PCP33 - COULD THE US ADMINISTRATION IMPOSE DRUG PRICE RAISES IN THE EUROPEAN UNION (EU)?

Abstract

The United States pays the highest drug bill per capita despite unequal global distribution of drug prices and payment. President Trump has said that this “[is] ridiculous, and it’s not going to happen any longer.” His proposed solution is to fix trade through bilateral negotiation to raise US drug prices abroad. Opportunities for US drug price increase in the European Union (EU) were reviewed at the WTO level and among other international organizations. Currently, US drug prices in the EU are not subjected to value-added tax (VAT) or to a very low VAT rate. The customs drug tariffs are usually nonexistent or if applied, are low. Trump’s argument of American discrimination may not be legally valid. If pricing is well structured, transparent, and based on scientific grounds (ex. HTA processes) complemented by established economics rules (ex. funding processes) applicable to all products, regardless of origin, it is unlikely for opportunities through legal routes to impact prices. An alternative is through bilateral trade negotiations, where the US may have an advantage in negotiating. However, in response to Trump’s proposal to raise US drug prices abroad, the UK’s NHS has emphasized their commitment to provide affordable drugs to UK citizen. In Japan, the first US export market for pharmaceuticals, some experts have questioned the relationship between Trump’s visit and the 2-year delay for HTA implementation. Following timid AMNOG reform in Germany, which was expected to yield more, some questioned the potential influence of Trump’s administration. Despite no potential legal route for price raising of US pharmaceuticals in EU, it is likely that price of pharmaceuticals will be a focus of bilateral trade negotiations between individual EU countries and the US. However, increasing prices outside the US may not directly translate to lower prices within the US nor lead to benefiting US patients.