The United States has launched an investigation into Germany’s drug policies as European countries seek to rein in soaring medical costs, including spending on pharmaceuticals.
“President Trump has made clear that American patients should not bear a disproportionate burden of global drug research and development,” U.S. Trade Representative Jamieson Greer said in a statement late Thursday.
He said he was “particularly concerned by the news that Germany is rushing to pass legislation that will further reduce spending on innovative medicines”, calling this a “serious setback”.
In April, Germany proposed a review of its health insurance system to ease pressure on public finances due to rising health spending.
Various cost-cutting measures were introduced, including increased discounts for insurance funds from the pharmaceutical industry, and many drug companies warned that they could withdraw or postpone new drugs in the country.
The bill is currently going through the parliamentary process.
Chancellor Friedrich Merz said on Friday that he assumed the United States would abide by trade agreements already in place with the European Union and that the issue of reimbursement by German health insurance providers was a matter of national jurisdiction.
“If the United States wants information on this matter, of course we will be happy to provide it,” he said after the EU summit in Brussels, in comments reported by Reuters.
The U.S. investigation began under Section 301 of the Trade Act, which authorizes unilateral action against countries that engage in unfair practices that burden U.S. commerce and could lead to the imposition of tariffs.
Greer said the U.S.’s trading partners must pay their fair share to fund research into new drugs, and the study followed months of consultation with Germany’s partners.
He also suggested the issue could be resolved without legal action, citing a recent US-UK agreement in which Britain pays higher prices for new medicines through the National Health Service in exchange for exempting them from customs duties.
“Germany should do the same and engage in constructive negotiations to address this imbalance,” Gurría said.
Germany’s Health Ministry did not respond to a request for comment.
Lowering drug prices
President Trump has made lowering drug prices a priority, noting the high prices of drugs in the United States compared to other similar countries, including Europe, and calling for an “end to global freeloading.”
Last year, the Trump administration introduced the so-called Most Favored Nation Drug Policy (MFN), which pegs drug prices in the U.S. to drug prices overseas. The United States has reached an agreement with 17 of the world’s largest pharmaceutical companies to voluntarily lower drug prices in the United States in exchange for tariff exemptions.
But critics of the policy say it stifles innovation and discourages investment in research and development.
Pharmaceutical company executives including CEOs AstraZeneca, NovartisRoche and privately held Boehringer Ingelheim also warned that European countries risk missing out on new drugs if prices in the lucrative U.S. market lead to lower prices elsewhere.
AstraZeneca CEO Pascal Soriot said in April that if the difference between the U.S. price and a reference country’s price becomes too large, the company will not be able to launch the new drug in that country, despite its “best intentions” to make it available to patients.
