The United States has opened a trade investigation into Germany’s pharmaceutical pricing system, escalating a dispute over how the cost of developing new medicines is shared between American patients and overseas health services.
Washington says Germany’s efforts to curb healthcare spending could unfairly reduce payments to drugmakers and leave the U.S. market carrying the financial burden for research. The inquiry could lead to tariffs if both sides fail to reach an agreement.
“President Trump has made clear that American patients should not be shouldering a disproportionate share of global pharmaceutical research and development,” U.S. Trade Representative Jamieson Greer said.
“I am particularly concerned with news that Germany is fast-tracking legislation that would further reduce its spending on innovative pharmaceuticals,” he added, calling the move “a serious step backwards.”
Germany proposed an overhaul of its statutory health insurance system in April as rising costs placed greater pressure on public finances. The package includes larger discounts from pharmaceutical companies to public insurers, drawing criticism from manufacturers, doctors, and patient groups.
Drug companies have warned that tighter reimbursement rules could make Germany less attractive for new treatments, potentially delaying launches or reducing investment. Berlin, however, maintains that health insurance payments remain a matter of national authority.
Chancellor Friedrich Merz said he expected the United States to respect its existing trade arrangements with the European Union. “If the United States would like information on this, we will of course be happy to provide it,” he said after an EU summit in Brussels.
The investigation was launched under Section 301 of the U.S. Trade Act, which allows Washington to challenge foreign policies it considers unfair to American commerce.
Greer cited a pharmaceutical agreement with Britain as a possible model for resolving the dispute. “Germany should follow suit with constructive negotiations to address this imbalance,” he said.
The row forms part of President Donald Trump’s campaign to narrow the gap between medicine prices in the United States and other wealthy countries. His administration has promoted a Most Favoured Nation policy linking some U.S. prices to lower rates overseas, while critics say the approach could weaken research investment.