The development of a new medicine is a long, complex and high-risk process. Every new treatment—from a therapy for diabetes to a drug for a rare disease—is the result of years of research, thousands of professionals involved and a very substantial investment that is funded, to a large extent, by the revenue generated from medicines already on the market. For decades, the US pharmaceutical market, through the country’s healthcare system, has funded a significant proportion of this global innovation.

For this reason, US decisions on drug pricing not only affect its own healthcare system but can also have a direct impact on the pharmaceutical industry’s ability to continue research and on the availability of new treatments in Europe and the rest of the world. The new Most Favoured Nation (MFN) policy, announced by Donald Trump’s administration last year, aims to ensure that the US will not pay more for certain drugs than higher-income countries, shifting pressure onto European markets and reigniting the debate on the global competitiveness of the biopharmaceutical sector.

Furthermore, this policy is accompanied by a second line of pressure: tariff threats and incentives designed to encourage companies to invest and produce more in the United States. In other words, a two-pronged strategy—prices plus tariffs—that is reshaping the global landscape of the pharmaceutical industry.

All this is unfolding at a particularly complex geopolitical juncture. The conflict in the Middle East triggered by the war in Iran is causing significant uncertainty in the energy and logistics markets, with potential repercussions for the costs of producing and supplying medicines. If the war drags on, the situation could resemble what happened with the conflict in Ukraine and the impact on inflation caused by rising energy prices. At that time, the impact on pharmaceutical companies from energy costs and rising raw material prices exceeded €900 million.

This situation comes on top of a scenario in which Europe was already losing competitiveness to the United States and China in biomedical research, manufacturing and investment. Europe must act to reverse the loss of competitiveness it has been suffering over the last two decades if it does not want to fall behind in biomedical research and, consequently, in its patients’ access to new treatments.

This report addresses the key questions raised by the MFN policy, tariffs and the new international context, and analyses how these could affect both Europe and Spain – and, of course, patients.

1. Why is the current international geopolitical situation key to understanding the future of medicines in Europe and Spain?

The development and availability of new medicines depend on a very delicate global balance between innovation, investment, production and market access. The decisions being taken by the United States on medicine prices, together with the threat of new tariffs and a geopolitical context marked by international conflicts such as those in the Middle East, are placing unprecedented pressure on that balance. All of this may affect Europe’s ability to remain competitive in biomedical research, attract investment, maintain medicine manufacturing and ensure that patients have timely access to new treatments.

2. Why does the conflict in Iran add to the uncertainty surrounding the global economy, and what effects might it have on international markets?

The conflict in Iran compounds an already highly complex geopolitical landscape and creates a new source of uncertainty and volatility for the global economy. Its impact is particularly significant in the energy markets, due to the strategic role of the Strait of Hormuz, through which a very significant proportion of the oil and liquefied natural gas transported by sea passes. Tensions in this region are already causing fluctuations in energy prices and financial markets, with potential inflationary effects if the conflict drags on, as has already occurred in other recent geopolitical crises.

3. How might the crisis in the Middle East affect the pharmaceutical industry and access to medicines?

Although the conflict does not directly affect the pharmaceutical sector, a prolonged crisis could have a significant indirect impact. Rising costs for energy, raw materials and international transport are driving up the costs of producing and supplying medicines. Unlike other sectors, the pharmaceutical industry operates in a price-regulated environment, which prevents these additional costs from being passed on to the final price, meaning they must be borne by the companies. In previous situations, such as the war in Ukraine, the sector has already absorbed a sharp rise in costs to ensure the supply of medicines, and that commitment to patients is once again key in a context of growing international uncertainty.

4. What is the Most Favoured Nation policy and why does the US want to apply it?

The Most Favoured Nation (MFN) policy is a measure promoted by the United States, announced in May 2025, which aims to ensure that the country does not pay a higher price for certain medicines than is paid in other developed countries (a list of OECD countries with a Gross Domestic Product [GDP] per capita exceeding 60% of US GDP). In practice, the United States compares international prices and uses the lowest price as a benchmark to determine what US healthcare programmes will pay. Its aim is to reduce the cost of medicines paid for by the US healthcare system.

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5. Which countries does the US use for price benchmarking, and why are medicines more expensive there than in Europe?

Depending on the US healthcare programme, prices are compared with those in countries such as Germany, France, Italy, the United Kingdom, the Netherlands, Sweden, Switzerland, Australia and Japan, amongst others, including Spain. Price benchmarking between healthcare systems is something that countries in Europe already use to set medicine prices.

On the other hand, prices in the US differ from those in Europe because the healthcare systems are very different. In Europe, healthcare systems are public, offer universal coverage and medicine prices are regulated. In the US, there is a mixed and fragmented system with private intermediaries that influence the price of medicines.

6. What is the impact of imposing tariffs on medicines?

On 3 April, the Trump administration issued a statement officially approving a new tariff framework for imports of pharmaceutical products. Specifically, for Europe and Spain, the ceiling has been set at 15% (with some exceptions), a decision that will have a direct impact on patients, healthcare systems and the pharmaceutical industry in the United States and Europe. Medicines are not simply consumer goods; they are a strategic and vital asset for the well-being of society, and no measures should be introduced that hinder their delivery to patients or restrict access to treatments for healthcare professionals and healthcare systems.

7. What role do tariffs play in the United States’ new strategy on medicines?

Tariffs form part of a broader US strategy to strengthen its industrial position. Alongside the Most Favoured Nation pricing policy, the threat of new tariffs aims to encourage pharmaceutical companies to invest and produce more within the country. This combination of pressure on prices and trade barriers can influence where decisions are made regarding the research, manufacture and launch of new medicines, with consequences for Europe and for patients’ access to biopharmaceutical innovation.

8. What implications does this situation have for the competitiveness of Europe and Spain in the field of medicines?

Europe is going through a difficult period of declining competitiveness compared to the US and China, primarily in terms of research, manufacturing and the launch of new medicines. Europe was a world leader in bringing new treatments to patients in the 1990s. In the 2000s, it lost its top spot to the US. And in 2024, China overtook Europe for the first time, relegating the EU to third place globally.

If prices in the US fall, putting pressure on European prices, this could:

Reduce R&D spending in Europe.
Jeopardise the continent’s strategic autonomy.
Deter investment in manufacturing and clinical trials in the region.
The new situation would deepen the competitiveness crisis that Europe has been experiencing over the last 20 years. And, specifically, the MFN policy could have a direct impact on the launch of new medicines in the European region.

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9. Could this measure lead to an increase in medicine prices in Europe?

No. In Europe, the prices of publicly funded medicines are regulated by governments. In Spain, for example, the prices of publicly funded medicines are gradually reduced over time. Under no circumstances can a pharmaceutical company unilaterally increase the price of a publicly funded medicine; any such increase must be agreed upon by the Interministerial Commission on Medicine Prices. However, in the context of the MFN policy and new tariffs, it is possible that the prices of new medicines may be affected in Europe; therefore, it is necessary to maintain protective measures such as the confidentiality of negotiated medicine prices, as there are expected to be fewer differences between launch prices in the US and the EU.

10. Why are not all the details of the prices paid by the State for medicines in Spain known?

The official price of publicly funded medicines in our country is public; it is published by the Ministry of Health. The only thing that is not made public is the final discount that the State negotiates with each company. Why not? Because if those discounts were published, Spain would lose its ability to negotiate lower prices, as other countries would automatically demand the same terms and the companies would stop offering discounts tailored to each healthcare system.

In short: transparency exists, but the details of prices and other negotiated funding conditions are kept confidential to protect the National Health System and ensure that Spain can continue to secure better prices.

11. Could the new US policy increase public healthcare spending in Spain?

Pharmaceutical expenditure accounts for only a fraction of total healthcare spending; moreover, medicines generate savings in other areas, such as hospital admissions, A&E visits, sick leave and pensions. A recent report by Analistas Financieros Internacionales (AFI) estimates that the savings generated in other areas of the public budget amount to two-thirds of the total volume of public pharmaceutical expenditure, due to the improved health of the population achieved through new medicines. And this is without taking into account the savings they generate in the private sector, such as reduced sick leave or the lower need for care for the sick. The price of a medicine must always be based on the value it brings to the patient and the healthcare system

However, the Spanish National Health Service (SNS) is clearly underfunded: Spanish public healthcare expenditure is well below the European average, both in per capita terms and as a percentage of GDP.

The challenge is to properly value innovation and speed up its delivery to patients. Medicines should be seen as an investment, not an expense: every euro invested in new medicines generates a 4-euro economic return for Spain.

12. Could this new scenario have an impact on the availability of new medicines for patients in Europe and Spain?

There is already a significant delay in the availability of medicines compared to the US and other markets. In Spain, patients receive new treatments, on average, more than 600 days after their European approval, to which must be added more than 150 days, also on average, until they are widely available across the autonomous communities. Global uncertainty does not help and requires us to remain vigilant and send political signals that firmly commit to biopharmaceutical innovation in Europe and in Spain.

Following the recent review of European pharmaceutical legislation, which unfortunately lacked the necessary ambition to halt Europe’s loss of competitiveness, new opportunities are now emerging with the future European Biotechnology Act, the European Health Data Space and the anticipated Law on Medicines and Medical Devices in Spain. All of these must foster a genuine innovation ecosystem and facilitate faster and more predictable access to new treatments.

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13. Is investment in research, production and clinical trials at stake?

Yes. The US is attracting huge investments (over $500 billion announced by the industry in recent months) and Europe needs to respond if it is to remain a key player in innovation, manufacturing and clinical trials. In the specific case of Spain, the impact could be significant, as our country is a European leader in clinical trials and pharmaceutical production exceeds €20 billion a year, with medicines being the fifth most exported product. However, maintaining this leadership requires continuous effort and decisive, stable support policies, as well as initiatives to reduce the time it takes for innovative medicines to become available to patients in Spain.

14. Is there a risk to the supply of medicines in Europe?

At present, no supply issues are anticipated as a result of US MFN policy or potential new tariffs, although there could be shortages of medicines if the conflict in the Middle East drags on.