Despite Trump’s bold claims, medicine prices in Europe won’t rise anytime soon snbchf.com

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Despite Trump’s bold claims, medicine prices in Europe won’t rise anytime soon — The US president’s “most-favored nation” executive order signed on Monday intends to change this by tying US drug prices to those paid by other developed countries. Copyright 2025 The Associated Press. All Rights Reserved.

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United States President Donald Trump has taken aim at European governments for what he sees as undercharging for medicine at the expense of US patients. But raising prices in Europe would face pushback from lawmakers and the public.

This content was published on May 15, 2025 - 14:59

“I’m not knocking the drug companies. I’m really more knocking the countries,” said Trump in the Oval Office on Monday, as he announced an executive order to lower drug prices. “It was really the countries that forced Big Pharma to do things that frankly I’m not sure they really felt comfortable doing.”

The US president’s “most-favored nation” executive orderExternal link intends to change this by tying US drug prices to those paid by other developed countries. This would bring down drug prices in the US by 60% to 90%, according to Trump.

There’s no dispute that US drug prices are high. A study by the thinktankExternal link RAND found that US drug prices are two to three times higher on average than thoseExternal link in other developed nations. The gap was largest for new brand-name drugs, where pharma companies have exclusive rights to sell a product, and therefore don’t face competition.

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Trump pushed a similar policy in his first term as president but was blocked by US courtsExternal link and faced strong pushback from pharmaceutical companies. This time, he believes it is different, because he has the threat of tariffs. This, he hopes, will coerce other countries into paying more for pharmaceuticals, making pharma more amenable to lower prices in the US.

The way Trump sees it, US patients are subsidising healthcare in other countries by filling the coffers of pharmaceutical companies that enable them to invest in innovation. By the Trump administration’s calculations, the US accounts for 4.2% of the world’s population but about 75% of the revenue for pharmaceutical companies.

The only way to lower drug prices in the US without cutting into pharma profits and sacrificing innovation is therefore for other countries, specifically in Europe, to pay more.

However, according to experts, prices aren’t about to rise anytime soon in Europe. And even if they did, it wouldn’t solve the underlying problems that have kept drug prices high in the US.

“Drug prices are a national matter,” said Kerstin Noëlle Vokinger, a professor of law and medicine at the University of Zurich and the federal technology institute ETH Zurich. “The laws and policies can differ across countries.”

Raising prices can’t just happen without “changing these laws,” she said. Unlike the US, where companies operate on a free market, drug prices are regulated in Europe, which means that they can’t just rise at the flip of a switch.

Europe’s rising costs

In Switzerland, which is not part of the European Union, drug prices are regulated by the Health Insurance Act. This law stipulates that, for a drug to be included on the “specialties list” and therefore reimbursed by mandatory health insurance, it has to meet criteria for efficacy, appropriateness and cost effectiveness. The country also compares prices with several European countries and to existing drugs for the disease when it negotiates with pharmaceutical companies to agree on a price.

In the United Kingdom, the NICE (National Institute for Health and Care Excellence) calculates the cost per quality-of-life year gained from a specific treatment to recommend a drug is paid for by the National Health Service. In the European Union, each member state sets its own drug prices once the European Medicines Agency authorises a drug.

Even beyond Europe, Japan sets prices based on comparator drugs. When that isn’t possible, it evaluates costs, including those for the drug’s development, manufacturing and sales. Brazil’s law mandates that the price for the most innovative drugs doesn’t exceed prices charged in nine reference countries, including the US and Canada.

Any push for higher prices would also face strong pushback from the public. Healthcare costs have been rising everywhere. Even with regulation, higher drug prices are partly to blame. For example, a recent reportExternal link from European health insurance bodies found that in 2023, some European countries saw year-on-year increases in drug spending of between 4-13%. New, high-priced therapies, many for cancer and rare diseases, are considered key drivers.

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Rising health costs are the biggest concern of Swiss residents, according to the annual Worry Barometer by Swiss bank UBS, published in December. The Swiss parliament has been discussing a second major healthcare cost containment package since 2020 and numerous healthcare issues have come to a nationwide vote in the last two years.

In January 2024, the Federal Office of Public Health wroteExternal link that the cost of medicine “has risen at an above-average rate in recent years” and is one of the “main causes of the strong growth in [health insurance] premiums”. It estimated that the cost of medication covered by mandatory insurance per person increased by more than 30% in the last eight years.

“Innovation costs, that’s clear,” said Vokinger. “We need to acknowledge and incentivise innovation, but we also need a sustainable healthcare system.”

Trump’s calls to raise prices come on the back of a similar debate in Europe about how to contain costs while keeping the innovation engine running. In a letterExternal link in the Financial Times published on April 23, 2025, the CEOs of both Sanofi and Swiss pharma giant Novartis said that Europe is facing waning biopharma competitiveness because it “is failing to properly value innovation”. They argue that Europe’s price controls were reducing attractiveness. Some companies have pulled their drugsExternal link from Europe after negotiations failed to arrive at a price.

Navigating secrecy

The details of Trump’s plan haven’t been released yet. Whether the most-favoured nation order would only apply to drugs covered by federal programmes like Medicare, which is for seniors, or for all medicine, is still to be determined.

It also isn’t clear what policy tool or leverage the Trump administration could use to move prices, especially since the majority of US healthcare is based on a free market with private insurers. Any attempt to make such a drug-pricing policy widespread would require more government intervention, and therefore an overhaul of the way healthcare is provided and paid for in the country. This could also affect access to medicine in the US, where drugs are often launched first – sometimes years before they are in other countries.

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There’s also a lack of clarity on how the US government will navigate declining transparency around drug prices. Confidential rebates negotiated with pharma companies are becoming more widespread in Europe, making it difficult to know the actual price countries or insurers are paying for a drug. There is also no transparency into how companies come up with their prices, and the share reinvested in research for future drugs.

“We all want fair prices, but this can’t be achieved if every country is only looking out for themselves,” said Vokinger.

Delicate dance

Whether or not Europe raises prices, pharmaceutical companies will still be under pressure to lower drug prices in the US.

President Trump said his team would be approaching the heads of the pharmaceutical companies over the next 30 days. If companies failed to make “significant progress”, the administration may pursue regulatory actions.

Pharmaceutical companies are already bracing for changes. The US accounts for 42% of Novartis revenue and around 50% of that of Roche. The American trade association PhRMA estimates that the most-favoured nation plan could cut the industry’s revenue in the US by up to $1 trillion over a decade.

Swiss pharma giant Roche told various media that if Trump implements the plans set out in the executive order, the company would review its US investment plans. Before the executive order, Roche laid out plans to expand its US footprint through a $50 billion investment over five years.

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The plan also raises questions for the Swiss government. Some 40% of the country’s exports are pharmaceuticals, and of these 60% are destined for the US. A drop in US export value would naturally hit the Swiss economy, but so would tariffs on Swiss exports.

The US originally imposed tariffs on Switzerland at 31%, much higher than on other European countries. But it then suspended these a week later, on April 9, leaving a 10% blanket rate.

In an emailed response to SWI swissinfo.ch, a spokesperson from the Swiss government said that they could not comment on whether pharmaceuticals and drug pricing are part of discussions on trade with the US.

But the experience of the United Kingdom shows that anything is possible. Last week the UK and the US governments struck a trade dealExternal link, which mentioned plans to “negotiate significantly preferential treatment outcomes on pharmaceuticals”. The deal states that the UK will “endeavour to improve the overall environment for pharmaceutical companies” operating in the country.

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