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EU, Denmark assess impact, warn of uncertainty

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European laws, health systems keep drug costs down

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Experts say Trump may struggle to force legal changes to

foreign

drug pricing

By Maggie Fick

LONDON, May 14 (Reuters) - European governments are

examining whether U.S. President Donald Trump can force them to

pay more for prescription medicines, after he issued an

executive order to lower U.S. drug prices, roiling the global

pharmaceutical industry.

On Monday, Trump took aim at governments paying a fraction

of what Americans have to shell out for their medicines, and

directed the use of trade policy to force other nations to pay

more for prescription drugs.

The Trump administration wants to reduce the gap between

U.S. drug prices and those in other developed countries such as

many in Europe, where prescription drugs cost, on average,

one-third what they do in the United States.

Denmark's industry and business minister Morten Bodskov

plans to meet with drugmakers based in his country to discuss

the order. He did not give details about the meeting.

"The uncertainty (caused) by the U.S. is bad for the world,"

he told Reuters. "Danish pharmaceutical companies are among the

best in the world and are of great importance to Denmark. The

message from Trump does not change that."

The country of six million has benefited from the expansion

of Novo Nordisk and the outsize demand for its

diabetes drug Ozempic and for Wegovy, one of the powerful new

weight-loss drugs singled out by Trump in his push to lower

prices.

Novo, Europe's third-largest listed company worth 265

billion euros ($295.74 billion), said it looked forward to the

meeting.

In the U.S., drug prices are shaped by complex negotiations

involving pharmacy benefit managers that act as middlemen

between drugmakers and employer clients and health insurers and

have been criticised for inflating costs. In Europe, countries

generally have public health systems that negotiate directly

with manufacturers and keep costs down.

The European Commission, the EU executive, will assess the

impact of Trump's order on European companies, a spokesperson

told reporters on Tuesday.

"We know the pharmaceutical industry faces challenges both

in the U.S. and the EU," the spokesperson said, noting

Commission President Ursula von der Leyen had met with

executives last month to address concerns about the threat of

U.S. tariffs on medicines.

Trump's effort during his first term -- through a more

limited executive order focused on certain drugs covered by the

government's Medicare program -- was blocked by a court.

Trump said if drugmakers do not cut prices they could be hit

with tariffs. His administration launched a probe last month

into pharmaceutical imports as a potential precursor to placing

levies on medicines on national security grounds.

"The United States will no longer subsidize the healthcare

of foreign countries, which is what we were doing," Trump said

on Monday. "I'm not knocking the drug companies. I'm really more

knocking the countries than the drug companies."

Although Americans pay significantly more for medicines,

they have access to a greater number of treatments. Some 55%

more cancer drugs were launched in the U.S. than in the UK over

the past three decades, according to a 2024 study in the British

Medical Journal.

An AstraZeneca ( AZN ) spokesperson said the company

supports fairer global sharing of pharmaceutical costs, but that

changes must avoid "disrupting patient care, undermining U.S.

biotech leadership, or stifling innovation."

CONFIDENTIAL PRICES

Seven drug pricing experts and lawyers told Reuters it is

unclear how the administration could legally demand confidential

contract details between drugmakers and governments. That

information would be needed as Trump's order calls for giving

drugmakers price targets within a month.

Strict cost containment measures and reimbursement policies

prevent drugmakers from charging Britain's financially strapped

state-funded National Health Service more for new drugs, said

Daniel Howdon, a health economist at the University of Leeds.

"Unless there is some sort of overhaul of UK law or policy,

Trump's order will not be able to achieve higher prices," he

said.

A spokesperson for Germany's health ministry told Reuters it

was not possible to predict how the U.S. order may be

implemented.

Germany has a "clearly defined framework for price

negotiations on medicines between statutory health insurance and

the pharmaceutical industry," the spokesperson said.

The call for developed countries to pay more for drugs so

the U.S. can pay less comes as worries grow that uncertainty

caused by Trump's whiplash trade war will dampen the 27-nation

bloc's already-weak economy.

Even with the threat of tariffs, governments may be unable

and unwilling to spend more on medicines, particularly as

populations age and healthcare budgets tighten, UBS analyst

Trung Huynh said.

The UK government does not publish the prices it pays for

NHS drugs, but a source at the UK's Department of Health and

Social Care said prices for some treatments are about a quarter

of those paid by the U.S.

The DHSC did not respond to a request for comment.

Still, a source at a European drugmaker told Reuters the

Trump administration could still exert pressure to try to force

governments to alter their longstanding pricing practices

embedded in national health systems.

"I read this as him showing pharma all of the negotiating

tools he has at his disposal," said Anna Kaltenboeck, a health

economist at Verdant Research, "and giving them some credible

threat based on his willingness to impose tariffs so far."

($1 = 0.8961 euros)