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European pharmaceutical bosses have called on the EU to increase drug prices towards the much higher levels paid by the US, saying it will encourage innovation.
In a letter to the Financial Times, Novartis chief executive Vas Narasimhan and Paul Hudson, his counterpart at Sanofi, say the European Commission should set a spending target for medicines and vaccines to “fairly reward innovation”.
The US pays nearly three times as much for branded and generic medicines as other comparable countries, according to US government estimates. The commission should create a benchmark for its member states “in the range of US net prices”, the chief executives say in their letter, adding that this could be adjusted though rebates for some countries.
Lower prices in the EU “artificially [cap] biopharma market growth” and create a “clear disincentive for innovators”, Narasimhan and Hudson say, citing data that 30 per cent of medicines approved in the US are not available in Europe after two years.
As the threat of tariffs hangs over the industry, the executives highlight major pharma investments in the US since Donald Trump returned to power and say Europe should act “urgently or decline will set in and [the] departure of companies will accelerate”.
The Trump administration has promised to address high drug prices in the US. During his first presidential term, Trump pushed for prices to be pegged to comparable countries.
While an executive order issued last week did not do this, a US official said the government was “very focused on narrowing the delta between what the United States gets for prices versus what other developed nations do”.
That would present a challenge to the pharmaceutical industry, which relies on the US for between 40 and 50 per cent of its sales.
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The European chief executives say in their letter: “Against a backdrop of waning European biopharma competitiveness, the uncertainty of tariffs is further reducing incentives to invest in the EU.”
They add that they face stiff competition from China, the second-largest pharmaceutical market after the US, which has “expanded its position by attracting multinationals and created a vibrant biotechnology environment”.
The industry has rushed to announce large US investments to try to see off the threat of tariffs. Pharmaceuticals were excluded from US tariffs announced this month but the Trump administration is pursuing an investigation that could result in their introduction.
Roche said this week that it would invest $50bn in the US, Novartis has pledged $23bn of spending on manufacturing and R&D, and US drugmakers Johnson & Johnson and Eli Lilly have both promised major investments.
Sanofi has not yet made any large US investment announcement. French President Emmanuel Macron has urged European companies to pause US investment as the commission prepares a response to tariffs.
An EU official said dialogue with the pharma industry was “ongoing”. Commission president Ursula von der Leyen met chief executives this month to discuss the potential tariffs and the bloc’s response.
