European pharmaceutical bosses urge EU to raise drug prices to US levels, citing innovation benefits. - FT

European pharmaceutical bosses urge EU to raise drug prices to US levels, citing innovation benefits. - FT

European pharmaceutical bosses have called on the EU to increase drug prices towards the much higher levels paid by the US, arguing that this move would encourage innovation. In a letter to the Financial Times, Novartis CEO Vas Narasimhan and Sanofi counterpart Paul Hudson stated that the European Commission should set a spending target for medicines and vaccines to "fairly reward innovation" [1].

The US pays nearly three times as much for branded and generic medicines as other comparable countries, according to US government estimates. The European chief executives proposed that the commission create a benchmark for its member states "in the range of US net prices," which could be adjusted through rebates for some countries. They cited data showing that 30% of medicines approved in the US are not available in Europe after two years, attributing this to lower prices in the EU [1].

The executives emphasized the need for urgency, warning that the threat of tariffs could accelerate the departure of companies from the EU. They pointed to major pharmaceutical investments in the US since Donald Trump returned to power, and highlighted the competition from China, the second-largest pharmaceutical market after the US. The industry has rushed to announce large US investments, with Roche, Novartis, Johnson & Johnson, and Eli Lilly all pledging significant spending [1].

Meanwhile, US President Donald Trump has sought to change Medicare drug price negotiations, proposing a modification to the Medicare drug price negotiation rules that differentiates between small-molecule drugs and biologics. This move could have significant implications for drugmakers, patients, and Medicare's spending on prescription drugs [2].

The European Commission is engaged in dialogue with the pharmaceutical industry, with President Ursula von der Leyen meeting with chief executives to discuss potential tariffs and the bloc's response. The industry has expressed concerns about the uncertainty of tariffs and the waning competitiveness of the European biopharma sector [1].

References:
[1] https://www.ft.com/content/8c66daf4-4b87-447b-b4f5-25fd6a3c37a2
[2] https://www.cnbc.com/2025/04/22/healthy-returns-trump-seeks-to-change-medicare-drug-price-negotiations.html