Novartis CEO Vas Narasimhan and Sanofi CEO Paul Hudson have called on the European Commission to establish targeted spending on medicines and vaccines, arguing that Europe's artificially low drug prices are stifling innovation in the biopharmaceutical sector. Their appeal comes amid growing concerns about pharmaceutical investment shifting to the United States following President Trump's return to office.
In a letter published in the Financial Times, the executives highlighted a troubling gap in drug availability, noting that 30% of medicines approved in the US remain unavailable in Europe two years after their initial approval. They warned that without immediate action, Europe risks facing industry decline and an acceleration in company departures.
"The biopharma sector in the EU is being held back by artificially low drug prices," the chief executives stated in their letter, emphasizing the negative impact on innovation across the continent.
Pharmaceutical Investment Shifts Amid Tariff Concerns
The plea from European pharmaceutical leaders comes as several major companies announce substantial investments in the United States. Roche has committed $50 billion to US operations, while Novartis has pledged $23 billion for manufacturing and research and development. Johnson & Johnson and Eli Lilly have also announced significant US investments.
These investment decisions appear to be influenced by the changing political landscape and potential tariff implications. Notably, Sanofi has not announced major US investments following French President Emmanuel Macron's call for European firms to pause investments in the United States.
Industry Seeks Tariff Exemptions for Medical Products
Pharmaceutical companies are actively lobbying both the Trump administration and European Union officials to exclude medical goods from potential tariff wars. Industry representatives have expressed concerns that tariffs on European goods would increase drug costs and create access barriers for patients.
The industry is particularly concerned about price spikes affecting popular European-manufactured medications such as Novo Nordisk's weight loss treatment Wegovy and Merck's cancer immunotherapy Keytruda.
Pricing Disparities Between US and Europe
According to US Government estimates, Americans spend nearly triple the amount on both generic and branded drugs compared to similar nations. This pricing disparity has become a focal point in discussions about pharmaceutical economics and healthcare policy.
While European pharmaceutical companies advocate for higher prices in their home markets, the Trump administration has simultaneously aimed to address high drug prices in the United States, creating a complex dynamic in transatlantic pharmaceutical commerce.
Regulatory Response and Ongoing Discussions
The European Commission is reportedly engaged in ongoing communication with pharmaceutical industry leaders. Commission President Ursula von der Leyen has met with chief executives to discuss tariff concerns and potential regulatory responses.
Recently, pharmaceutical companies have called for modifications to European regulatory frameworks in response to impending tariffs implemented by the Trump administration. These tariffs potentially threaten billions in planned pharmaceutical investments across Europe.
As tensions continue to evolve, both industry leaders and regulatory authorities face the challenge of balancing innovation incentives, patient access, and economic considerations in an increasingly complex global pharmaceutical landscape.
