Mind the Gap: Understanding the Global Imbalances in Spending for Innovative Medicines
Author(s)
Sarah L. McKeown, BA, MSPH1, Richard Kane, MPP2.
1University of Oxford, Oxford, United Kingdom, 2PhRMA, Washington, DC, USA.
1University of Oxford, Oxford, United Kingdom, 2PhRMA, Washington, DC, USA.
OBJECTIVES: The US Administration’s executive order to address Americans’ disproportionate contribution to global pharmaceutical R&D—sometimes called “foreign freeloading”—and the push for international reference pricing have renewed focus on drug pricing disparities among high-income countries. Amid historic life sciences innovation, patients in many countries face delayed, restricted, or no access to new medicines. Our research examines country-level spending on innovative medicines relative to economic size and explores the broader risks and opportunities these imbalances present.
METHODS: We analyzed net spending and GDP shares for high-income countries based on new active substances launched globally from January 1, 2014, to December 31, 2023, approved by regulatory bodies in the US (FDA), Europe (EMA), or Japan (PMDA). Launch and approval data came from IQVIA, GlobalData, NAVLIN, and regulatory agencies. Net spending was calculated by subtracting rebates, discounts, and clawbacks from list sales using IQVIA MIDAS®, GlobalData, and public reports (e.g., CEPS, NIHDI MORSE). We also assessed 2023 GDP per capita spending on protected brand medicines, split between those launched in the past 10 years and earlier.
RESULTS: Access imbalances are driven by health insurance design, pricing and reimbursement policies, and levels of public funding for innovation. The US accounts for 34.5% of high-income GDP but 56.7% of net spending on new medicines; the EU makes up 33.5% of GDP but only 25.6% of spending. In 2023, the US spent 0.8% of GDP per capita on new medicines—more than Spain (0.5%), Italy (0.5%), Germany (0.4%), France (0.3%), and the UK (0.3%). These disparities highlight systemic tensions.
CONCLUSIONS: The US effort to correct global spending imbalances brings risks and opportunities for patients worldwide. Europe’s austerity-driven approaches and growing US support for reference pricing reveal cracks in the global pharmaceutical system. Policymakers must balance cost control with sustaining innovation and equitable access, recognizing that today’s funding choices shape tomorrow’s outcomes.
METHODS: We analyzed net spending and GDP shares for high-income countries based on new active substances launched globally from January 1, 2014, to December 31, 2023, approved by regulatory bodies in the US (FDA), Europe (EMA), or Japan (PMDA). Launch and approval data came from IQVIA, GlobalData, NAVLIN, and regulatory agencies. Net spending was calculated by subtracting rebates, discounts, and clawbacks from list sales using IQVIA MIDAS®, GlobalData, and public reports (e.g., CEPS, NIHDI MORSE). We also assessed 2023 GDP per capita spending on protected brand medicines, split between those launched in the past 10 years and earlier.
RESULTS: Access imbalances are driven by health insurance design, pricing and reimbursement policies, and levels of public funding for innovation. The US accounts for 34.5% of high-income GDP but 56.7% of net spending on new medicines; the EU makes up 33.5% of GDP but only 25.6% of spending. In 2023, the US spent 0.8% of GDP per capita on new medicines—more than Spain (0.5%), Italy (0.5%), Germany (0.4%), France (0.3%), and the UK (0.3%). These disparities highlight systemic tensions.
CONCLUSIONS: The US effort to correct global spending imbalances brings risks and opportunities for patients worldwide. Europe’s austerity-driven approaches and growing US support for reference pricing reveal cracks in the global pharmaceutical system. Policymakers must balance cost control with sustaining innovation and equitable access, recognizing that today’s funding choices shape tomorrow’s outcomes.
Conference/Value in Health Info
2025-11, ISPOR Europe 2025, Glasgow, Scotland
Value in Health, Volume 28, Issue S2
Code
PT9
Topic
Economic Evaluation, Epidemiology & Public Health, Health Policy & Regulatory
Topic Subcategory
Insurance Systems & National Health Care, Pricing Policy & Schemes, Public Spending & National Health Expenditures, Reimbursement & Access Policy
Disease
No Additional Disease & Conditions/Specialized Treatment Areas