markedly since Election Day. Investors are worried Kennedy, a controversial vaccine critic, could upend vaccine policies even as a measles outbreak grips the nation. There are also concerns RFK Jr. will upset the obesity drugs market and push scientifically unsound ideas.
Kennedy has already made good on a plan to cut thousands of jobs at health agencies. One Food and Drug Administration employee described the sudden firings as a "bloodbath." Among the ousted are Peter Marks and Peter Stein, two high-profile officials at the FDA. RBC Capital Markets analyst Brian Abrahams described the haphazard cuts as "chaos," suggesting "mass cuts are being implemented without regard for any particular policy, continuity, senior level or ability."
If anything is certain, it's that the Trump administration is embracing the tech industry's famous mantra, "Go fast and break things," says David Johnson, chief executive of health care and economics advisory firm 4sight Health.
"On the other hand, they seem to be doing it with a meat cleaver," he said in an interview. "There are a lot of legitimate issues on the table, lots of improvements we could choose to make and we have new dynamics coming into the political arena."
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Will RFK Jr. 'Go Wild?'
President Donald Trump has said he would let RFK Jr. "go wild on health." In the two months since his Senate confirmation, that's a fair description of what has happened.
In late March and early April, Kennedy fulfilled rumors that he would cut 10,000 full-time jobs across the Department of Health and Human Services, which he now leads. The SPDR S&P Biotech exchange traded fund, a key barometer for biotech stocks, fell 4% on March 31 and another 3.7% on April 1 as the mass firings kicked off.
Kennedy later said some of the fired employees would have to be hired back and some of the shuttered studies would be restarted.
"That was always the plan," he told ABC News.
Marks, the director for the Center for Biologics Evaluation and Research, resigned rather than give the new health secretary "subservient confirmation of his lies and misinformation." In his role, Marks oversaw the division in charge of reviewing vaccines, genetic medicines and cell therapies. The next day, Stein was reportedly placed on administration leave rather than accepting a reassignment. Stein led the Center for Drug Evaluation and Research's Office of New Drugs.
"The FDA as we've known it is finished," Robert Califf, a former FDA commissioner, said in a LinkedIn post. "I believe that history will see this (as) a huge mistake."
Funding Cuts Could Be Damaging
Also, last month, the federal government terminated thousands of grants awarded through the National Institutes of Health, Centers for Disease Control and Prevention and other agencies to research myriad diseases and issues, including HIV, substance abuse, mental health, Alzheimer's disease and gender-affirming health care.
Experts say the impact on research will be immeasurable, slowing the discovery of new treatments and biomedical innovation in the U.S. and abroad.
Shams Afzal says the U.S. needs to prepare to cede much of its innovation lead in medicine to China. Afzal is the managing director at Carnegie Investment Counsel, an investment strategies firm. He noted that China has spent years becoming a biopharma powerhouse.
"That's going to change the trajectory of how cancer research gets done and any, frankly, early research gets done," he told Investor's Business Daily, referring to the grant cuts. "Long term, let's say this change remains in place for the next four years, then you're looking at a substantial ceding or basically giving up on the competitive advantages we have built over the last few decades to China."
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A 'Frantic Rush' Of Changes
On top of the mass firings, Kennedy has made headlines for mixed messaging around vaccines even as the number of measles cases tops 600.
The FDA canceled its annual meeting to discuss this year's flu shots and then, in an unprecedented move, simply provided its own guidance on the strains to include in the vaccines. HHS is also reportedly mulling clawing back the funds Moderna (MRNA) received to develop a bird flu vaccine.
In his resignation letter, CBER's Marks referenced RFK Jr.'s long history of vaccine doubt.
"Undermining confidence in well-established vaccines that have met the high standards for quality, safety, and effectiveness that have been in place for decades at FDA is irresponsible, detrimental to public health, and a clear danger to our nation's health, safety and security," he said.
Cybin (CYBN) Chief Executive Doug Drysdale says there's been a "frantic rush" of changes in the second Trump administration. Policy moved slower during Trump's first tenure, he says. Cybin is a small biotech stock tied to psychedelic treatments for mental health conditions.
"I think there's been a bit of a rush and we're seeing some backlash from that publicly," Drysdale told IBD. "But I suspect that will calm down eventually and reality will kick in. I think this is just the early stages of being fresh into new roles."
Avoiding RFK Jr.'s Skepticism
Some of the policy changes seem bent on avoiding RFK Jr.'s ire.
According to ProPublica, employees at the National Cancer Institute — under the NIH umbrella — have been told to avoid "controversial, high profile or sensitive" topics in communications. These include vaccines, fluoride, peanut allergies and autism. Researchers requesting NIH funding have been told to scrub any references to messenger RNA vaccine technology from their applications. This is the technology behind the Covid vaccines created by Moderna, and by Pfizer (PFE) with biotech company BioNTech (BNTX).
Further, federal officials say the CDC will look for a potential link between vaccines and autism, despite decades of scientific research disproving that theory. The new Make America Healthy Again commission will also reexamine the childhood vaccine schedule issued by the CDC.
"His positions on vaccines are ludicrous," says Johnson, the CEO of 4sight. He noted Kennedy's long history of speaking out against vaccines. "You could argue we had eliminated measles in the year 2000 and you could argue he bears some responsibility for the fact we have an outbreak again."
But Dr. Yan Katsnelson, a cardiac surgeon and chief executive of a health care network called USA Clinics Group, says RFK Jr. just wants people to ask questions.
"In medicine, many times we have a position where certain points of view went unchallenged for decades," he told IBD. "Even the same researchers in the beginning of their career had one theory and in the second portion of their career, they completely dismantle the same theory."
Dismantling Settled Science
To be sure, there are benefits to raising questions in science and health. Decades ago, the scientific community agreed that built-up plaque in the brain called beta amyloid caused Alzheimer's disease. Today, scientists acknowledge that while amyloid is a hallmark of Alzheimer's disease, it's not the cause.
Biogen (BIIB) with partner Eisai (ESAIY), and Eli Lilly (LLY) make drugs that remove beta amyloid from the brain. But their drugs — both approved by the FDA — only slow cognitive decline. They don't stop or reverse it. RFK Jr. has made strong statements on such Alzheimer's treatments.
"NIH has funded 800 studies on a fraudulent hypothesis and we've lost 20 years in figuring out ... a cure for Alzheimer's," RFK Jr. said in front of the Senate. "And that's just one example. I could give you hundreds. We need to end that."
Kennedy has suggested 20% of NIH funding should be directed to replicating studies with questionable outcomes. But critics say that's a slippery slope considering RFK Jr.'s years of speaking out against the safety or effectiveness of vaccines. Just after his confirmation, Kennedy doubled down on his view that vaccines don't undergo enough safety testing. Most experts say that's bunk.
RFK Jr. Acknowledges Measles Outbreak
RFK Jr.'s handling of the measles outbreak has been controversial.
In a Fox News editorial, he acknowledged the seriousness of the measles outbreak. Initially, he touted the use of vitamin A to treat measles. Experts say vitamin A deficiency can make measles more severe. But vitamin A supplements don't treat measles. Later, he recommended the measles, mumps and rubella vaccine, also called the MMR shot.
The back-and-forth is troubling, health industry experts say.
Veteran health care executive Web Golinkin says RFK Jr. has a huge megaphone. He is able to reach a broad audience that includes parents worried about the side effects of vaccines. That worry was compounded exponentially during the pandemic when the first Covid vaccines emerged using new mRNA technology. But hesitancy has spread to vaccines that use older, protein-based technology.
"Is he going to use his megaphone in a responsible way and understand the impact he has?" Golinkin, who has led major health companies, including FastMed and RediMed, told IBD. If he doesn't, it could lead to a "huge health problem," he said.
His pronouncements have also been bad for biotech investors. Biotech stocks tied to vaccines have taken a hit this year. Part of it is due to the tough macro. As a whole, the market has slumped amid an escalating tariff battle pitting the U.S. against the rest of the world. On April 8, Trump said he would soon put forth "major" tariffs on drug imports, reversing hopes that pharmaceuticals would be exempt from the trade war. The following day, Trump delayed his tariffs plan for 90 days for more than 75 trading partners, but Treasury Secretary Scott Bessent said sectoral tariffs are still coming, meaning drug imports aren't off the hook.
The biotech industry group has fallen more than 28% since Election Day. Meanwhile, the S&P 500 has fallen 4.5%, while the Dow Jones Industrial Average has slipped about 3% as of Wednesday's close.
Focus On Chronic Disease
One key change under Kennedy is a renewed focus on chronic disease.
In his Senate testimony, RFK Jr. claimed infectious disease research receives far more federal funding than chronic diseases. That's wrong, according to an NBC News report. Infectious diseases received $8.1 billion in NIH funds last year. In comparison, cancer — a category of chronic diseases — received about that same amount of funding in 2024.
But Kennedy is correct that chronic diseases are on the rise. Several cancer types, including colorectal cancer, as well as obesity and type 2 diabetes have also become more prevalent. RFK Jr. wants to focus on improving the health of the American food supply to slow the rise of obesity. He says "processed foods" in schools are making children sick.
"We meet patients too late," said Katsnelson, the cardiac surgeon. "He wants to meet the problem before it arrives. Make food healthier. Do what we can to prevent disease. It goes against the business of medicine. The business of medicine is to treat patients as long as possible. To produce revenue."
However, RBC Capital Markets analysts say reducing chronic disease is a fairly vague goal — and it can't be accomplished through personnel and funding cuts.
To reduce chronic disease requires "some level of a pro-innovation stance," they said in a report.
But William Soliman, CEO of the Accreditation Council for Medical Affairs, says companies are already feeling the brunt of personnel cuts. The ACMA provides voluntary accreditation for pharma reps. At a recent conference, Soliman said he spoke with a vice president who said his company's review for a rare disease drug was delayed by three months after the reviewer was let go.
"I'd like to understand the logic behind less people and less staff, but you want to speed up the (drug approval) process," he told IBD.
To that point, RBC Capital Markets analysts said in a recent report that the "leaner, meaner, greener FDA (is) not a great recipe for health care."
"Our consultants all felt a reorganized Agency with less horsepower will ultimately lean more negatively toward complex or earlier drug approvals — reversing a decades-long evolution," they said.
Anti-Obesity, But Also Anti-Obesity Drugs
RFK Jr. also has drawn criticism for his views on a fast-growing biopharma trend: weight-loss drugs.
Despite his goal of curbing chronic diseases, he has been skeptical of blockbuster weight-loss drugs from Lilly and Novo Nordisk (NVO).
"If we just gave good food, three meals a day, to every man, woman and child in our country, we could solve the obesity and diabetes epidemic overnight," he told Fox News.
But other factors, including genetics, are tied to diseases and obesity, industry leaders and experts argue.
Novo's Wegovy and Lilly's Zepbound aren't "silver bullets," says Golinkin, the former health care CEO. They lead to the loss of fat and lean muscle mass alike. In older people, especially, the loss of lean mass can be particularly problematic, leading to the risk of falls and fractures.
RFK Jr.'s views on weight-loss treatments are also at odds with other prominent Trump allies, including Dr. Mehmet Oz, the TV celebrity Trump tapped to lead the Centers for Medicare and Medicaid Services and a known fan of these GLP-1-targeting drugs. Another known weight-loss drugs fan is Elon Musk, who heads the Department of Government Efficiency and has called himself "Ozempic Santa."
Earlier this month, the Trump administration said it wouldn't allow Medicare and Medicaid to pay for the cost of weight-loss drugs. This would have massively expanded access, likely even pushing commercial insurers to cover them.
RFK Jr. Takes On Big Food
To be sure, Kennedy's skepticism about weight-loss drugs isn't necessarily unfounded, says ACMA's Soliman.
"This might be a quick fix for a lot of people, especially for younger people," he said. "And then the question is, 'What are you going to do? Keep these people on GLP-1 agonists forever? Is that the strategy? What's the strategy? And if you did that, what are the long-term consequences?' "
Instead, RFK Jr. is eyeing the food industry — in particular, processed foods. And he's not alone. Dr. Mark Makary, the new FDA commissioner, has called food in the U.S. "poisoned" and pointed out the differences between food supply in the U.S. and abroad.
By 2030, nearly half of all U.S. adults will have obesity, according to the National Library of Medicine. Of those, nearly one in four will have severe obesity.
"His desire to address that issue is well founded," said Golinkin, the former health care CEO. But "he's working for an administration that's anti-regulation. It's going to take some regulations and new regulations in order to get the food industry pointed in the right direction. There's no evidence they're going to reform themselves."
Pricing Pressure On Biotech Stocks
Part of that discussion could unduly pressure Novo, Lilly and others working on anti-obesity meds.
The two shots on the market both go for north of $1,000 a month before insurance and reimbursement. In the wake of an FDA decision, compounding pharmacies can no longer make less expensive knockoff versions of the two drugs. Instead, they'll have to focus on dosages Lilly and Novo don't make.
But the weight-loss drugs won't be the only ones facing RFK Jr.'s skepticism.
Like Trump, Kennedy has said the U.S. is on unfair footing when it comes to drug prices compared to other countries. This "most favored nations" approach — touted by Trump during his first presidency — would hurt biotech stocks, RBC analysts say. He has also expressed openness to waiving drug patents.
The latter would "potentially devastate the biopharma segment if actually implemented," they said.
Katsnelson, the cardiac surgeon, said the U.S. is spending an increasing amount of its gross domestic product on health care costs. The U.S. has spent around 17% to 19% over its GDP on health care over the past five years, according to CMS.
Part of that is because the health care system is exhaustively complex, says 4sight's Johnson.
"Our health care system overall operates on artificial economics," he said. "How to optimize the volume of revenue — essentially how to get to the most money for doing the things we do. Not to drive the best outcomes for the lowest cost."
RFK Jr: 'An Unpredictable Renegade?'
Ultimately, the impact of RFKing biotech stocks depends on one key question, RBC analysts say.
"If he maintains the persona he perpetuated at the hearing – as an agent to carry out Trump's agenda, rather than an unpredictable renegade inclined to upend the U.S. health care system – it may not be as damaging for the sector as originally feared," they said.
Biotech stocks, though, are trading below their key moving averages in mid-March and have a middle-of-the-road Relative Strength Rating of 70. This means the industry group ranks below the top 30% of all stocks when it comes to 12-month performance, according to IBD Digital.
Soliman, the ACMA chief, says RFK Jr. will undoubtedly make things more difficult for the biotech segment. And, he says, that might not necessarily be a bad thing.
"What he's trying to do is making the industry a little more accountable," he said. "I think he may make things a little more difficult. But his intentions are good."
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