News

Europe on Alert as Trump’s Drug Pricing Mandate Sends Shockwaves Through Global Pharma

On average, Europeans pay about a third of what Americans spend on the same medications.

• By Reuters
• London
• May 14, 2025

News

European capitals are on edge following a bold executive order from former U.S. President Donald Trump aimed at slashing domestic drug prices—by pressuring foreign governments to pay more for prescription medicines. The directive, which Trump announced this week, has ignited fresh uncertainty across the global pharmaceutical industry and raised alarms among European policymakers and drug manufacturers.

At the heart of the order is a controversial strategy: use U.S. trade policy to demand that countries with public healthcare systems—particularly in Europe—raise the prices they pay for drugs, which are often significantly cheaper than in the U.S. On average, Europeans pay about a third of what Americans spend on the same medications.

Denmark’s Minister for Industry and Business, Morten Bodskov, said the government would hold urgent talks with domestic pharmaceutical firms, including Novo Nordisk, one of the world’s leading drugmakers. “The unpredictability created by the U.S. is harmful to global stability,” he told Reuters. “Our pharmaceutical sector is vital to Denmark’s economy and global reputation. President Trump’s message won’t change that.”

Novo Nordisk, now Europe’s third-largest publicly listed company, has seen meteoric growth thanks to soaring demand for its diabetes drug Ozempic and its weight-loss counterpart Wegovy—both mentioned by Trump as targets for price reduction. The company said it welcomed the opportunity to engage with Danish authorities over the implications of the order.

In contrast to the U.S. system, where pricing negotiations are influenced by powerful intermediaries such as pharmacy benefit managers, most European countries use centralized public healthcare models to negotiate directly with manufacturers, ensuring lower prices. That structure could now face intense scrutiny if Trump’s trade agenda advances.

The European Commission confirmed it is assessing the legal and economic impact of the order. A spokesperson said the Commission remains in dialogue with pharmaceutical executives and emphasized the need for stability amid growing concerns of a transatlantic trade conflict. Commission President Ursula von der Leyen recently met with industry leaders to discuss ongoing threats of U.S. tariffs on medicines.

Trump's new order builds on an earlier attempt during his first presidency to target high drug prices through executive action—an effort ultimately blocked in court. This time, he is backing his policy with the threat of punitive tariffs and a national security probe into pharmaceutical imports, potentially giving the administration more leverage.

“The United States will no longer be the financial backer of global healthcare,” Trump declared. “This isn’t about punishing the drug companies. It’s about holding other countries accountable.”

While Americans generally face higher drug costs, they also enjoy broader access to innovative treatments. A recent British Medical Journal study revealed that 55% more cancer drugs were launched in the U.S. than in the UK over the last 30 years.

Pharmaceutical giant AstraZeneca responded cautiously, saying it supports a more equitable global distribution of pharmaceutical costs but warned that sudden changes must not compromise patient care, biotech leadership, or innovation.

Yet legal experts question how feasible Trump's directive truly is. The order appears to require disclosure of confidential pricing agreements between drugmakers and foreign governments—something that could be challenged under local laws. “Unless there's a fundamental shift in UK legislation, this order will be unenforceable here,” said Dr. Daniel Howdon, a health economist at the University of Leeds.

Germany’s health ministry also cast doubt on the enforceability of the U.S. move, pointing to strict national rules governing drug price negotiations.

Trump’s latest maneuver comes at a time when the European Union is grappling with weak economic growth, and leaders fear that another front in a trade war could deepen the downturn. “Even with the threat of tariffs, it’s hard to imagine governments finding the political will or financial bandwidth to spend significantly more on drugs,” said Trung Huynh, a pharmaceutical analyst at UBS.

Although the UK’s Department of Health and Social Care declined to comment, insiders noted that some NHS drug prices are a mere fraction of their U.S. counterparts—sometimes as low as 25%.

Behind the scenes, European pharmaceutical executives are bracing for pressure. “It’s clear Trump is putting all his bargaining chips on the table,” said Anna Kaltenboeck, health economist at Verdant Research. “And given his past willingness to escalate trade disputes, companies and governments are taking the threat seriously.”

As Europe scrambles to interpret the fallout, the pharmaceutical world may be entering a new era—one where drug pricing becomes a battleground not just for health systems, but for global diplomacy.