US launches pharma pricing probe into Germany, raising threat of new tariffs
The US Trade Representative opened a Section 301 investigation into Germany’s pharmaceutical pricing policies, arguing that persistent underpayment forces American patients to carry a disproportionate share of global drug R&D costs.
The investigation
The US Trade Representative announced on Thursday that it had launched an investigation into whether Germany’s pricing of innovative pharmaceuticals is unreasonable or discriminatory and burdens US commerce. The probe was opened under Section 301 of the Trade Act of 1974, a trade statute that the Trump administration has used repeatedly since returning to power to target practices ranging from forced labour to industrial overcapacity.
USTR Jamieson Greer said the move followed “months of meaningful discussions with our German partners in an effort to resolve this issue.” Greer expressed particular concern that Germany is fast-tracking legislation that would further reduce its spending on innovative pharmaceuticals. The investigation will examine the legal mechanisms Germany uses to set drug prices, with written comments accepted from 25 June and a public hearing scheduled for September.
US claims of unequal burden
President Trump has made clear that American patients should not be shouldering a disproportionate share of global pharmaceutical research and development.
The USTR’s notice argues that Germany’s pricing policies depress revenues for innovative drug makers, contributing to reduced R&D investment. Because US list prices are among the highest in the world, the administration contends that Americans effectively subsidise innovation for other wealthy countries. A RAND Corporation report from 2024 found that US prescription drug prices averaged 2.78 times those in 33 other nations, with an even wider gap for branded drugs.
US Health Secretary Robert Kennedy Jr. underscored that message.
The United States is asking Germany to pay its fair share for the innovative treatments its population benefits from.
Germany’s reform plans and pushback
In April, Chancellor Friedrich Merz’s cabinet approved a healthcare reform bill that Merz called historic, aiming to save more than €16 billion and close a projected €20 billion deficit in the statutory health insurance system. The package includes measures that cut spending on pharmaceuticals, raising alarms in Washington and among drug companies. Eli Lilly announced earlier in June that it would halve its planned €2.3 billion investment in a facility in Alzey, Rhineland‑Palatinate, explicitly citing the government’s reforms.
German sickness funds, however, warn that drug prices are rising unsustainably.
Medications are the second-largest cost block after hospitals, and the pharmaceutical industry is making a killing off it.
Possible next steps
The probe could ultimately result in tariffs, but Greer signalled that a negotiated settlement remains possible. In early April the US reached a deal with the United Kingdom under which Britain agreed to raise its drug prices in return for an absence of tariffs on pharmaceutical exports. Greer held that deal up as a model, saying Germany should follow the example. The office will open a docket for written submissions on 25 June and the Section 301 committee will hold a public hearing in September. No final determination has been announced.
- US and UK agree pharmaceutical pricing deal, with higher UK prices in exchange for no tariffs.
- German cabinet approves healthcare reform bill that reduces spending on innovative drugs.
- USTR launches Section 301 investigation into German pharmaceutical pricing.
- Docket opens for written comments on the investigation.
- Section 301 committee holds public hearing on the probe.
