Pharmaceutical companies, led by Pfizer’s CEO Albert Bourla, met with the Trump administration to discuss the implementation of an executive order signed by President Trump on May 12. The order requires drug companies to align their US prices with the lowest price of a set of economic peer countries. However, Bourla proposed an alternative solution, suggesting that other countries should spend a certain percentage of their GDP per capita on innovative medicines. He suggested a NATO-type agreement, where each country would commit to a minimum 2% of their national GDP on research and development spending.
Bourla warned that if the US implements price controls and other countries do not increase their prices, Pfizer may not make its drugs available for government reimbursement in those countries. This proposal is likely to create challenges for Ireland, which lags behind other countries in research and development expenditure. According to OECD and World Bank figures, Ireland’s R&D spending as a percentage of GDP is 0.9%, well below the EU average of 2.29% and significantly lower than countries like the US (3.6%) and Israel (6.3%).
Economists believe that Trump is using unfavorable policies to coerce the pharmaceutical industry into increasing investments in the US. Several large pharma companies have announced major US investments, but Pfizer remains an exception to this trend. Bourla stated that Pfizer has invested in US manufacturing and will continue to do so, but the risks posed by Trump’s policies make it difficult for the company to commit further.
Pfizer’s hesitation to invest further in the US may be good news for Ireland, as the company is unlikely to back off its Irish investments anytime soon. However, Bourla’s call for more R&D support in Europe, including Ireland, is a warning that the country needs to increase its investment in research and development to remain a competitive location for pharmaceutical companies. Many pharma companies are leveraging the US threat of tariffs on drug imports to push for policy changes in the EU, and Ireland’s Research and Innovation Act 2024 may not be sufficient to meet the specific requirements of the pharma industry. The Act replaces Science Foundation Ireland, but it does not commit to doubling the level of funding to €2bn per year needed to reach EU level.