Could European drug prices increase following Trump’s pharma policy?
Earlier this month, The Trump administration launched TrumpRx.gov, a government website that allows consumers to purchase prescription drugs directly. The move is part of a broader overhaul of US pharmaceutical policy, which includes letters sent to 17 drugmakers demanding lower domestic prices and the enforcement of the Most Favoured Nation (MFN) (lowering US drug prices to those in other developed countries).
“Europe’s going to have to pay a little bit more,” Donald Trump said. “The rest of the world is going to have to pay a little bit more, and America is going to pay a lot less.”
Trump’s message is clear, but what impact might these policies actually have on global, and particularly European, drug pricing?
TrumpRx.gov represents a major policy shift. By selling directly to consumers, the administration hopes to bypass intermediaries and bring down prices for Americans. But this shake-up is already rippling through the global pharmaceutical market.
Last month HBI covered Eli Lilly’s Mounjaro UK price increase by 170% amidst Trump’s push for cheaper US pharma prices. Novo Nordisk followed suit, announcing plans to sell its weight-loss treatments Ozempic and Wegovy directly to U.S. consumers without going through pharmacies or insurers.
Pharma giant Pfizer became the first big company to agree to a pricing deal with the implementation of a DTC website as well as adherence to the MFN pricing policy for prescription drugs covered under medicaid. In return, Pfizer received a three year grace period from US pharmaceutical tariffs.
On October 10th, Anglo-Swedish pharma company AstraZeneca also agreed to discount medicaid prices as well DTC drug sales on Trump’s website in return for a three year tariff relief. Medicaid represents less than 5% of the company’s US revenue.
ING modeled a $1.9 billion in cost savings under the One Big Beautiful Bill, which could potentially come at the cost of pharmacy benefit managers. Additionally, since the US imports a majority of its generic drugs (10% of the prescription drug market), the savings could be undermined by a $7 billion cost from import tariffs.
Amidst these fruitful price negotiations with the US, AstraZeneca and MSD have paused investments in the UK. UK ministers are now preparing to raise the amount the NHS pays pharmaceutical firms for medicines by up to 25% following weeks of discussion with both the Trump administration and pharmaceutical companies.
The UK has had a rocky relationship with big pharmaceutical companies in the last year as many have an issue with the National Institute of Health and Care Excellence (NICE), the body that provides guidance to the NHS on what treatments, procedures and technologies to pursue. The industry has also labeled the voluntary scheme for branded medicines pricing, access and growth (VPAG), which allows the government to limit expenditure by forcing pharma companies to pay rebates when prices rise too quickly, as “unsustainable”.
The labour government has proposed changes to the cost-effectiveness thresholds by which new medications are assessed for the NHS. It’s a delicate balancing act, and one that comes at a time when relations between the British government and the pharmaceutical industry are already strained.
Despite Trump’s rhetoric, many analysts believe Europe’s exposure is limited. Joan Costa-i-Font, Professor of Health Economics at the London School of Economics, told HBI:
“The idea proposed by Trump is simply absurd and will have little real impact. It only highlights how little the Trump administration understands about health care. There are two main reasons why Europe is not vulnerable to such policies.
“First, unlike in the US, Europe only funds a selective subset of new products that are proven to be highly cost-effective. In the US, by contrast, virtually everything is funded as long as there is demand. Second, the products that we do purchase in Europe typically become available 2–5 years later than their launch in the US. Raising prices in Europe would therefore only make sense if we were to gain access to these products at the same time as the US—which may not even be feasible.”
Diederik Stadig, Sector Economist, TMT & Healthcare at multinational bank ING, echoed this, telling us that TrumpRx will not have a material effect on US drug prices and the DTC channel will not prompt a strong reaction from other countries.
“For consumers, price impact will be limited,” Stadig said. “There is pressure on European regulators to increase prices for branded drugs, which could happen gradually, but for generics there will be limited effects.”
It looks like we’re in for a period of policy posturing and strategic repositioning. Pharma companies may adjust pricing structures at the margins, but Europe’s health systems, with their cost-effectiveness assessments and delayed launches, are well insulated from US pricing shocks in the short term.
The bigger risk is that investment in R&D by pharma companies could be negatively impacted, either because they expect lower average prices or because of policy uncertainty. And everyone would suffer from an impoverished drug pipeline in the long term.
We would welcome your thoughts on this story. Email your views to Anjana Madangarli or call 0207 183 3779.
