Across Europe, countries are spending far less on prescription drugs compared to the United States. A 2022 study revealed that while the U.S. spent more than $617 billion on medications, 24 European nations combined spent just $233.5 billion. Despite these lower costs, European countries are often described as tough negotiators by pharmaceutical companies. The difference in spending is drawing new attention after U.S. political leaders proposed aligning drug prices with those paid overseas.
U.S. Drug Spending Remains the Highest in the World
In 2022, the United States spent $617.2 billion (€542.7 billion) on prescription medicines, according to a study by the RAND Corporation. That’s nearly three times the amount spent by 24 European countries, which together spent $233.5 billion (€205.3 billion).
This vast spending gap has triggered political debate in the U.S. In a past statement, former President Donald Trump said, “We’re going to pay what Europe pays,” criticizing European governments for being “brutal” and “nasty” in how they negotiate prices with pharmaceutical companies.
His plan aimed to lower U.S. drug costs by linking them to the lowest prices paid by other wealthy nations. However, how this policy would be enforced — and whether it would actually lead to savings — remains unclear.
Europe Uses Direct Negotiations and Price Comparisons
Most European countries negotiate directly with drug companies to agree on prices, unlike the free-market pricing system in the United States. These governments often rely on what’s called “external reference pricing”, comparing drug costs in other countries before setting their own.
A report from the World Health Organization (WHO) notes that this method helps governments keep costs under control. Still, drug prices across Europe vary due to private negotiations and local priorities.
For instance, Switzerland spends around €525 per person per year on medicines, while Croatia spends only €262. These price gaps reflect different income levels, health system structures, and negotiation strategies.
How Countries Decide What to Pay
Each European country uses its own rules to decide what a drug is worth. In England and Sweden, health authorities focus on how cost-effective a drug is. In Germany, the focus is on how well the drug performs compared to treatments already available.
“There’s essentially no transparency,” said Huseyin Naci, a health policy expert at the London School of Economics. He explained that confidential deals between governments and drug companies can lead to high prices, especially for newer or rare disease treatments.
Even with controls, drug prices have been rising. Between 2012 and 2022, Germany’s hospital drug costs rose by 11.5 percent, while costs in retail pharmacies increased by 2.6 percent. These numbers raise concerns among health insurers and policymakers.
Cost Pressures on National Healthcare Systems
Across the continent, European health systems are feeling the strain. “Prices are already too high in many countries for health systems to handle,” warned Naci. He added that any increase caused by U.S. market pressure or pharmaceutical lobbying “would be highly disruptive.”
European citizens typically pay less out-of-pocket for medications than Americans. In most countries, public health insurance covers the majority of drug expenses. However, co-payments or additional fees can apply, especially for newer drugs.
The WHO notes that in Estonia, Poland, and France, fixed prescription fees are often used to keep patient spending predictable and fair.
Coverage Differences Across Europe
In Cyprus, public health programs and mandatory insurance paid for about 90 percent of drug costs in 2022. By contrast, in Bulgaria, only 23 percent of total drug expenses were covered by public sources — leaving patients to pay most of the rest.
Such differences show how national policies and economic priorities shape drug coverage. Countries with lower public spending often face harder choices about what medicines to include in their health plans.
U.S. Pressure Could Disrupt Europe’s Balance
As the U.S. continues to seek lower medicine prices, Europe may feel indirect effects. Pharmaceutical firms may raise European prices to make up for losses in the American market. But experts say that Europe’s tight health budgets leave little room for such increases.
“There’s little room left in health budgets for even higher drug prices,” Naci emphasized.
While the U.S. continues to struggle with high drug prices, European nations show that firm negotiations, cross-border comparisons, and public healthcare priorities can help control costs. But with global pressure growing, even these systems may soon face tough choices.