Trump wants Americans to pay less for medicines. The recent UK deal aside, Europe doesn’t want to pay more. Both positions make sense. Americans have long paid drug prices 2.5 times higher than those in France or Germany. European governments are fighting ballooning deficits. The pharmaceutical industry meanwhile points to the €2.45 ($2.83) billion average cost of bringing a single new medicine to market.
The US Most Favored Nation executive order seeks to peg American prices to the lowest in comparable countries. The industry’s response has been predictable: seeking to raise European launch prices to protect US reference points, talking of delaying market entry, moving manufacturing stateside. Proposed tariffs add further uncertainty. The result serves nobody well.
The current debate assumes a fixed pie: if Americans pay less, Europeans must pay more. This misses something fundamental. We’re talking about how we collectively invest in future health security and economic productivity.
Every euro invested in preventive healthcare generates up to €4.90 in economic benefits. The median return on investment for public health interventions sits at 14:1. In the UK alone, scaling innovations across four chronic conditions could deliver €19.4 (£17) billion in annual productivity gains and €3.4 (£3) billion in NHS savings. The pharmaceutical industry contributes three times more gross value added per employee than the economy average.
Compare this to defence spending. NATO countries have committed to 5% of GDP in defence and security by 2035. The fiscal multiplier for defence investment is 0.6 to 0.8 each euro generates 60 to 80 cents in GDP. Yet spending on health, which offers superior economic returns, remains politically difficult to increase. Europe found the political will to unlock substantial defence funds. Why not for health?
We’re on the cusp of a technological transformation that could reshape drug development and healthcare delivery. AI is already demonstrating the capacity to slash development costs and timelines while improving healthcare productivity.
AI applications in drug discovery could generate €86.5 ($100) billion to €518.8 ($600) billion in savings by 2050. Companies using AI in pharmaceutical R&D report 30 to 50% cost reductions in clinical trials and accelerate completion by over a year. AI-enabled early disease detection promises to reduce treatment expenditures substantially. This represents an escape from the current bind—if we materially and safely reduce development costs while improving healthcare efficiency, we create space for better pricing outcomes benefiting patients, payers, and industry.
The pharmaceutical sector has a trust deficit it must acknowledge. When people do form opinions about the industry, they’re shaped more by pricing controversies than by understanding of drug development.
The industry’s instinct when facing pricing pressure has been to issue warnings and threats—reduced R&D, delayed launches, threats to innovation. These may be legitimate, but they don’t build understanding or demonstrate value in terms policymakers relate to.
The sector has been working over many years to communicate the long-term value of investment in medicines. This is the better path, transparency about what drug development costs and why, demonstrating economic and health returns with hard evidence, and engaging in genuine dialogue about trade-offs rather than dismissing all pricing regulation as existential threats.
The transatlantic standoff has created an opening for a different conversation. What we need is recognition that health represents strategic investment in economic competitiveness and population productivity—with returns superior to defence spending.
The pharmaceutical industry will advance its interests more effectively through tying their success to the success of the economy overall. European governments need to recognize the broader economic returns from strategic health investment. Policymakers should explore frameworks that align innovation incentives with affordability objectives rather than treating these as fundamentally opposed.
We found the political will for defence when the case became clear. Now we need to make the same case for health, backed by evidence, enabled by technological transformation, and communicated with straightforward clarity. The alternative is sleepwalking into a future where nobody gets what they need.
