US drug-price cuts could delay access to medicines in Europe

In May last year, US President Donald Trump proposed bringing American drug prices in line with the lowest prices charged in other wealthy nations under a policy known as most-favoured-nation (MFN) pricing. The measure could have unintended consequences.

A modelling study in The Lancet suggests European patients could face longer waits for some innovative medicines if US price cuts are based on lower prices in countries such as Germany and France.

Researchers examined 195 patented medicines accounting for $87.9 billion in annual US spending. For three-quarters of the drugs, the revenue companies could lose from US price reductions would exceed their combined annual sales in the countries used as price benchmarks.

To limit US losses, pharmaceutical companies may have an incentive to postpone launches in the lowest-priced reference markets. A later European launch would mean lower European prices would not immediately have to be mirrored in the US.

“US policies could affect access to medicines around the world,” said Kerstin Vokinger of ETH Zurich and the University of Zurich, a study author, in a press release.

The burden would ultimately fall on patients.

“The risk is very real: if companies delay launching medicines in Europe because European prices may be used to set prices in the United States, patients here could wait longer for treatments already available elsewhere,” the European Patients Forum told Euronews Health in a written statement. “For people living with serious or progressive conditions, even an additional delay can affect their health and quality of life.”

The policy is already affecting Europe.

Effects in Europe

Europe has seen fewer new drug launches in recent months. Ten months after Trump issued his executive order, launches in EU markets had fallen by about 35% compared with the preceding 10-month period, Reuters reported in March.

It remains unclear how much of that decline is directly attributable to the US policy. In February, however, it was announced that a drug for particularly severe forms of high cholesterol could be withdrawn from the market because of Trump’s drug-pricing policy.

“Even in large markets such as Germany, companies are reconsidering whether to launch a medicine and when to do so,” Alexander Natz, head of biotech industry group Eucope, told Euronews. The current environment, he said, is forcing manufacturers to think carefully before entering a market.

“We should not assume that we will lose access to every medicine, but companies are likely to make launch decisions far more cautiously,” he added.

Natz said governments may need to commit more funding to ensure Europe continues to receive new medicines without delay.

“There needs to be an internal political debate in Germany and elsewhere about how much countries are prepared to spend on healthcare,” he said.

Health systems are already feeling pressure on constrained budgets.

“Reference countries, from Germany and Japan to Australia, are facing strong pressure from the US administration and the industry to raise prices and increase spending on medicines,” said Thomas Hwang of Brigham and Women’s Hospital and lead author of the study. “But that clashes with the reality that many of those countries have little budget room left.”

To limit potential harm, the study’s authors suggest that manufacturers and governments could use list prices—the manufacturer’s sticker price before discounts—rather than net prices, which incorporate confidential rebates.

Under recently updated EU pharmaceutical rules, a company must make a new medicine available in a country if that country requests access within three years, or risk losing two years of market exclusivity.

The rule is intended as a “counterweight” to the effects of Trump’s drug-pricing policy, but the study’s authors caution that it is unlikely, on its own, to significantly reduce projected savings. Natz also questioned whether it would be enough to prevent the policy’s adverse consequences.

How much could the US save?

While the policy could delay launches in Europe, the Lancet study estimates that it could reduce US spending by $5.2 billion on hospital medicines and $6.4 billion on drugs purchased from pharmacies. Under a broader version of the policy, savings could reach $21 billion and $25.5 billion, respectively.

Those potential savings would be reduced by 71% because 17 companies have secured confidential deals with the administration and are exempt from the policy.

“MFN pricing has the potential to generate real savings for the US federal government and taxpayers,” Hwang said. “But if manufacturers can avoid participating through side deals, most of those savings may never materialise.”

The European Patients Forum warned that if the policy delays launches abroad without delivering the expected savings for Medicare, it could become a lose-lose outcome for health systems and patients.

The European Commission is also assessing the issue. At the request of health ministers in mid-June, the European Health Commissioner has been tasked with evaluating the impact of the US MFN policy across the bloc, including whether it is delaying launches, driving up prices and restricting access to innovative medicines.

The Commission’s assessment, which Euronews Health has seen and which is not yet published, says it is currently almost impossible to determine whether delays or price pressure are directly caused by US policy or stem from uncertainty surrounding it. More clarity may emerge in the coming years.

“I understand the Commission study to mean that it is too early to compare individual prices closely, so that may be true,” Natz said. “But the implications are much broader. This is not only about a price; it is about whether a product will ever be launched in Europe and whether it will reach patients in Germany. That is the real question here.”

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