On Monday, US President Donald Trump openly criticized the European Union (EU) over drug prices while announcing a plan to reduce medicine costs in the United States. Speaking to reporters, Trump said the US would “pay what Europe pays” for medicines. He described EU nations as “difficult,” “brutal,” and “nasty” negotiators with pharmaceutical companies. The announcement highlights the ongoing debate about high medicine costs in the US and how other wealthy countries manage their drug pricing.
US Drug Spending Far Outpaces Europe
Medicine prices in the United States remain among the highest worldwide. According to a 2022 study by the RAND Corporation, the US spent a staggering $617.2 billion (about €542.7 billion) on pharmaceuticals that year. By contrast, 24 European countries combined spent only $233.5 billion (approximately €205.3 billion) on medicines in 2022.
President Trump’s plan aims to tie American drug prices to the lowest amounts paid by other wealthy countries. However, officials have yet to provide clear details on how this plan would be put into action or how much patients might save.
How Europe Keeps Drug Prices Lower
So, why does Trump call Europe’s approach “nasty”? The key difference lies in how European countries negotiate drug prices. In the US, pharmaceutical companies often charge high prices to recover research and development costs. The US government rarely pushes back by negotiating these prices directly.
In contrast, many European countries actively negotiate drug costs with pharmaceutical firms. They often look at what other countries pay for the same medication before deciding their own price. This method, supported by the World Health Organization (WHO), has led to a wide range of prices across Europe.
Price Differences Across Europe
Drug prices vary significantly within Europe. For example, Switzerland spends around €525 per person on medications yearly. Meanwhile, Croatia’s average annual spend per person is just €262. One reason for this gap is the confidential nature of European price negotiations. Many experts believe this secrecy can sometimes drive prices higher for expensive medicines.
“There’s essentially no transparency,” said Huseyin Naci, associate professor of health policy at the London School of Economics. Naci explained that countries use different methods to set prices. England and Sweden, for instance, focus on the cost-effectiveness of a drug. Germany looks at how much a new medicine improves patient health compared to older options.
Rising Costs and Budget Strains in Europe
Even with tough negotiations, medicine prices in Europe have risen in recent years. Between 2012 and 2022, hospital drug spending in Germany increased by 11.5 percent, and pharmacy costs went up by 2.6 percent. Health insurers have warned that growing medicine prices are already putting pressure on national healthcare budgets.
“Prices are already too high in many European countries based on what health systems can afford,” said Naci. He added that if US drugmakers or policies cause prices to climb further, it could be “highly disruptive” for Europe’s health systems.
Who Pays for Medicines in Europe?
European countries also differ in who pays for medicines. Public health systems usually cover most drug costs, but patients often pay out-of-pocket fees or extra insurance premiums. In some Baltic nations, costs vary depending on the illness being treated, according to the WHO. Estonia, Poland, and France require patients to pay fixed co-payments or prescription charges.
Government funding for medicine costs varies widely. In 2022, Cyprus covered 90 percent of its national medicine expenses through government and mandatory insurance programs. Bulgaria, however, funded only 23 percent. These numbers include all medicines, not just prescriptions.
“There’s limited room for health systems to absorb higher pharmaceutical prices,” Naci warned. He stressed serious concern about any push to increase drug costs.
The US Plan Faces Challenges Ahead
President Trump’s promise to reduce US medicine prices by matching Europe’s low costs faces several hurdles. The US market is very different, with complex drug pricing systems and less government negotiation power. Experts say simply copying European methods will be difficult without major changes to the US healthcare system.
Still, the discussion shines a spotlight on the urgent need to control rising medicine prices worldwide. Patients in both the US and Europe often struggle with the cost of essential drugs. Finding fair and transparent ways to set medicine prices remains a key challenge for governments and pharmaceutical companies alike.