US tariff policy changes are forcing European pharmaceutical firms to cut drug prices or face new barriers. The European industry warns of growing risks to investment and innovation. The sector now trails China and the US in discovering new treatments.
Changes in US tariff policy are putting European pharmaceutical companies under pressure to lower drug prices for the American market or face trade barriers. The Federation of European Pharmaceutical Industries and Associations (Efpia) warns that the measures could further weaken Europe’s position in medical new idea and investment.
The basic issue is the US administration’s push for Most Favoured Nation (MFN) pricing. It requires drugmakers to match the lowest global prices or face tariffs. Twenty-six major pharmaceutical firms have already signed agreements with the US to avoid the tariffs, agreeing to lower their prices in the American market. The effects could reach Europe, where medicine costs may rise and access to new treatments could become more limited.
In April 2026, the US announced a 100% tariff on patented pharmaceuticals. The rate falls to 20% for companies that localize production, while those signing MFN pricing agreements could face a 0% rate.
Efpia says there is still no clear evidence of how these US policies will affect European patients. The impact on drug availability and national healthcare budgets is also uncertain. The outcome will depend on how companies respond and what steps European governments take. Uncertainty is growing, especially after a recent study in The Lancet suggested that US measures could directly raise European drug prices.
Europe’s pharmaceutical sector has already lost ground. Efpia says the continent now attracts much less global investment. It runs only half as many clinical trials as it did ten years ago, and has slipped to third place behind China and the US in discovering new treatments. The decline affects patients and the wider economy.
From September 1, 2026, the EU-US trade structure specifies that only MFN tariffs will apply to generic pharmaceuticals and their ingredients. Stricter tariffs will remain for patented drugs. European companies so face the greatest risk in the new medicines segment, especially if manufacturers shift pricing strategies across markets.
The MFN pricing policy aims to lower costs for US consumers, but could distort the global market for new medicines. Efpia warns that it may limit the worldwide availability of new drugs, especially in countries included in MFN agreements. The group says Europe needs to make its market more attractive to global pharmaceutical companies and ensure medical new idea is adopted as quickly as in other leading countries.
Despite the modeling published in The Lancet, Efpia remains cautious: the study’s conclusions depend heavily on its assumptions. The group argues that Europe cannot afford to stand by as it falls further behind in pharmaceutical research and development. Targeted action to boost competitiveness and keep investment in Europe is now urgent.
These developments reflect a broader pattern of regulatory and market changes affecting major European industries, as seen in the recent Acciona Energía takeover battle. Both cases show how outside policy changes can reshape entire sectors, forcing European companies to adapt or risk losing ground globally.
The US tariff strategy reaches beyond trade: it challenges Europe’s ability to compete in medical new idea. Unless European governments and industry leaders move beyond cautious statements and take concrete action, the continent risks falling further behind in global healthcare. Efpia warns that without urgent steps, Europe’s influence in shaping the future of medicine will continue to shrink.
