Trump's drug plan risks higher medicine prices in Europe

Irish Times

4 hours ago

European healthcare systems face paying more for drugs or losing access to new treatments as a result of
Donald Trump's
push for the global medicines industry to cut prices in the US, industry experts have warned.
Global drugmakers are in talks with the Trump administration as he pressures them to voluntarily reduce their prices for American patients.
Experts say the US president's plan risks significant consequences for European healthcare systems, as both the Trump administration and pharmaceutical companies are likely to seek price increases in Europe to allow for cheaper costs in the US.
Trump's so-called most favoured nation drugs policy, set out in an executive order in May, is hanging over the industry's negotiations about changes to its UK pricing agreement, which are due to conclude this month.
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Drugmakers are using the policy as an argument to bolster their case for charging the UK's National Health Service (NHS) more, people familiar with the matter say. The industry fears that if it settles for less with the NHS, the Trump administration could try to cut US drug prices to UK levels.
European countries are likely to resist significant price hikes because budgets are stretched and many contracts with companies are long. This could mean drugmakers end up not launching new medicines in markets where the price will be much lower.
Trump has accused Europe of being among the world's 'foreign freeloaders' that he says enjoy cheap drugs on the back of the US healthcare system, which pays sky-high prices for branded medicines.
The Most Favoured Nation policy pushes drugmakers to offer US patients the lowest price they charge in any country where GDP per capita is at least 60 per cent of US levels.
Dustin Benton, managing director at Forefront Advisors, a political risk research firm, said the policy is built on the premise that the administration can pressure European healthcare systems to pay more for drugs.
'The idea being that if Europeans pay more for drugs, then Americans can pay less for drugs', he said, adding that the medicines industry was discovering the 'downside of being multinationals'.
'We think the ultimate goal is if the price in the US is $100 (€86), and in Europe it is $20, Trump wants Europe to come up to $80 or $90, and the US to come down to the same,' said Philip Sclafani, a partner in PwC's life sciences practice.
Trump has already shown signs of trying to put pricing pressure directly on other countries through trade deals.
The EU would struggle to include promises on medicine prices in its potential trade deal with Washington because member states control their own budget negotiations on drugs.
But the UK-US trade deal includes a promise from London that it will 'endeavour to improve the overall environment for pharmaceutical companies operating in the United Kingdom', without specifying what this might mean.
The UK is likely to resist dramatic changes to the methodology it uses to value drugs, but it could present any changes to its pricing deal as a victory for Trump, if it could also make that politically palatable at home by winning additional investment from drugmakers.
The UK caps the total bill for branded medicines with a clawback tax, and assesses each drug for value for money in a stringent process.
Most Favoured Nation threatens pharmaceutical companies' business models, which are based on a large US market where drug prices are on average about 2.3 times higher than in 32 other OECD countries, according to research by the Rand Corporation for the US health and human services department.
Companies are likely to try to offer small voluntary changes to the Trump administration. If those fail, legal challenges could follow. A court stopped the policy when Trump tried to introduce it towards the end of his previous administration, but on the grounds that he did not allow enough time for consultation.
The industry shares some common ground with the Trump administration, however, as it has for a long time argued that Europe should pay more for drugs.
Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry, said Most Favoured Nation was a 'validation of what we have been saying for a long time': that the UK will miss out on investment because it pays so little for drugs.
Sclafani said the US administration is asking a lot if it expects the outcome to be an ideal 'pie in the sky world' where America spends less on healthcare and European countries are pushed to spend significantly more, even though this was achieved with Ukraine and defence spending.
'It would be very tough for most European populations to say the price of a drug is going to double,' Sclafani said.
The UK health department said it had 'well-established and effective mechanisms for managing the costs of medicines and has clear processes in place to mitigate risks to supply'.
The Danish ministry of the interior and health said there was 'free pricing' on pharmaceuticals in Denmark and there would continue to be so, while Germany said the country's assessments of a drug's benefits played a 'crucial role' in pricing. – Copyright The Financial Times Limited 2025