US Launches Tariff Probe Into Germany Over Pharma Pricing

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(Bloomberg) — The US launched a tariff investigation into Germany over what it called “persistent underpayment for innovative pharmaceutical products,” setting the stage for possible levies on its goods in retaliation.

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President Donald 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 late Thursday. The move comes as a government overhaul of Germany’s health-insurance system, designed in part to reduce spending on drugs, makes its way through parliament in Berlin.

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“I am particularly concerned with news that Germany is fast-tracking legislation that would further reduce its spending on innovative pharmaceuticals,” Greer said. “This is a serious step backwards at a time when our trading partners need to step up and start paying their fair share.”

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The investigation is being carried out under a legal provision known as Section 301 that allows the Office of the US Trade Representative to pursue unilateral action against countries that impose unfair trade barriers. Such inquiries can lead to tariffs and typically take months to conclude. The move risks reigniting tensions between the US and Germany, as well as the wider European Union.

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Greer suggested the inquiry could also be resolved through talks, pointing to a US-UK deal from earlier this year as an example.

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“We believe that the United States and Germany can find a path forward that expands access to the most innovative drugs for the German people while ensuring fair reimbursement for the pharmaceuticals made by American workers,” Greer said.

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The White House did not immediately respond to a request for comment on Thursday night. The German Embassy in Washington and the Health Ministry in Berlin also did not immediately respond.

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The investigation follows the Trump administration’s so-called most-favored-nation campaign, which is intended to end the practice of Americans often paying far higher prices for prescription drugs than other countries such as Canada and the UK.

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Trump has urged pharmaceutical companies to manufacture more of their medicines in the US, and the administration began an investigation into whether the lack of local production is a national security threat.

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Stephen Ubl, the president of the Pharmaceutical Research and Manufacturers of America, said in a statement that his organization “appreciates the administration’s commitment to challenging unfair practices abroad” and supports using Section 301 to achieve the goal.

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“For too long,” Ubl added, “foreign governments have undervalued innovative medicines, forcing US patients and taxpayers to shoulder a disproportionate share of the costs of global innovation.”

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Representatives of the German pharma industry have criticized the measures proposed by Chancellor Friedrich Merz’s conservative-led ruling coalition, and they have also faced resistance from regional lawmakers worried about potential hospital closures.