Biotech and Pharma

Eli Lilly CEO rebuffs Trump's attack on drug prices

Key Points
  • In his first State of the Union address, President Trump promised that drug prices will come down this year.
  • Attention is focused on drug pricing because consumers are paying more out-of-pocket costs, Eli Lilly CEO Dave Ricks tells CNBC.
  • Ricks says he welcomes Amazon, J.P. Morgan and Berkshire Hathaway's plan to join forces to reduce employee health-care costs.
Eli Lilly CEO: New products driving top line growth

Eli Lilly CEO Dave Ricks says despite what President Donald Trump says about prescription drugs, "they remain the best deal going in health care."

Trump repeated a frequent attack against drug prices in his first State of the Union address Tuesday night. He has previously accused pharma companies of "getting away with murder," but he hasn't done much in his first year in office to bring prices down. That will change this year, Trump promised.

The problem is an insurance-design issue, Ricks told CNBC's "Squawk Box" on Wednesday. The attention is on drug pricing because consumers are increasingly bearing the cost of prescriptions, he said.

"There needs to be real changes," Ricks said. "There's no reason why consumers should be paying much more for their medications than they do other health products because medications are the most efficient part of the system, in our eyes. We'd like to see real change there."

He's not the only one.

Amazon, J.P. Morgan and Berkshire Hathaway announced on Tuesday they will work together to create a company that's "free from profit-making incentives" and uses technology cut their employee health-care costs.

Ricks said his reaction to the news was "good," because Jeff Bezos, Jamie Dimon and Warren Buffett, who head the respective companies, are thought leaders.

Lilly is self-insured, meaning it bears the financial risk of its employees' medical costs, and has a "heavy hand" in designing its own programs, Ricks said. The company uses Anthem for medical benefits and CVS for pharmacy benefits, he said.

"We welcome choice and competition in health-care markets, and I look forward to seeing what they come up with," Ricks said. "Actually, I don't think it's a bad thing."