Falling US Drug Prices: Why That Could Become Expensive for Europe (Thanks to Pharma Lobbyists)
For decades, the United States was the high-price market for pharmaceuticals. These extremely high prices enabled manufacturers to accept lower prices in Europe. But with new government price negotiations in the U.S., this balance is shifting. Health economists therefore point out: when the world’s most profitable market lowers its prices, economic pressure on other countries increases — and Germany is one of the key markets affected.
In the article on GLP-1 products, you can see an example for med prices being quite high — and that prices in the U.S. are even significantly higher. Here, you‘ll get to know how pharmaceutical pricing on the U.S. market is set to change and why this may lead to rising prices on European markets.
The United States as the Most Expensive Drug Market
International comparisons have shown for years that medications are sold at significantly higher prices in the U.S. than in Europe. This fact played a central role in manufacturers’ global pricing strategies: high U.S. prices allowed them to accept lower prices in other countries without jeopardizing overall profitability.
The Political Will to Change This
With the Inflation Reduction Act, a U.S. law in force since 2022 that includes numerous measures to combat inflation, the government Medicare system has for the first time been permitted to conduct direct price negotiations for certain medicines.
The responsible authority published an official fact sheet with the first list of selected drugs subject to price negotiations (Centers for Medicare & Medicaid Services, 2023).
The Commonwealth Fund, an independent, non-profit U.S. foundation producing analyses, studies, and international comparisons of health system performance, describes this reform as a fundamental shift in previous U.S. pricing logic, as it establishes government negotiating power for the first time (Commonwealth Fund, 2025).
Why Europe Is Affected
The Organisation for Economic Co-operation and Development explains that due to international price referencing, price changes in one large market can exert pressure on other markets (OECD, 2018).
Health economists refer to this as a spillover effect.
Why the German Market Is Particularly Relevant
Germany is a key market for pharmaceutical companies in Europe because:
· early market access is possible,
· the statutory health insurance system is very large,
· prices determined under the AMNOG (“Arzneimittelmarkt-Neuordnungsgesetz” ~ “Pharmaceutical Market Restructuring Act”) are monitored internationally and, in some cases, used as a reference.
Pricing is determined through:
· benefit assessment according to §35a SGB V,
· reimbursement price negotiations according to §130b SGB V.
The reimbursement amount only applies from the seventh month after market entry.
For orphan drugs (medicines for rare diseases, including so-called neglected tropical diseases) a regular benefit assessment only takes place once annual revenue exceeds €30 million (G-BA, 2024). The price-regulating effect often only takes hold later. Until then, orphan drugs can therefore be significantly more expensive than other medications (IQWiG, 2024).
Such mechanisms gain importance because manufacturers may try to compensate for lost U.S. profits in other markets — and not only with less demanded meds.
Pharma Lobbyists: Busy “Representatives”
In the United States, lobbyists have been required to register officially since the mid-1940s. Analyses of these registers by the Center for Responsive Politics show that in the pharmaceutical and health products sector, well over 1,000 registered lobbyists representing various international pharma giants regularly address Congress. In 2018, a total of 1,451 registered lobbyists were active in Washington for the interests of the pharmaceutical and health products industry. With 535 members of Congress, this equals around 2.7 lobbyists per elected representative (OpenSecrets, 2018).
Picture this: three lobbyists trying to influence a single member of Congress in their interest! While this lobbying pressure can be clearly illustrated in numbers, the situation in Germany is different.
Only since 2022 has the Deutscher Bundestag maintained a mandatory lobby register in which representatives of all sectors are recorded. Before that, registration was voluntary. The register includes pharmaceutical sstakeholdersas well as large companies like Bayer, Pfizer, Roche, and Novartis with their German representations (status 2025). Adding together the registered representatives concerned with federal politics results in a low three-digit number. With 736 members of parliament, this corresponds to significantly fewer than 0.2 pharma lobbyists per member.
The systematic difference:
In the U.S., health policy is decided very directly at the level of Congress — e.g., when it comes to whether government programs are allowed to negotiate prices.
In Germany, lobbying work focuses less on individual members of parliament and more on legislative details, deadlines, exemptions, and evaluation criteria that later influence pricing. Drug prices here do not primarily arise from parliamentary decisions, but from a formal technical procedure consisting of benefit assessment and reimbursement negotiations. This form of early influence in the legislative process is also described by Michael Simon in his 2015 article for the Bundeszentrale für politische Bildung (~“Federal Agency for Civic Education”, bpb).
The U.S. Is Turning the Price Screw … Germany May Soon Feel IT
The United States is changing global rules. This can create increasing pressure on Europe — and Germany, due to its market size, early approval practice, and reference function, is particularly relevant for pharmaceutical corporations … one could also say: particularly affected by their activities.
FAQ – Frequently Asked Questions About Medication Prices
1. Could the situation in the U.S. lead to delayed introduction of (new) medicines in Europe or Germany?
Yes, industry analyses have described for years that pharmaceutical companies plan launches strategically. If a previously highly profitable market generates less revenue, the incentive increases to negotiate harder on prices in other important markets or to introduce products later.
2. Does this mean medicines in Germany will inevitably become more expensive?
No, but it means that manufacturers’ sales strategies may change. It remains to be seen whether the buyer side reacts strategically (and wisely).
3. Is Germany obliged to adopt prices from other countries?
No, however, German prices are frequently used as reference prices by other European countries. This makes the German market particularly interesting for manufacturers in terms of price setting.
4. Why do independent countries refer to prices in other countries at all?
Negotiation strategies include looking at prices in other countries to protect against overcharging.
5. What exactly is Medicare?
Medicare is the U.S. government health insurance program for people aged 65 and older, as well as certain younger people with disabilities. It is therefore one of the largest payers for pharmaceuticals in the world — and now allowed to negotiate some prices.
Further information on (questionable) practices of pharmaceutical companies and many other topics can be found in our blog articles, the volumes of our “Codex Humanus,” and the “Medizinskandale” series. You are welcome to visit our online shop.
Sources:
· Centers for Medicare & Medicaid Services (2023): “Medicare Drug Price Negotiation Program – Selected Drugs for Initial Price Applicability Year 2026,” Fact Sheet.
· Cubanski, J.; Neuman, T.; Freed, M. (2025): “Medicare Drug Price Negotiations: All You Need to Know,” The Commonwealth Fund.
· OECD (2018): “Pharmaceutical Pricing Policies in a Global Market,” OECD Health Policy Studies.
· Sozialgesetzbuch (SGB V) – § 35a.
· Sozialgesetzbuch (SGB V) – § 130b.
· G-BA – Gemeinsamer Bundesausschuss (16.05.2024): “Erneute Zusatznutzenbewertung von Orphan Drugs nach Überschreiten der Umsatzschwelle,” Fachnews 129.
· IQWiG (17.01.2024): “Preis- und Kostenentwicklung von Orphan Drugs,” Arbeitspapier GA22-01, Version 1.0.
· IQWiG (20.02.2024): “Das AMNOG wirkt … bei Orphan Drugs oft erst später,” Projektinformation zu GA22-01.
· Center for Responsive Politics OpenSecrets (2018): “Lobbying Data – Pharmaceuticals/Health Products Industry.”
· “Lobbyregister für die Interessenvertretung gegenüber dem Deutschen Bundestag und der Bundesregierung”
https://www.lobbyregister.bundestag.de/startseite
· Michael Simon: “Lobbyismus in der Gesundheitspolitik,” Bundeszentrale für politische Bildung (bpb), 2015.