Health ministers from the twenty-seven member states have formally requested that the European Commission assess how the United States' most-favored-nation (MFN) drug pricing policy is affecting the European Union. The move, initiated during a meeting in Luxembourg, reflects growing concern that Washington's push to lower its own pharmaceutical costs may be inadvertently harming patient access to innovative medicines in Europe.
What Is the Most-Favored-Nation Policy?
In May of last year, President Donald Trump signed an executive order directing pharmaceutical companies to align the prices they charge in the United States with the lowest prices offered in other developed nations. Because the US accounts for more than half of global demand for prescription drugs, it has long been the most profitable market for drugmakers. The MFN policy aims to reduce that premium by tying US prices to those in countries like Germany, France, and Japan.
However, the policy may have unintended consequences for Europe. Drug companies, seeking to protect their margins, could respond by raising prices in smaller markets or delaying product launches there. A Reuters analysis of GlobalData figures, published in March, found that new drug launches in EU markets fell by roughly 35 percent in the ten months following the executive order, compared with the previous ten months.
“We need to understand how the MFN works and what general impact it has on EU markets,” Health Commissioner Olivér Várhelyi told journalists after the ministerial meeting. Várhelyi, a Hungarian official who took office in December, will oversee the assessment.
The Commission will examine which pharmaceuticals are most vulnerable to the policy, whether it is delaying launches, and whether some drugmakers are considering withdrawing from the European market entirely. The findings could inform future EU negotiating strategies with both the US and the pharmaceutical industry.
The issue is particularly sensitive given the broader context of transatlantic trade tensions. The European Parliament recently approved a new EU-US trade deal amid renewed threats of tariffs from the Trump administration. Any disruption to drug supply or pricing could further complicate those negotiations.
European health systems already face significant pressure from rising healthcare costs and an aging population. A prolonged slowdown in drug launches would hit countries like Poland, Greece, and Portugal hardest, where patients often wait longer for access to new treatments. Even wealthier markets such as the Netherlands and Sweden could see delays for niche therapies.
The assessment will also need to consider the role of the European Medicines Agency (EMA), which approves drugs for the entire EU. If companies prioritize the US market, they may submit fewer applications to the EMA, slowing the pipeline of new medicines for European patients.
Várhelyi did not provide a timeline for the report, but health ministers expect preliminary findings within six months. The outcome could shape EU policy on drug pricing, procurement, and even intellectual property rules.
For now, European officials are watching closely. As one diplomat put it: “We cannot afford to be the world’s pharmacy without getting the medicines we need.”
