U.S. Launches Trade Probe Into German Drug Pricing Policies

The U.S. Trade Representative opened an investigation Thursday into Germany's pharmaceutical pricing policies, accusing the country of systematically underpaying for new medicines. The probe, filed under Section 301 of the Trade Act, targets cost-containment measures that American officials say force U.S. patients and taxpayers to shoulder an unfair share of drug research costs.

"President Trump has made clear that American patients should not be shouldering a disproportionate share of global pharmaceutical research and development," USTR Jamieson Greer said in a statement. He singled out Germany's fast-tracked legislation that would further reduce spending on innovative drugs. "I am particularly concerned with news that Germany is fast-tracking legislation that would further reduce its spending on innovative pharmaceuticals," Greer said. He called the move "a serious step backwards."

Germany proposed a health-insurance overhaul in April to curb rising public healthcare costs. The draft law includes higher mandatory discounts from drugmakers for statutory insurance funds. Several pharma executives said the new discounts could lead them to delay or pull new medicines from the German market. The legislation is currently moving through parliamentary committees.

Section 301 allows the U.S. to impose tariffs or other trade penalties unilaterally if a foreign practice is deemed unfair. The same authority was used in previous trade disputes with China and the European Union. Greer said the investigation follows months of discussions with German counterparts that failed to resolve the pricing gap.

The Trump administration last year introduced a Most Favored Nation drug policy that ties U.S. drug prices to lower rates paid by other developed countries. That rule faces legal challenges and has not been fully implemented. The Germany probe signals renewed pressure on foreign pricing controls.

The investigation puts drugmakers with large German revenue streams in a difficult position. Lower reimbursement from the German system would reduce profits on new drugs. Tariffs on German pharmaceutical exports to the U.S. could escalate the conflict. The U.S. imports a range of German-made medicines, though the specific products targeted remain unclear. Administration officials argue the current model forces U.S. patients to subsidize research for the rest of the world. Germany and other developed countries negotiate lower prices to control public spending, a practice the White House says is unsustainable.

The German Health Ministry did not respond to a request for comment. The USTR has 12 months to complete the investigation and recommend action. The timeline could accelerate if Germany's legislation moves ahead before the probe concludes.