Industry Watch
Analysis-Drugmakers brace for Europe pricing fight after Trump’s US price-cut deals
Analysis-Drugmakers brace for Europe pricing fight after Trump’s US price-cut deals
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✍️By ZRIntel Editorial Team📍New York, NY
By Michael Erman and Maggie Fick
NEW YORK, Jan 8 (Reuters) – Global drugmakers face a battle in 2026 to secure higher prices for their prescription medicines in Europe after agreeing to cut U.S. pricing last year under pressure from President Donald Trump.
Tougher negotiations may lead drugmakers to delay launches of new medicines in parts of Europe, potentially limiting patient access to them, several industry investors, a lobbyist, and a pharmaceutical executive have indicated. Tensions over drug pricing in Europe are expected to be a major topic at the J.P. Morgan Healthcare Conference in San Francisco starting January 12, an annual event that attracts pharmaceutical executives and investors globally.
Trump touted the agreements at a series of White House events from September through December, where companies like Pfizer, Eli Lilly, and AstraZeneca pledged to align U.S. prices on new drugs more closely to what is paid in other developed nations. Trump has maintained that other wealthy countries will pay more for medicines so that companies can afford to reduce prices in the U.S.
The U.S. and Britain have also struck a deal under which Britain will receive tariff relief in exchange for raising the net price it pays for new U.S. medicines by 25%.
Sebastian Guth, chief operating officer of Bayer’s pharmaceutical business and a board member of U.S. industry lobby group PhRMA, believes that leaders of European countries are willing to revisit pricing policies if it could secure earlier access to new medicines. “If you look at innovative medicines that were launched and approved over the past 10 years, Americans have access to 80% of those while Europeans have access to less than 50%,” Guth said. This highlights a significant delay in Europe’s access to new treatments.
European countries typically pay around one-third less than the U.S. because they have national health systems that negotiate the prices of medicines with drugmakers, often delaying purchasing to secure a better price. Marshall Gordon, senior research analyst for healthcare at ClearBridge Investments, commented that it may take time for pressure from the public and politicians in Europe to translate into higher prices for medications. “You can’t force the Europeans to just all of a sudden spend more,” said Gordon. However, he adds that the recent deals provide companies with better negotiating power.
Many drugmakers, including AstraZeneca, Novartis, and Sanofi, expressed last year that Europe risks losing access to new medicines unless governments change how health systems assess and pay for them. PhRMA spokesperson Sarah Ryan noted the progress made with the U.S.–UK agreement announced late last year and the ongoing efforts by the Trump administration with other nations to combat foreign free-riding on U.S. innovation.
In 2022, fourteen major pharmaceutical companies struck deals with the Trump administration to cut prices for some drugs sold to Medicaid and for cash-paying patients, also tying U.S. launch prices for new drugs to prices paid in other wealthy countries. After these price concessions were made, the drugmakers received a three-year exemption from Trump’s threat of steep tariffs on their products.
Shares of most drugmakers rose following the announcement of these deals, as investors seemed to downplay the impact of the price cuts on a limited number of drugs while welcoming the removal of tariff threats. Certain fears regarding pricing appear to be dissipating, according to Linden Thomson, senior portfolio manager at Candriam Asset Management, though she notes the problem of high launch prices still persists.
Gareth Powell, head of healthcare investment at London-based Polar Capital, suggested that companies might choose to launch some new drugs in the United States first and delay introducing them to Europe altogether. This pivot could mean that - at least for the next couple of years until the Trump presidency concludes - some products may not be available in Europe.
A Washington lobbyist who works with drugmakers expressed skepticism that European governments would make significant concessions to the U.S. given current political events, highlighting Trump's recent controversies that have strained U.S.-Europe relations.
This ongoing discussion around drug pricing presents not only an economic challenge but also raises questions about healthcare access for European populations. Likewise, how the market adjusts could have long-term implications for drug availability and innovation.
As negotiations unfold, the focus remains on how these policies will impact access to innovative treatments for European patients. While the U.S. pricing strategy provides leverage, the real question is whether it will lead to sustainable improvements in market access. The health of drug pricing dynamics in the transatlantic space will determine the future of these crucial medications and the pharmaceutical landscape beyond 2026.