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J&J CEO warns of 'unintended consequences' of Trump's drug-price reduction plan

  • "There are going to be changes in the pricing system" for prescription drugs, Johnson & Johnson chief Alex Gorsky acknowledges.
  • However, Gorsky expects J&J's pharma business to successfully navigate any changes in health care coming out of Washington.

Johnson & Johnson Chairman and CEO Alex Gorsky told CNBC on Wednesday he expects the company's pharmaceutical business will be able to successfully navigate any changes in health care as a result of President Donald Trump's new plan aimed a reducing drug prices.

At the same time, Gorsky warned the Trump administration to be careful not to impose "unintended consequences" on the U.S. health-care system, which is incredibly complex. He did not elaborate.

"We know there are going to be changes in the pricing system. That's why we have to continually innovate," Gorsky said in a "Squawk Box" interview with CNBC's Meg Tirrell. He added that J&J, whose pharma unit accounted for 47 percent of 2017 net sales, is still analyzing Trump's plan, which was unveiled on Friday.

Trump's plan, among other changes, will consider an alternative system for buying Medicare Part B drugs, including many cancer treatments and infused biotech drugs.

J&J's top-selling arthritis drug Remicade, which is covered under Part B, could be affected by Trump's plan. Gorsky said the company has looked at its entire portfolio and it's reinventing it. He said two other drugs — Simponi and Stelara, designed to treat autoimmune diseases — have actually exceeded sales of Remicade.

Earlier Wednesday, J&J announced it would relaunch its baby-care products, which saw a 20 percent sales decline since 2011 to $1.9 billion.

Speaking just hours before the company's every-other-year consumer products and medical devices analyst meeting, Gorsky said J&J is trying to be more like a "start-up" with its baby brand, focusing on the changing needs of "millennial moms," who favor baby products with more natural ingredients.

"We realize that over the past few years that we probably got a little bit behind the curve," he said. "But what you're going to hear about today is that we totally reformulated the brand where we're changing and making sure we're using more natural ingredients."

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