USTR says Germany's underpayment for innovative medicines burdens US commerce, risking fresh tariffs as Berlin seeks to cut insurer drug costs.
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The United States has started an investigation over pharmaceutical pricing policies and other practices in Germany, a move that could lead to fresh tariffs.
The probe seeks to determine if “persistent underpayment for innovative pharmaceutical products by Germany is unreasonable or discriminatory and burdens or restricts US commerce,” the US Trade Representative’s office announced Thursday.
The move, launched under Section 301 of the Trade Act of 1974, comes months after the administration of President Donald Trump tapped similar authorities to investigate dozens of trading partners over issues including forced labor and industrial overcapacity.
A federal register notice released by the USTR charged that “evidence indicates that Germany implements unfair pricing policies and practices with regard to innovative pharmaceutical products.”
It added that reduced revenue associated with these practices also appeared to contribute to reduced investment for research and development, among other issues.
“As a result, the United States pays a disproportionate share of global R&D costs for innovative pharmaceuticals,” the notice said.
“President Trump has made clear that American patients should not be shouldering a disproportionate share of global pharmaceutical research and development,” US Trade Representative Jamieson Greer said in a statement.
He cited Germany’s plans to fast-track legislation “that would further reduce its spending on innovative pharmaceuticals.”
The German government is seeking to overhaul its statutory health insurance system, including through lowering the prices public insurers pay for medicines, in a bid to rein in public spending.
The US trade envoy’s office will next receive comments and hold a hearing in September as part of the investigation.
The German health ministry confirmed talks on pharmaceutical prices were taking place with Washington but declined further comment.
However, Health Minister Nina Warken said earlier this week that it would be tough for Germany to pay higher prices.
“We have a tense financial situation in our health insurance system,” she said.
Germany’s VCI pharmaceutical industry federation said it took the US move “very seriously.”
“In an already tense trade policy environment, companies need reliability and planning certainty — not a new source of disruption,” the group said in a statement to AFP.
Trump has rolled out sweeping tariffs since returning to the White House last year, though the US Supreme Court struck down many of them in February.
His administration has since turned to trade probes as officials look to reimpose more lasting duties.
This month, the USTR’s office proposed new tariffs of up to 12.5 percent on dozens of countries under its investigation into forced labor concerns.
