OPINION:
Today, medical leaps that once took decades are now happening in months. The improved quality and longevity of life that these treatments and cures provide are nothing short of a miracle of ingenuity, innovation and the human mind.
Although the development of treatments is a global effort, much of the world’s most critical advancements have come from the United States. A bastion of innovation and a free market that rewards risk-taking, America has helped power the world’s capacity to develop breakthroughs.
Yet, as I warned late last year, American policymakers’ efforts to pivot toward government-set care pricing are leaving Europeans, including me, bewildered.
“Most-favored-nation” pricing, an effort to peg American drug prices to those of nations with socialized care, risks sending America’s leadership in innovation down the same slope that has woefully diminished Europe’s biopharmaceutical capacity and capabilities.
Price controls are a dangerous threat to the very innovation and ingenuity that are bringing us closer to treating and curing a host of life-altering and life-ending diseases.
Now, while some in the United States flirt with importing Europe’s failed model, many European governments are doubling down on it.
Rather than reforming systems that hurt innovation and access, they are entrenching them, often at America’s expense.
Germany provides a clear and troubling example. Long considered an economic anchor of Europe, it has increasingly relied on aggressive price-setting and rebate mechanisms to limit its payments for medicines.
Recent proposals would expand these policies further, increasing mandatory discounts on manufacturers and embedding automatic price reductions into law, steps widely understood to place additional pressure on pharmaceutical investment and availability.
AstraZeneca has already warned that German policies may limit the company’s ability to introduce new medicines in the country.
Reports on Germany’s ongoing healthcare cost-containment efforts underscore a broader political consensus in favor of tightening, rather than loosening, price controls.
Yet Germany is not isolated in this. Across Europe, governments continue to treat innovative medicines as a cost to be minimized rather than a value to be rewarded.
The result is predictable: lower investment, fewer clinical trials and delayed or denied patient access.
Because the United States remains the free world’s engine of pharmaceutical research and development, these policies effectively shift the burden of funding innovation onto American patients and taxpayers.
In economic terms, Europe is free riding.
The U.S. has begun to recognize this imbalance. Efforts to ensure that allied nations contribute more fairly to the cost of innovation — such as recent bilateral commitments on pharmaceutical spending between the United States and Britain — reflect a necessary recalibration and should serve as a model for the future.
Trade policy can and should be used to encourage higher standards, greater transparency and more equitable burden-sharing, but signals alone are insufficient. When major economies respond by intensifying the very practices under scrutiny, the credibility of American leadership is tested.
This is where decisive action becomes essential. U.S. law already provides tools to address discriminatory or unreasonable foreign practices that harm American industries. A targeted investigation into foreign pharmaceutical pricing regimes (a Section 301 investigation) would bring long-overdue scrutiny to policies that systematically undervalue innovation while relying on it.
More important, it would create leverage to negotiate agreements that raise standards rather than reinforce a race to the bottom.
Such an approach should not be viewed as protectionism. Rather, it is a defense of the principles that have driven America’s unparalleled medical progress: open markets, strong property rights and rewards for risk-taking.
From a European perspective, this may be uncomfortable, but it is necessary. The current trajectory in which Europe pays less, regulates more and innovates less while the U.S. carries the load is unsustainable and inconsistent with the values of the trans-Atlantic relationship.
For American policymakers, the lesson should be clear: Importing European-style price controls would not discipline foreign free riding. It would validate it.
A more effective course is to reinforce market principles at home and insist on fair participation abroad.
The United States has led the world in medical innovation not by accident, but by consequence of American virtue. Preserving that leadership will require both resisting the temptation to replicate failed policies and confronting those who continue to depend on them.
• Barbara Kolm is an economist, director of the Austrian Economics Center and a member of the National Council of Austria.
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