A new trade probe is reigniting a long-running clash over who should pay for medical innovation. Washington argues that German citizens benefit from lower medication prices while US patients are forced to shoulder a disproportionate share of global research and development costs. According to the view of the Trump administration, other nations are unfairly benefiting from the US pharmaceutical market, specifically pointing to Germany.
Washington is currently targeting Germany with an investigation to determine if US businesses and patients are being forced to pay higher prices for top-tier pharmaceuticals so that German patients can maintain lower costs. This inquiry, which is scheduled to conclude in September, is based on Section 301 of the Trade Act of 1974 and could potentially lead to the implementation of new US tariffs. The dispute touches on fundamental health policy differences, as Germany regulates drug prices through its public health insurance system to ensure affordability, a practice the US views as a market distortion. Berlin, however, maintains that its price regulation is a legitimate tool for cost control.
The issue has escalated into a trade policy dispute that extends beyond the pharmaceutical sector. At its core, Washington is concerned that Germany’s price regulation creates a trade imbalance that puts US pharmaceutical companies at a disadvantage. Data from the OECD highlights that the US and Germany are the world’s leading spenders on medicine. In 2023, US patients spent an average of $1,713 (€1,502) per person on medicine, compared to $1,158 per patient in Germany.
US Trade Representative Jamieson Greer stated that the investigation will seek to determine whether persistent underpayment for innovative pharmaceutical products by Germany is unreasonable or discriminatory, and whether it burdens or restricts US commerce. Greer noted that the investigation follows months of meaningful discussions with German partners. He expressed particular concern regarding legislation in Germany that would further reduce spending on innovative pharmaceuticals, directly targeting a multi-billion-euro healthcare savings package proposed by German Health Minister Nina Warken that is slated to be passed by the Bundestag in the coming weeks.
The price disparity is illustrated by Jardiance, an innovative drug developed by Germany’s Boehringer Ingelheim for treating type-2 diabetes and heart failure. A one-month supply of 30 tablets costs roughly €80 for out-of-pocket and privately insured patients in Germany, while those on public health insurance pay a maximum co-pay of €10. Conversely, the US subsidiary of Boehringer Ingelheim notes that uninsured or privately insured patients who have not met their annual deductible must pay a full list price of roughly €300, with some pharmacies charging even more. Meanwhile, low-income, handicapped, or elderly patients in the US covered by Medicare or Medicaid pay between zero and $50 for the medication.
Health economists widely agree that US patients pay more for top-shelf drugs than those in Germany. A March report by German media outlets NDR, WDR, and the Süddeutscher Zeitung, along with the New York Times, confirmed that patent-protected medications are more expensive in the US. Helmut Schröder of the Wissenschafltliches Institut der AOK (WIdO) suggests that a lack of market transparency allows companies to demand higher prices in the US. Furthermore, Deloitte consultant Susanne Uhlmann explained that Germany’s system of central price negotiations provides insurance funds with significant leverage compared to the US, where insurers often rely on powerful middlemen known as Pharmacy Benefit Managers (PBMs). The three largest PBMs in the US—CVS Caremark, Express Scripts, and Optum Rx—control roughly 80% of the market. US regulators, including the Federal Trade Commission, have recently cracked down on these firms for anti-competitive discounting practices.
Germany’s pharmaceutical industry faces significant pressure, as over 20% of its exports go to the US. Beyond US investigators, the industry faces domestic pressure from Berlin’s planned public healthcare reforms. According to an April 2025 report by Deloitte, if new US tariffs between 10% and 35% are applied for three to four years, it could shrink German industry exports to the US by 5% to 53%, resulting in losses between €1.3 billion and €13.4 billion. Despite this, German Chancellor Friedrich Merz has remained relaxed, stating that Germany is happy to provide information on its federal reimbursement system, while Health Minister Nina Warken emphasized that Germany’s strained health insurance funds make it difficult to accommodate higher prices.
