US launches trade probe on Germany over pharma pricing

WASHINGTON: The US on Thursday started an investigation into Germany over its pharmaceutical pricing policies and other practices, in a move that could lead to fresh tariffs.

The probe seeks to determine if “persistent underpayment for innovative pharmaceutical products by Germany is unreasonable or discriminatory and burdens or restricts US commerce,” said the US trade representative’s office.

The move was launched under Section 301 of the Trade Act of 1974, and it comes months after the Trump administration tapped similar authorities to investigate dozens of trading partners over issues like forced labour and industrial overcapacity.

A federal register notice released by the USTR charged that “evidence indicates that Germany implements unfair pricing policies and practices with regard to innovative pharmaceutical products”.

It added that reduced revenue associated with these practices also appeared to contribute to reduced investment for research and development, among other issues.

“As a result, the United States pays a disproportionate share of global R&D costs for innovative pharmaceuticals,” the notice said.

The probe will look into the means that Germany uses to implement its pricing policies and practices.

“President (Donald) Trump has made clear that American patients should not be shouldering a disproportionate share of global pharmaceutical research and development,” said USTR Jamieson Greer in a statement.

He expressed concern over Germany’s plans to fast-track legislation “that would further reduce its spending on innovative pharmaceuticals”.

The trade envoy’s office will next receive comments and hold a hearing in September as part of the investigation.

Earlier this month, the USTR’s office proposed new tariffs of up to 12.5% on dozens of economies under its investigation into forced labour concerns.

Trump has rolled out sweeping tariffs since returning to the White House last year, although the Supreme Court struck down many of them in February.

His administration has since turned to trade probes as officials look to reimpose more lasting duties.