Trump's drug idea could lead to a surge in medicine prices in Hungary and Europe

According to the Financial Times, industry experts warn that Donald Trump's new drug pricing policy, based on so-called 'most favoured nation's policy', could lead to significant price rises in Europe.

"I will be signing one of the most consequential Executive Orders in our Country’s history. Prescription Drug and Pharmaceutical prices will be REDUCED, almost immediately, by 30% to 80%," Trump said in his usual humble tone on his social media platform Truth.

According to experts, the US president’s plan could have serious consequences for European healthcare systems.

Both the Trump administration and pharmaceutical companies are likely to seek price increases in Europe to offset cheaper costs in the US.

Pressure from the US administration is already affecting the UK's negotiations with pharmaceutical companies over price agreements. Companies fear that if the National Health Service (NHS) negotiates a low price, this could set a precedent for US negotiations, with the US demanding similar terms. However, European countries are expected to resist drastic price rises due to budgetary constraints and long-term pharmaceutical contracts.

This, however, could result in drug manufacturers deciding not to launch new medicines in markets where the price would be significantly lower.

Trump has previously labelled Europeans as 'foreign freeloaders' because, he claims, medicines are cheaper here at the expense of the US system. The Most Favoured Nation policy would require manufacturers to apply the lowest international prices to the US market. But this goes against the grain of European price regulation, whereby many countries negotiate with manufacturers based on their own budgetary rules.

Although the paper does not provide examples of drug prices, the situation in Hungary is quite specific due to the margin cap recently imposed on otc drugs.

In the medium term, US tariffs could prompt pharmaceutical companies to take legal action if political pressure does not result in a voluntary agreement. Meanwhile, the UK is trying to tailor its communications to appear as a concession to Trump, while countering any price hikes at home with promises of investment.

The debate highlights the fragile balance of the global pharmaceutical market, particularly when changes are made to the rules in the largest market, the US.

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