In 2022, the United States spent $617.2 billion (€542.7 billion) on medicines, much more than 24 European countries combined. The U.S. government, led by President Donald Trump, has criticized Europe’s drug pricing system and proposed plans to lower American drug costs by linking prices to those paid in other wealthy countries. This article explains how drug prices vary worldwide and what the U.S. plans might mean for patients and healthcare systems.
The United States spends far more on medicines than Europe. While the U.S. spent over $617 billion, 24 European nations together spent only $233.5 billion (€205.3 billion) in the same year. Europe manages to keep prices lower by negotiating directly with pharmaceutical companies. The U.S. usually does not do this, which allows drug makers to set higher prices.
President Trump called European nations tough negotiators and promised that America would pay what Europe pays for medicines. His proposal suggests that if drugmakers do not lower prices voluntarily, U.S. prices should be linked to the lowest prices in wealthy countries. However, the plan’s details and its effects on American patients are still unclear.
European countries often use a method called external price referencing. This means they look at how much a medicine costs in other countries before deciding what to pay. This system helps reduce medicine prices compared to the U.S. Despite this, medicine costs differ widely across Europe. For example, Switzerland spends about €525 per person each year on medicines, while Croatia spends only €262. These differences happen because each country negotiates prices separately and follows its own health policies.
Much of the variation in drug prices comes from confidential agreements between governments and pharmaceutical companies. This secrecy makes it hard to know the true cost of medicines. Different countries also use different ways to decide how much to pay. Some focus on the cost-effectiveness of drugs, while others weigh the benefits compared to existing treatments.
Even with strong negotiation strategies, European countries have seen medicine prices rise over the past ten years. For example, hospital drug prices in Germany increased by 11.5% between 2012 and 2022, and pharmacy drug prices rose by 2.6% during the same period. These increases have caused concern for national health systems, which worry about the financial strain on public healthcare budgets. Experts say medicine prices are already very high and that further increases could disrupt healthcare services.
Who pays for medicines varies across Europe. In most countries, public health systems cover most drug costs, but in some places, private payments and patient co-pays are common. In the Baltic states, the cost of the same medicine can differ depending on the patient’s diagnosis. Some countries charge fixed fees for prescriptions. For example, Cyprus covered 90% of medicine costs through public and mandatory schemes in 2022, while Bulgaria only covered 23%, showing large differences in access to affordable medicines.
There is growing concern that medicine prices could rise beyond what healthcare systems can handle. Further price increases may threaten the sustainability of health services in Europe. The U.S. plan to match drug prices to lower international rates could lower costs for American patients. However, the impact on drug companies and the availability of new medicines remains uncertain.
Drug pricing is a complicated global issue. The U.S. spends far more on medicines but does not usually negotiate prices. European countries negotiate hard and use price referencing to keep costs lower but face rising expenses and budget challenges. President Trump’s plan to pay what Europe pays could reshape the U.S. market, but many questions remain about how it will work in practice.