The Office of the US Trade Representative (USTR) has triggered a new active investigation targeting Germany over what it describes as “persistent underpayment for innovative medicines” and other policies discriminatory to US commerce.
Underpinning the investigation is a long-standing conviction within the Trump administration that the US shoulders a disproportionate share of global R&D costs for innovative medicines while Europe takes advantage of relatively low prices for branded pharmaceuticals
The USTR decision to open a Section 301 investigation into pharmaceutical pricing and reimbursement policies in Germany is part of an escalating pattern of US executive orders piling pressure on European governments to accept higher medicine prices as demanded by the Trump administration. USTR head Jamieson Greer declared that the investigation would focus on allegations of “persistent underpayment for innovative pharmaceutical products” by Germany and other “freeloading” policies, which are considered “unreasonable or discriminatory” to the US. If investigators uncover violations, this could enable the USTR to pursue unilateral action against Germany.
Options on the table would potentially include US tariffs or import restrictions on Germany. But since it would be difficult for the US to consider tariff-related actions on German imports alone, there is a risk of broader trade implications for the EU. The trigger for the USTR investigation appears primarily to be over fast-tracked German reforms to reduce spending on innovative pharmaceuticals.