Why is the US targeting Germany's drug industry?

Lead

The United States has launched a trade investigation into Germany's pharmaceutical pricing policies, a move that could lead to new tariffs and has intensified a long-running dispute over who pays for drug research and development.

The probe, announced by the Office of the US Trade Representative (USTR), will determine whether "persistent underpayment for innovative pharmaceutical products by Germany is unreasonable or discriminatory and burdens or restricts US commerce," according to a statement from US Trade Representative Jamieson Greer, as reported by Deutsche Welle and France 24.

The investigation is conducted under Section 301 of the Trade Act of 1974, a tool the Trump administration has already used this year against dozens of trading partners over issues such as forced labor and industrial overcapacity, France 24 reported.

Coverage comparison

The investigation was reported by both Deutsche Welle and France 24, with largely overlapping facts but differing emphases. Deutsche Welle's coverage, in one of its articles, framed the conflict as rooted in structural differences between the US and German healthcare systems, noting that Germany regulates drug prices through its public health insurance system to keep access affordable, while Washington sees this as market distortion. That article struck a more critical tone, including language such as "ripping off" and "serious step backwards" in describing the US perspective.

France 24's report was more neutral, presenting the investigation as a formal trade action and highlighting the potential for fresh tariffs. Both outlets reported the same core facts: the Section 301 basis, the key statement from Greer, and the timeline for the investigation.

Key claims

At the center of the dispute is the question of whether US pharmaceutical companies are disadvantaged by Germany's price regulation system, which Washington says creates a trade imbalance. Greer said the investigation follows "months of meaningful discussions with our German partners in an effort to resolve this issue," as quoted by Deutsche Welle and France 24.

Greer also expressed concern over Germany's plans to fast-track legislation that would further reduce spending on innovative pharmaceuticals, calling this a "serious step backwards at a time when our trading partners need to step up and start paying their fair share to fund innovative pharmaceutical research and development."

"President Trump has made clear that American patients should not be shouldering a disproportionate share of global pharmaceutical research and development," Greer added, a statement carried by both outlets.

The US argument is supported by data showing that American patients pay significantly more for prescription drugs than patients in other countries. A 2024 RAND Corporation report, cited by Deutsche Welle, found that US prescription drug prices averaged 2.78 times more than those in 33 other countries, with the gap even larger for brand-name drugs. OECD data, also referenced by Deutsche Welle, showed that in 2023 US patients spent an average of $1,713 per person on medicine, compared to $1,158 per patient in Germany.

Germany, as reported by Deutsche Welle, defends its price regulation as a legitimate instrument for keeping costs down. In April, the German Cabinet approved a healthcare draft law that Chancellor Friedrich Merz called "historic," according to Deutsche Welle, aimed at lowering insurance premiums and plugging a funding gap.

The dispute has real consequences for the pharmaceutical industry in Germany. Deutsche Welle reported that US pharmaceutical company Eli Lilly announced it would halve its original planned investment of €2.3 billion in Alzey, Rhineland-Palatinate, citing the German government's healthcare reforms. The same article illustrated the price disparity with a concrete example: a one-month supply of 30 tablets of the diabetes drug Jardiance costs roughly €80 for out-of-pocket and privately insured patients in Germany, while uninsured or privately insured patients in the US pay a full list price of roughly €300.

The investigation is scheduled to wrap up in September, according to Deutsche Welle. The USTR will accept written comments starting June 25 and hold a public hearing in September, as reported by Deutsche Welle and France 24.