ANALYSIS-Drugmakers brace for Europe pricing fight after Trump's US price-cut deals

Global drugmakers face a battle in 2026 to secure higher prices for their prescription medicines in Europe after agreeing to cut U.S. pricing last year under pressure ‌from President Donald Trump.

Tougher negotiations could lead drugmakers to delay launches of new medicines in parts of Europe, potentially limiting patient access to them, several industry investors, a lobbyist and a pharmaceutical executive said. Tensions over drug pricing in Europe are expected to be a major topic at the J.P. Morgan Healthcare Conference in San Francisco that starts January 12, ⁠the premier annual event that pulls pharmaceutical executives and investors from around the world.

Trump touted the agreements at a series of White House events from September through December at which companies including Pfizer, Eli Lilly and AstraZeneca pledged to align U.S. prices on new drugs more closely to what is paid in other developed nations. Trump has insisted other wealthy countries will pay more for medicines so that companies can cut prices in the United States. The U.S. and Britain have also struck a ​deal under which Britain will receive tariff relief in exchange for raising the net price it pays for new U.S. medicines by 25%.

EUROPE'S PRICING DILEMMA Sebastian Guth, chief operating officer of Bayer's pharmaceutical business and a board member of ‍U.S. industry lobby group PhRMA, said he believes leaders of European countries are open to revisiting pricing policies, particularly if it could secure earlier access to new medicines.

"If you look at innovative medicines that were launched and approved over the past 10 years, Americans have access to 80% of those while Europeans have access to less than 50%," Guth said. "There's structurally a very significant delay in Europe." European countries pay around one-third less than the U.S. because they have national health systems that negotiate the prices of medicines with drugmakers and may delay purchasing them to get a better ⁠price.

Marshall Gordon, senior ‌research analyst for healthcare at ClearBridge Investments, said it may ⁠take time for pressure on Europe's politicians to translate into higher prices. "You can't force the Europeans to just all of a sudden spend more," said Gordon. "But (the deals) do actually give the companies negotiating power."

Many drugmakers, including AstraZeneca, Novartis and Sanofi, warned last year that Europe risks losing access to ‍new medicines unless governments change how health systems assess and pay for them. "We've already seen progress with the U.S.–UK agreement announced late last year, and it's encouraging to see the Trump administration continue this work with other nations to address foreign free-riding on U.S. innovation," said ​PhRMA spokesperson Sarah Ryan.

PRICE CONCESSIONS FOR TARIFF RELIEF Fourteen major pharmaceutical companies last year struck deals with the Trump administration to cut prices for some medicines sold to Medicaid - the U.S. health program for low-income Americans - and ⁠for cash-paying patients, and tie U.S. launch prices for new drugs to prices paid in other wealthy countries.

In exchange for price concessions, the drugmakers received a three-year exemption from Trump's threat of steep tariffs on their products. Shares of most drugmakers rose after the deals were announced, as investors downplayed the impact of ⁠the price cuts on a limited number of drugs and welcomed removal of the tariff threat.

Worst-case pricing fears are "clearly not coming to pass," said Linden Thomson, senior portfolio manager at Candriam Asset Management. Despite years of political noise, launch prices in the U.S. are not coming down, Thomson said. Some new drugs and treatments are being priced "materially higher than even Wall Street" expects, she added, pointing to J&J's Inlexzo which treats a type of bladder cancer and launched in September. The drug costs ⁠over $1.5 million per treatment course.

Gareth Powell, head of healthcare investment at London-based Polar Capital, said companies could choose to launch some new drugs in the United States and delay selling them in Europe. "That could mean that - at ⁠least for a couple of years until the Trump presidency ‌ends - these products just aren't launched in Europe."

A Washington lobbyist who works with drugmakers said European governments were unlikely to make major concessions to the U.S. given current events, such as Trump's latest push to "purchase" Greenland, which is part of NATO-member Denmark. "It's not like the Trump administration has done a bunch of stuff that has made the Europeans ⁠happy and willing to be nice to him," the lobbyist said, asking not to be named.

"He's antagonizing them."

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