Last Thursday, EMD Serono became the latest pharmaceutical company, after Pfizer and AstraZeneca, to agree to a deal with the Trump Administration to reduce the prices of its drugs. Under these deals the companies must sell their drugs to the federal government at the “Most Favored Nation” price.

Under the Most Favored Nation system, the price pharmaceutical companies can charge for a drug is equal to the lowest price among selected high-income countries. Many of those countries are in Europe, where they have lower drug prices because they impose price controls.

The Trump Administration is trying to address public frustration with high drug prices. However, what Most Favored Nation drug prices mean, in effect, is the federal government will import European price controls. The rub is that it can’t do that without also importing the biggest problem caused by price controls, namely shortages.

For patients, drug shortages can cause anxiety, poor health, and even death. In August 2024 David Allen, a military veteran in the United Kingdom, said he was living “day-to-day” because he was struggling to get a supply of Creon. Allen’s pancreas no longer makes the enzymes needed to digest food, the result of his treatment for pancreatic cancer four years earlier. Creon replaces the missing enzymes. Without it, Allen would end up in the hospital with a feeding tube. Allen said it was depressing and frightening when the Creon starts “running out and you haven’t got a clue where the next supply is going to come from.”

Another U.K. citizen, epilepsy patient David Crompton, was unable to get Tegretol, an anti-seizure medication, for about ten days in early 2024. He survived a fall which the physicians at his hospital attributed to increased seizure activity. 

In December 2024 the U.K. faced another Tegretol shortage. That month, Crompton suffered another fall that killed him. The coroner ruled the fall was likely due to his inability to obtain Tegretol. Crompton was 44 years old.

Many other epilepsy patients in the U.K. face similar risks. A recent survey by the Epilepsy Society found that seven in ten patients with either epilepsy or Parkinson’s disease had experienced difficulties getting their medicines in the last year.  Of those with epilepsy, 37% “reported having seizures induced by having to switch or skip medication.” It’s not just epilepsy and Parkinson’s patients who struggle. For all drugs in the U.K., the Department of Health and Social Care sent out over 1,900 formal alerts to healthcare providers notifying them of a drug shortage or discontinuation in 2024.

The situation in the rest of Europe is equally grim.

The Pharmaceutical Group of the European Union has been tracking pharmaceutical shortages in Europe for nearly a decade. Its research shows shortages are widespread. Three-quarters of the 28 countries surveyed in the 2024 PGEU Medicine Shortages Report had at least 200 drug shortages at the time of the survey, while 1 in 5 had over 600.

Shortages of cardiovascular medications, antibiotics, and nervous system drugs were the most common. All but one of the 28 countries suffered shortages of cardiovascular medications and antibiotics in 2024, while 86% experienced shortages of nervous system drugs.

Price controls cause shortages because, in part, politicians want to win votes. When politicians impose a price control, they set the price lower than the market price since “low prices” are the best way to please voters. However, artificially reducing the price of drugs does not reduce the costs associated with producing those drugs. Pharmaceutical companies will be less likely to manufacture drugs since the lower prices will make it harder to cover costs, let alone make a profit. On the other hand, artificially lower drug prices incentivize consumers to demand more drugs than they would at the higher market price. When consumers demand more and producers make less, a shortage results.

The Trump Administration’s efforts to lower drug prices in the U.S. are well-intentioned. Unfortunately, the laws of economics don’t care. It is impossible to bring European price controls to our shores without also bringing shortages. It will be the very same patients the Trump Administration is trying to help who will suffer.

David Hogberg is an independent writer living in Washington, DC. He is author of the Substack, The Sowell Man.

Image from Grok.