J&J CEO Joaquin Duato Seeks Common Ground with Trump Administration, Opposes Tariffs as Drug Pricing Solution

Oct 15, 2025 17:03 CST Updated 17:03

Johnson & Johnson

Medical Device R&D and Manufacturer

Abstract:Facing the Trump administration's revived "Most Favored Nation" (MFN) drug pricing policy and tariff threats, Johnson & Johnson CEO Joaquin Duato broke his silence, explicitly stating his willingness to work with the government to find common ground. However, he firmly opposed using tariffs to push for industry reshoring, emphasizing that tax incentives are the reasonable path forward. In this game of chess between pharmaceutical companies and the government, Johnson & Johnson’s statement may become an important weathervane for industry negotiations.

Dialogue Rather Than Confrontation: Johnson & Johnson's Negotiation Stance

As the pricing battle between the pharmaceutical industry and the government intensifies, Duato recently publicly responded to policy pressures from the Trump administration. He stated that Johnson & Johnson is actively seeking communication channels with the government, hoping to find a balance in the negotiation of the "Most Favored Nation" policy.

Behind this statement lies the Trump administration's aggressive policy offensive. In May this year, Trump signed an executive order to restart the MFN policy, requiring pharmaceutical companies to align drug prices in the U.S. with the lowest prices in other developed countries. He also sent letters to 17 pharmaceutical companies, including Johnson & Johnson, demanding commitments to lower prices within a set timeframe. This policy had previously been suspended due to procedural issues, but after expanding its scope of application, it has once again caused significant disruption in the industry.

Tariffs Become a "Stumbling Block": Supply Chain Warns of 400 Million in Losses

Compared to the negotiating space of MFN policies, Duato sharply criticized tariff policies. He explicitly stated that if the goal is to bring the pharmaceutical industry back to the U.S., imposing additional tariffs on medical products is "completely the wrong approach."

Johnson & Johnson's financial report data shows that the announced tariff policy is expected to result in a $400 million profit loss for the company, with the medical device division being hit the hardest. Duato explained that the global pharmaceutical industry chain has long formed a stable division of labor, and tariffs will directly disrupt the supply chain, potentially leading to drug shortages. He gave an example, stating that active pharmaceutical ingredients mostly rely on imports, and even if factories are built in the U.S., it would be difficult to avoid the impact of tariffs, with the final costs possibly being passed on to patients.

Industry Resonance: Tax Incentives Are the Key to Breaking the Deadlock

While opposing tariffs, Duato proposed an alternative: incentivizing domestic investment through preferential tax policies. He recalled that the 2017 tax reform under the Trump administration had significantly boosted investment in pharmaceutical manufacturing, which was more effective than mandatory tax increases.

This view has been tacitly echoed in the industry. Previously, Pfizer gained tariff exemption by committing to a $70 billion investment in China, demonstrating the feasibility of policy guidance. However, industry experts generally believe that the high cost of drugs in the U.S. stems from multiple factors such as the complexity of the reimbursement system. Simply pressuring pharmaceutical companies to lower prices or imposing tariffs cannot resolve the issue fundamentally and may instead weaken the motivation for research and development.

With the government-set negotiation deadline approaching, Duato's statement offers a possibility for dialogue in the current deadlock. However, whether tax incentives will replace tariffs or if the MFN policy will be enforced, this博弈 affecting the global pharmaceutical price structure still awaits its final outcome.

Reference source: https://www.fiercepharma.com/pharma/jj-chief-duato-expects-find-common-ground-trump-administration-industrys-mfn-talks-play-out