The U.S. government has argued that it pays too much of biopharma R&D costs, demanding that other high-income countries contribute fairly to global innovation efforts.
The U.S. Trade Representative is investigating Germany’s drug pricing policies to determine if the country’s actions leave the U.S. with a disproportionate share of global R&D costs.
USTR ambassador Jamieson Greer has launched the probe under Section 301 of the Trade Act of 1974, which focuses on unfair trade practices that impact the U.S.
“President Trump has made clear that American patients should not be shouldering a disproportionate share of global pharmaceutical research and development,” Greer said in a Thursday release. “I am particularly concerned with news that Germany is fast-tracking legislation that would further reduce its spending on innovative pharmaceuticals. This is a serious step backwards at a time when our trading partners need to step up and start paying their fair share to fund innovative pharmaceutical research and development.”
In April, Germany announced a new draft law designed to save more than €16 billion ($18.3 billion) in healthcare spending and control insurance rates. The country’s leaders pitched the plan as a necessary response to the widening deficit at state insurers, which is forecast to balloon from €15.3 billion ($17.5 billion) in 2027 to €40.4 billion ($46.3 billion) in 2030.
Drugmakers are against the changes, with Eli Lilly CEO David Ricks saying it sends a terrible signal to pharma companies. After both Lilly and Boehringer Ingelheim axed plans to invest in German production over the planned reforms, Reuters later reported that Germany was dropping one contentious part of the plan.
The USTR investigation also follows months of back-and-forth between the U.S. and Germany in efforts to resolve the situation, according to the U.S. government. The trade office is expected to hold a public hearing in connection with the investigation on Sept. 22.
If the investigation determines that the U.S. is indeed unreasonably impacted by German’s actions, the U.S. could push for measures such as confidential supplemental discounts or mandatory variable rate rebates.
Greer suggested that Germany should follow the United Kingdom’s lead after its recent agreement with the U.S. The deal means the U.K. government pays more for pharma innovation in exchange for protection from Trump’s drug tariffs.
“Fighting the war against disease is a shared burden across wealthy nations,” U.S. Department of Health and Human Services Secretary Robert F. Kennedy Jr. said in a prepared statement. “The United States is calling on Germany to pay its fair share for the innovative treatments its people use.”
