In a bold move, pharma giants push the EU to reconsider its current drug pricing policies. European pharmaceutical leaders urge the EU to propose alignment with US net prices to stimulate R&D and manufacturing investment amid growing competition.
Major European pharmaceutical companies are intensifying calls for the European Union to permit higher medicine prices. They argue that current policies stifle innovation and drive investment towards the United States and China. They warn that without significant changes, Europe risks falling further behind in research, development (R&D), and manufacturing capabilities, as pharma giants push EU decision-makers to act swiftly.
Europe lagging in pharma investment?
AstraZeneca CEO Pascal Soriot emphasised the urgency, stating that Europe's lower spending on innovative medicines compared to the US hinders its ability to attract vital investments. He remarked that Europe spends a substantially lower share of its GDP on innovative medicines than the US, and as a result, is falling behind in attracting R&D and manufacturing investments, putting its ability to protect the health of its people at risk.
Soriot emphasised the need for greater investment to secure Europe's "health sovereignty" in a changing global landscape, aligning with how pharma giants push EU governance to prioritise this issue.
Price controls vs innovation
This sentiment was echoed by the CEOs of Swiss-based Novartis and France's Sanofi. In a recent letter published in the Financial Times, they argued that strict European price controls undermine innovation and make the region less appealing for pharmaceutical investment, contrasting this with incentive programmes in the US and China. Clearly, pharma giants push EU boundaries to re-evaluate approaches.
Their proposed solution is bold: a unified, Europe-wide list price for new medicines set "within range of US net prices," with adjustments made through rebates. This goes beyond a joint letter signed by over 30 industry CEOs in early April, which urged EU support and a reconsideration of pricing policies without specifying a specific mechanism.
That earlier letter, addressed to EU President Ursula von der Leyen, followed discussions between her and pharma executives, where Sanofi CEO Paul Hudson reportedly criticised European governments for undervaluing innovation.
Industry sources suggest that while matching US list prices (the initial price set by drugmakers) is unlikely, aligning with US net prices (the actual price paid after discounts and rebates) might be a more viable path forward. European governments typically negotiate confidential net prices directly with manufacturers, resulting in significantly lower costs than in the US, where prices are often the highest globally.
US investment surge fuels European concerns
The push comes as several pharmaceutical giants, including Roche, Eli Lilly, Johnson & Johnson, and Novartis, have announced substantial multi-billion-dollar investment plans in the United States. Roche alone pledged a $50 billion investment over five years.
This wave of US-focused investment follows potential shifts in US policy, including reported considerations by the previous Trump administration to link American drug prices to international benchmarks, although details remain scarce.
EU acknowledges industry importance
The European Commission has acknowledged the concerns. A spokesperson stated that the EU executive recognises the pharmaceutical industry's strategic importance and aims "to make the market more attractive" for these companies. However, balancing affordable access to medicines for citizens with creating a competitive environment for industry investment remains a complex challenge for policymakers across the bloc.
The outcome of this lobbying effort could significantly shape the future of pharmaceutical innovation and manufacturing in Europe, as pharma giants push EU officials to align with global benchmarks.