Leading figures from European pharmaceutical companies have called on the European Union to raise drug prices, bringing them significantly closer to much higher U.S. levels, arguing that this would stimulate innovation and prevent the outflow of investments to the U.S.
Novartis CEO Vas Narasimhan and his colleague from Sanofi, Paul Hudson, urged the European Commission to set a targeted consumption level for drugs and vaccines to ‘fairly reward innovation.’ According to estimates from the U.S. government, the United States pays nearly three times more for branded and generic drugs compared to other comparable countries, reports the Financial Times.
Pharmaceutical officials propose that the EU introduce a European price benchmark that would be ‘in the range of U.S. net prices,’ with the possibility of adjustments through rebates for individual member states.
Narasimhan and Hudson warn that lower prices in the EU artificially limit the growth of the pharmaceutical market and represent ‘a clear negative incentive for innovators.’ Citing data showing that 30 percent of drugs approved in the U.S. are not available in Europe even two years later, they call on the Commission to act urgently. Otherwise, they warn, the European biomedical industry could enter a phase of decline with an accelerated relocation of companies outside the European continent.
Tensions are further heightened by the threat of U.S. tariffs. Although drugs are currently not included in the latest U.S. tariff measures, President Donald Trump’s administration has initiated an analysis that could result in their introduction. Meanwhile, the industry is urgently announcing significant investments in the U.S. to prevent possible sanctions.
U.S. Investments Are Growing, Europe Is Lagging
For example, Swiss Roche announced this week that it will invest $50 billion in the U.S. over the next five years, emphasizing that its goal is for pharmaceutical exports to exceed imports. Roche employs 25,000 workers in the U.S. across 13 manufacturing sites and 15 research and development centers, and the investment confirms that the U.S. is important to it, said CEO Thomas Schinecker.
When new and expanded production capacities come online, Roche will export more drugs from the U.S. than it currently imports into the U.S. market, the Swiss company emphasizes. The investments will allow Roche to expand its manufacturing and distribution centers in Kentucky, Indiana, New Jersey, and California. In Pennsylvania, it will build a new facility for gene therapy production, and in Indiana, a factory for continuous glucose monitoring solutions. The company will also build a new facility for weight loss drugs and establish a center for cardiovascular, renal, and metabolic research in Massachusetts.
– By investing $50 billion over the next five years, we will lay the foundation for a new era of innovation and growth, benefiting patients in the U.S. and around the world – Schinecker stated, without mentioning Washington’s announcement of possible tariffs on drug imports.
Swiss Novartis, on the other hand, has promised $23 billion to be invested in the production and research and development of drugs in the U.S. Novartis plans to expand three facilities and build six more, and the plan includes a new center for biomedical research and innovation in California, which is expected to start operations in 2028 or 2029.
– The investments will enable us to bring the complete supply chain and key technological platforms and significantly improve already strong growth prospects – said Novartis CEO Vas Narasimhan.
The U.S. market is a priority for Novartis, they emphasized, noting that the announced $23 billion will raise the total investment amount over the next five years to $50 billion.
American giants Johnson & Johnson and Eli Lilly have also announced significant investments, while Sanofi has not yet announced major projects in the U.S. French President Emmanuel Macron has called on European companies to temporarily suspend U.S. investments until the Commission develops a response to possible tariffs.
Key Market
According to data from the IQVIA Institute for Human Data Science, the U.S. accounts for between 40 and 50 percent of global pharmaceutical sales, making it a key market for this industry. Meanwhile, China, as the second-largest pharmaceutical market, is rapidly strengthening, attracting multinational companies and developing its own biotechnology ecosystem.
The European Commission has not yet provided concrete proposals, but dialogue with the pharmaceutical industry is, according to EU officials, ‘ongoing.’ Commission President Ursula von der Leyen held a meeting this month with CEOs of major pharmaceutical companies to discuss the possible consequences of U.S. tariffs and a joint European response. We hope not through messages.
Interestingly, the U.S. administration is seeking ways to reduce high drug costs in its country. During his first term, President Trump proposed tying U.S. prices to levels in comparable countries. Although the latest executive order did not formalize that idea, officials say the goal is to ‘reduce the gap between U.S. prices and prices in other developed countries.’
This initiative could create additional challenges for the pharmaceutical industry, which relies on high prices in the U.S. market to finance research and development. In this context, European pressures for price increases can be viewed as a response to geopolitical and market changes that threaten the EU’s position as a center of pharmaceutical innovation.
