US opens trade probe against Germany over pharma pricing

The US probe will determine whether Germany’s pharmaceutical underpayment is unreasonable or discriminatory and burdens US commerce. (Freepik pic)

WASHINGTON: The United States has started an investigation over “unfair” pharmaceutical pricing policies in Germany, a move that could lead to fresh tariffs.

US President Donald Trump’s administration has launched similar probes into dozens of trading partners over issues including forced labour and industrial overcapacity, leading to proposals of higher levies in some cases.

The US move on Thursday comes after the German government sought 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 probe announced by the US trade representative’s office will determine if Germany’s “persistent underpayment for innovative pharmaceutical products” is “unreasonable or discriminatory and burdens or restricts US commerce”.

The move – launched under Section 301 of the 1974 Trade Act – came after the USTR pointed to evidence Germany has “unfair pricing” policies and practices.

Reduced revenue associated with such practices also appeared to contribute to reduced investment for research and development, among other issues, it added.

“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 US trade envoy’s office will next receive comments and hold a hearing in September as part of the investigation.

Germany’s health ministry confirmed ongoing talks with Washington on the issue.

“I assume the United States will honour the agreement we have in place. Reimbursements for modern, innovative medicines by our health insurance funds is a decision which falls within our national jurisdiction,” German Chancellor Friedrich Merz told reporters in Brussels on Friday.

Health minister Nina Warken said earlier this week it would be tough for Germany to pay higher prices. “We have a tense financial situation in our health insurance system,” she said.

‘Disruption’ risk

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% on dozens of countries under its investigation into forced labour concerns.