US President Donald Trump took a swipe at the European Union on Monday when he announced plans to lower the cost of medicines for Americans.
"We’re going to pay what Europe pays,” Trump told journalists, adding that EU countries are "difficult," "brutal," and "nasty" in their dealings with drug companies.
Drug prices in the US are among the highest in the world. It spent $617.2 billion (€542.7 billion) on medicines in 2022, compared with $233.5 billion (€205.3 billion) in 24 European countries combined, according to an analysis from the RAND Corporation.
Trump’s plan would tie US pharmaceutical prices to the lowest rate paid by other wealthy countries – if drugmakers don’t bring down prices on their own first. But it’s not yet clear how it could be implemented or what savings it would bring to US patients.
So what about the European approach to medicine prices is so "difficult," "brutal," and "nasty," exactly?
Prices are higher in the US because drug companies say they need to recoup the costs of developing new medicines – but European countries negotiate to lower their prices, whereas the US government generally does not.
Most European countries also consider the costs of the same medicine in other countries when they decide how much they are willing to pay for it, according to a report from the World Health Organization (WHO).
Even so, Europeans pay different prices for medicines depending on where they live. Switzerland, for example, spends an average of €525 on drugs per person annually, while Croatia spends €262.
That’s partly because their negotiations with drug companies are confidential, which critics say can drive up the cost of already-expensive drugs.
"There’s essentially no transparency," Huseyin Naci, an associate professor of health policy at the London School of Economics, told Euronews Health.
Countries also have different priorities when they negotiate prices. In England and Sweden, cost-effectiveness is a key measure, Naci said, while Germany considers how much a new medicine could benefit patients compared to existing options.
Notably, drug prices have risen in European countries in recent years. In Germany, for example, medicine costs rose 11.5 per cent in hospitals and 2.6 per cent in retail pharmacies between 2012 and 2022.
Health insurers warned last year that climbing drug prices are already straining national budgets.
"Prices are already too high in many European countries in terms of what health systems can afford to pay," Naci said, adding that if US policies or drug companies successfully pressure them to raise prices further, "it would be highly disruptive".
There are also differences within Europe when it comes to who actually pays for medicines, with costs mostly shouldered by public health systems, but some expenses paid out-of-pocket or through extra health insurance.
In the Baltic countries, for example, patients can pay different prices for the same drug depending on which disease they have, the WHO report said. Others, like Estonia, Poland, and France, have prescription fees or other fixed co-payments.
In Cyprus, the government and other mandatory schemes covered 90 per cent of all spending on medicines in 2022, compared with 23 per cent in Bulgaria. Those figures include all drugs, not only prescription medicines.
"To ask health systems to pay even higher prices for pharmaceuticals, I don't think there's much space to be able to accommodate that," Naci said.
