When U.S. Trade Representative Jamieson Greer opened a Section 301 investigation into Germany’s pharmaceutical pricing last month, it marked the first time Washington has put the full weight of U.S. trade law behind a foreign government’s exploitation of American medicines. And for good reason. Germany continues to push sweeping price controls that undermine the true value and importance of American innovation.   

Berlin Doubled Down Instead of Backing Down 

Berlin didn’t just ignore the investigation; it fast-tracked its response to it.  

On July 10, Germany’s lower house of parliament rammed through a pharmaceutical cost containment bill designed to pay even less for American-invented medicines.  The bill now moves to Germany’s upper house, where approval is likely. 

Chancellor Friedrich Merz, who has called Germany’s drug pricing decisions “a purely domestic matter,” is seeking to push the bill through both chambers before summer recess, more than doubling the mandatory manufacturer rebate from 7% to 15.5%, adding a 9% rebate on patented vaccines, and freezing vaccine prices through 2030. Ambassador Greer had already warned he was “particularly concerned” that Germany was fast-tracking legislation to further cut spending on innovative medicines. Germany passed it anyway. This is not the posture of a country ready to compromise. 

Germany Isn’t the Only Bad Actor 

Germany is not alone, either. Among the other top exploiters are Switzerland, Japan, and France—all very wealthy nations that can afford to pay their fair share, but don’t.  

Switzerland runs one of the most rigid reference-pricing systems in Europe. By pegging what it pays to a basket of other price-controlled markets, its government-set ceiling ratchets down in lockstep with neighboring countries. Japan, on the other hand, has a built-in penalty on success. It reassesses drug prices annually and cuts them the moment a medicine sells well, punishing the very innovation it relies on. And France negotiates a single national price directly with manufacturers and gives them little room to push back.  

 The Numbers Don’t Lie 

The numbers make the imbalance impossible to ignore. USTR’s own findings show that American consumers pay nearly four times what German consumers pay for the same brand-name drugs. Similar stories are playing out across Switzerland, Japan, France, and the rest of the developed world.  

U.S. companies account for roughly 55% of global biopharmaceutical R&D, versus about 29% for European companies. At the same time, American patients generate roughly three-quarters of global pharmaceutical profits despite the U.S. being only a quarter of global GDP. Our companies are investing billions to take the risks that produce the world’s most innovative medicines—and American patients are left absorbing most of the cost of that innovation through higher medication costs and taxes.   

Why This Fight Matters

President Trump and American voters have made it clear: it’s past time foreign governments paid their fair share for American innovation. Two reasons make the case.  

Lower Prices at the Pharmacy Counter 

First, ending foreign exploitation is one of the most direct ways to lower what Americans pay at the pharmacy counter. The cost of developing a new medicine doesn’t disappear because a foreign government caps its price, it just gets shifted onto someone else, and right now that someone is the American patient. President Trump’s Most-Favored-Nation policy runs on the same logic. MFN ties U.S. prices to what other wealthy countries pay, so when foreign governments stop underpaying, their reference price rises, and the American price falls to meet it.  

Protecting America’s Innovation Lead 

The second reason is competitiveness. China is investing aggressively in its own biopharmaceutical industry, but the biggest risk to American leadership isn’t Chinese competition, it is a shrinking U.S. and allied revenue base that pushes capital, research, and manufacturing toward Beijing. Every foreign government that underpays makes that shift more likely.  

What Washington Should Do Next 

The administration got it right with the United Kingdom, which agreed to raise its spending on innovative medicines rather than face tariffs. USTR can apply that same pressure to Germany through the September 22nd hearing and beyond — Berlin is digging in, not backing down, and the administration’s leverage likely won’t let up now.  

Congress can play a role as well. Permanent enforcement tools like Rep. Arrington’s USTRx Act would put Switzerland, Japan, France, and every other abusive nation on notice — not just Germany.  

President Trump promised to put American patients first. Making foreign countries, like the UK, pay their fair share, is one way the President is keeping his promise.