John Whelan: US drug price shake-up threatens EU medicine access 

Donald Trump tells 17 top pharmaceutical companies to align US prescription drug prices with lowest offered in other developed nations

Pharma companies, many of which have operations in Ireland, may delay product launches here to avoid price erosion in larger markets. File picture: Dan Linehan 

US president Donald Trump’s “most favoured nation” medicines strategy for the US could force up prices in Europe and make medicines scarcer in smaller countries like Ireland.

In a direct letter to 17 top pharmaceutical manufacturers in late July he warned they had two months to align United States prices for brand-name drugs with the lowest offered in other developed nations, so-called most favoured nation (MFN) pricing.

If they fail to do so, Trump vowed: “We will deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices.”

The clock is ticking for the industry with the end of September looming.

The letter from the White House to drugmakers spelled out steps to match the MFN price, is raising concerns in Europe about delayed launches, significantly higher prices, and reduced access to innovative medicines.

Because the US is the world’s largest pharmaceutical market, accounting for more than half of total global demand for prescription drugs, lowering prices there would hit industry revenues hardest, with a particular impact on profits and state corporate tax incomes here in Ireland.

Helmut Brand, professor of European public health at Maastricht University in the Netherlands, stated that some companies may decide to delay launches in low-price markets to avoid price erosion in larger, more profitable markets.

This tactic would avoid loss of profits in the US market, but would hit countries such as Ireland who could find it difficult to access the latest innovative medicines.

For small and midsized firms, launching new products on the US or EU markets at lower prices dictated by US pricing policy would be particularly painful. 

In the long term this would restrict their ability to raise investment capital for new innovative medicines, EU lobby group, Eucope warned.

The US administration states its aim is to eliminate, what they describe as ‘global freeloading’ where foreign governments benefit from US funded innovation without proportional contribution. 

By linking trade and MFN pricing, manufacturers are obliged to apply pricing based on the global average, from day one of their launch, to comply.

European branded drugs lobby association EFPIA warned “implementing MFN pricing could have an impact on jobs and our capacity to discover, develop, and deliver new medicines”.

For Ireland and other EU governments, their response may depend on how the MFN pricing is implemented. 

If it’s tied to list prices, leaving net prices intact, stepping up procurement exercises might be enough.

The MFN policy is anchored in an Organisation for Economic Co-operation and Development (OECD) based price reference model. 

Price comparisons with high-income nations

Only countries with GDP per capita equal to or exceeding 60% of the US are considered valid benchmarks, limiting the basket to high-income nations such as Germany, the UK, Ireland, Canada, France, and Japan.

The policy stipulates that US list prices must not exceed the average of this global reference basket, effectively importing international price ceilings into the US market. This alters launch sequencing and commercialisation strategies.

Companies must now develop synchronised pricing strategies across multiple geographies, ensuring their global prices align tightly with the US to avoid unintended MFN Trump administration liabilities.

The sequence of launches in the basket of OECD markets largely determines the total global commercial opportunity for the product. 

Thus, once a manufacturer has identified target markets of interest, they must develop global alignment strategies before a US launch to avoid regulatory penalties.

The MFN policy introduces persistent downward pressure on US list prices, particularly for high-cost therapies in oncology, immunology, and rare diseases. 

This structural price compression challenges the prevailing model in which the US market has historically served as the global margin leader. 

New pricing must now align with OECD references, making it increasingly difficult to sustain high US launch prices without global conformity.

Analysts project that MFN compliant list prices could result in 25% to 40% reductions compared to historical US launch norms. 

The days of premium pricing in the US as a default strategy are numbered.