Novartis CEO Vas Narasimhan says Europe needs a “complete rethink” of how it prices its drugs, warning that the entrance of new pharmaceuticals into its markets could be delayed.
With his comments on Tuesday, Narasimhan echoed calls from leaders of other European drugmakers—such as Roche and AstraZeneca—who have been critical of Europe’s healthcare policies, which they say hinder innovation.
Last week, Roche CEO Thomas Schinecker referred to Europe’s bureaucracy and over-regulation as “mind-blowing” and warned that the continent was falling further behind the United States and China as an industry innovator.
The criticisms come after the industry’s top companies—including Novartis, Roche and AstraZeneca—have made most-favored-nation (MFN) pricing deals with the U.S. and with President Donald Trump asking other wealthy nations to pay their “fair share” for medicines.
Earlier this month, Germany unveiled a reform package that would cut healthcare costs by billions and would trigger discounts on branded medicines.
“We’ve been large investors in Germany for decades and I would say more broadly, the pharmaceutical industry is one of the largest employers and sources of innovation in Europe,” Narasimhan told reporters during a Tuesday conference call as Novartis revealed its first-quarter financials. “Policies like this send the wrong signal to a high innovation industry like ours, where we see U.S. and China actively investing in the biotech ecosystem to make it highly competitive.”
On the flip side, the U.S. recently formed a partnership with the U.K., which will free it from tariffs on pharmaceutical products exported to America in exchange for the U.K. increasing its spending for novel drugs by 25%.
Backing up Narasimhan’s warning that there could be a delay in access to new medicines in Europe is a recent report from GlobalData, which showed that since Trump laid out his MFN plan in May of last year, new drug launches in Europe have declined by 35%.
“We are engaging with governments across Europe as well as in Japan, to hopefully get to a better place. I think we’re not seeing the progress that we had hoped to see at the pace that we had hoped to see, so I think there has to be some urgency here,” Narasimhan said. “I do expect across the industry, there will be difficult decisions companies will have to make in terms of how they launch or ultimately progress.”
Since Trump’s MFN pricing scheme is tied to what other wealthy countries pay for their drugs, it is imperative for other countries in Europe to increase their healthcare spending, Narasimhan said.
“What’s very important now is that we continue to advocate for the European government to ensure they’re properly rewarding innovation and not take policies that really don’t enable companies like ours to continue to invest in Europe, in clinical trials, in manufacturing,” Narasimhan said. “Europe needs a healthy ecosystem, which is going to require a complete rethink on how reimbursement systems work in the continent.”
