Europe: A Cautionary Tale for America
Europe once led the world in life sciences innovation. The second half of the 20th century, however, brought a steep decline for European countries, who drove away innovation with strict price controls and a sluggish regulatory system. The result: fewer new treatments reaching patients, Stifled Research & Development, and growing dependence on the U.S. for lifesaving treatments and cures.
As U.S. policymakers weigh whether to adopt foreign-style pricing frameworks such as most favored nation drug pricing, Europe’s trajectory offers a cautionary lesson.
FEWER TREATMENTS
Over the past five years, 40% of new U.S. drug launches never reached major European markets – keeping innovative medicines out of patients' hands.
STIFLED R&D
Price controls in Europe and other OECD countries reduce global pharmaceutical R&D by over $56 billion annually, costing the world approximately 25 new drugs each year.
FREELOADING OFF AMERICAN PATIENTS
American patients are subsidizing European health care. European countries spend roughly half of what the U.S. does on innovative medicines. Even after adjusting for GDP, France spends 72% of U.S. levels, Italy 70%, Switzerland 66%, and the Netherlands just 29%.
THE CHOICE IS CLEAR:
Maintaining America's leadership in life-saving innovation requires modernizing regulatory frameworks, rejecting harmful price controls and preserving smart intellectual property protections.
If the U.S. fails to do this, we risk following Europe down the path of reduced R&D, fewer breakthroughs and dependence on others for medical progress.
WHAT THE EXPERTS ARE SAYING
"As we’ve seen in Europe, top-down economics has gutted the free market and hollowed out its medical manufacturing capacity, leading to drug shortages and delayed access to innovative treatments. Now, the continent relies on medical breakthroughs developed by American companies trickling down to its residents. The U.S. would be wise to avoid such self-sabotage."
"Europe's price controls have reduced its once-thriving pharmaceutical industry to dust, while Europeans (and Australians and Canadians) have access to far fewer new drugs than are available to Americans, including breakthrough cancer treatments. Those nations also show how a lack of innovation leads to even higher healthcare costs in the longer run."
“President Trump is correct to call out European free-riding and work to prevail upon other nations to spend more on innovative medicines that deliver tremendous improvements in the quality and longevity of life. But the United States should not be importing shortsighted foreign drug prices into the U.S. market.”
"Wealthy foreign countries, particularly in Europe, rely on government-established ‘health technology assessments’ (HTAs) to artificially undervalue breakthrough innovations that purposefully omit quantifiable, real-world values. These HTAs use faulty and outdated methodologies to routinely set drug prices far below the actual societal and economic benefits new medicines deliver, often by more than 90%.”
"MFN mirrors the very same policies that led to the decline in Europe many decades ago. Europe used to lead the world in innovation in the life sciences until the late 1980s and early ‘90s. But then the U.S. came along and prioritized R&D at the same time Europe was deprioritizing investment R&D and we’ve held that position ever since."
"Importing European-style price controls won't help Americans access medicines or make them cheaper. Rather, these policies will dampen innovation and R&D, threaten patient access and empower bureaucrats abroad to undermine America's health system."