Truth or tale: Are US patients subsidising healthcare in Switzerland?
Series Truth or tale,
Episode 4:
US President Donald Trump says US patients are subsidising healthcare in the rest of the world. Is this true? Swissinfo took a look at the facts.
US President Donald Trump argues US patients pay high prices for medicine so pharmaceutical companies can invest in new treatments that benefit the whole world. As Trump sees it, US patients are subsidising healthcare in other countries.
There is some truth to this.
Are US drug prices really that high?
The US makes up just 4.2% of the world’s population but delivers 40% to 60% of total revenue for big pharma companies – including Swiss companies Roche and Novartis. Last year, just over half of Roche’s global pharmaceutical revenue (CHF46 billion, $57 billion) came from the US.
This is because companies sell more medicine in the US and charge more. Multiple studies, including this oneExternal link from the Rand corporation, an American think tank, show prices of brand-name prescription drugs are two to three times more in the US than in Europe.
However, Switzerland still has some of the highest drug prices and per capita healthcare costs in Europe.
Why are US drug prices so high?
Unlike in Switzerland or most of Europe, there are no government price controls or a central price negotiator. The Inflation Reduction Act, enacted in 2022, authorised the US government to negotiate directly with drug companies on some drugs for the state-run insurance scheme for seniors (Medicare). But this is only for a small set of drugs and patients.
In May, Trump announced the “most-favoured nation” executiveExternal link order, which intends to tie US drug prices to those paid by other developed countries. This would bring down drug prices in the US by 60% to 90%, according to Trump. He also called on European governments to raise prices to make up for any loss in revenue.
He restated his demands this summer. Trump sent letters to 17 major pharmaceutical companies calling for immediate measures to lower drug prices in the US.
More
Despite Trump’s bold claims, medicine prices in Europe won’t rise anytime soon
What happens if prices drop in the US?
The ten largest pharmaceutical companies spend around 20% of their global revenue on new treatments. If prices drop in the US (and nothing else changes) companies will have less revenue, which could lead to less investment in new medicine.
But there remains a big question: how much profit companies make on high US prices.
Edited by Veronica DeVore/Virginie Mangin/ts
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