US Drug Price Pressure May Raise Costs in Israel, Coface Warns
Translated & summarized from NEWSru Israel by baba
US pressure to lower drug prices is impacting pharmaceutical companies, leading them to seek higher prices in Europe. A Coface report highlights that US drug prices are significantly higher than in Europe, with the US leading in prescription drug spending. European countries are adopting varied strategies to manage costs, while facing challenges from aging populations and budget deficits. The CEO of Coface Israel noted that while Israel currently benefits from moderate prices, changes in European pricing could lead to increased costs domestically.
The story in 6 lines · by baba
- US pressure on drug prices is causing pharmaceutical companies to seek higher prices from European governments.
- US patented drugs are four times more expensive than in Europe, with the US spending 1.6% of GDP on prescription drugs.
- European nations like the UK, Germany, and France are implementing diverse strategies to control drug costs.
- Aging populations and budget deficits limit Europe's ability to absorb rising drug prices.
- Chinese companies are increasing their share of international clinical trials, surpassing Europe.
- Israel's moderate drug prices are linked to European trends, making it vulnerable to future European price hikes.
US pressure on pharmaceutical companies to lower drug prices is impacting their profits in the American market, according to an economic review by credit insurer Coface. The US administration is negotiating prices for Medicare and Medicaid, bypassing intermediaries via TrumpRx, and threatening to link prices to international levels. To offset these losses, drugmakers are seeking higher purchasing prices from European governments, indirectly supported by the US view that global markets should share research and development costs.
Coface data indicates that patented drugs in the US are, on average, four times more expensive than in Europe. The US leads OECD countries in prescription drug spending at 1.6% of GDP, compared to Germany (1.5%), France and Switzerland (1.1%), and the UK (0.6%). This disparity is attributed to the decentralized US market dominated by intermediaries who add commissions, inflating prices.
European nations are responding differently to the pricing pressure due to the absence of a unified EU procurement and pricing mechanism. The UK has agreed to a 25% net price increase for new drugs and a doubling of public drug spending by 2036 to maintain its status as an innovation hub and secure exemption from US tariffs. Germany, conversely, raised mandatory payments to manufacturers from 7% to 15.5%, aiming to save €4.1 billion, but this led to a 50% rise in patient co-payments and fears that companies may stop launching new drugs there.
France permits high initial prices for breakthrough drugs, followed by sharp reductions, projecting €3 billion in savings, while also promoting domestic R&D. Europe's capacity to absorb price increases is constrained by significant budget deficits and aging populations, with Italy, Spain, and Germany projected to have over 30% of their populations aged 65+ by 2045. This standoff is already costly for Europe, as companies like AstraZeneca, Johnson & Johnson, and Roche are shifting billions of dollars in investments to the US. Meanwhile, China is surpassing Europe in international clinical trials, increasing its share from 11% in 2019 to a projected 17% by 2025.
Michael Nachmanovich, CEO of Coface Israel, stated that the Israeli market currently benefits from moderate prices due to its linkage of maximum drug prices to European levels and the negotiating power of its health funds. However, he warned that any shift in European pricing trends could consequently lead to higher drug costs in Israel.
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