According to Donald Trump, every country in the world is “snatching” the United States – the same goes for pharmaceuticals, especially from Germany.
Now, the Trump administration is targeting Germany with an investigation. Washington says it wants to explore whether American patients and businesses are being forced to pay disproportionately high prices for research and development of top-tier pharmaceuticals so German patients can pay less. The investigation, which is scheduled to conclude in September, is based on Section 301 of the Trade Act of 1974 and could ultimately lead to new US tariffs.
An old fight over different pricing rules
This conflict touches on a key aspect of health policy. Germany controls drug prices through its public health insurance system to keep access affordable. The US sees this as market distortion. Berlin defends its price regulation practice as a legitimate means of keeping costs down. The issue of drug pricing has now developed into a trade policy dispute that reaches far beyond the pharmaceutical sector.
At its core, the question now is whether American pharmaceutical companies suffer losses as a result of Germany’s price regulation system, which Washington says creates a trade imbalance. According to OECD, the organization of rich industrialized countries, America and Germany are the two countries that spend the most on medicines. In 2023, US patients spent an average of $1,713 (€1,502) per capita on the drug, compared with $1,158 per patient in Germany.
US attack on German healthcare reform
According to U.S. Trade Representative Jamieson Greer, “This investigation will seek to determine whether Germany’s persistent underpayment for innovative pharmaceutical products is unfair or discriminatory and whether it burdens or restricts U.S. commerce.”
Greer added, “President Trump has made clear that American patients should not bear a disproportionate share of global pharmaceutical research and development.” “I am particularly concerned by the news that Germany is rapidly enacting legislation that would further reduce its spending on innovative pharmaceuticals.”
With this, the US is directly targeting German Health Minister Nina Warken’s multi-billion euro health care savings package, which is to be passed by the Bundestag in the next few weeks and aims to force further discounts from pharmaceutical companies.
Are there any merits in American claims?
A look at a specific innovative German drug is instructive in that it highlights the huge differences in price depending on where the patient is buying it: Jardiance, with the active ingredient empagliflozin, was developed by Germany’s Boehringer Ingelheim and is the world’s most popular drug for treating type-2 diabetes and heart failure.
A one-month supply of 30 tablets costs around €80 out of pocket in Germany for privately insured patients, with those with public health insurance liable for a maximum co-payment of €10. Uninsured patients in the US or privately insured patients who have not yet reached their annual deductible will have to pay the full list price of about €300, according to Boehringer Ingelheim’s US subsidiary. Boehringer USA says some pharmacies may charge even more.
On the other hand, Boehringer USA says elderly, disabled, chronically ill and low-income US patients covered by Medicare or Medicaid pay between zero and $50 dollars for the drug.
So does this mean that the huge price gap the Trump administration is pointing to only applies to the uninsured and those with high deductibles?
It would be hard to find a health economist who would dispute the fact that American patients pay more for top-shelf drugs than those insured in Germany.
This fact was documented in a March report based on research conducted by German media outlets NDR, WDR and south german newspaper and this new York Times Newspaper. Accordingly, patent-protected drugs are more expensive in the US than in Germany. Helmut Schröder of the Wissenschaftsliches Institut der AOK (WIDO), a scientific research institute linked to the AOK network of German public health insurers, who led the study, says the lack of transparency in different national markets makes it easier for pharmaceutical companies to demand higher prices.
structural reasons for price difference
“There are structural reasons for the price differences,” Suzanne Uhlmann, head of the pharmacy sector and a partner at management consultancy Deloitte, told DW. “In publicly financed health systems such as Germany, prices for statutorily insured patients are negotiated centrally. This gives health insurance funds a greater advantage than insurers in the US, who have to negotiate themselves or have contract negotiators act on their behalf.”
This stands for “pharmacy benefit managers” or PBMs, powerful negotiators who serve as middlemen – working with drug companies, insurers and pharmacies to negotiate and regulate prices. PBMs are believed to help patients save money, however, they have been heavily criticized for creating an opaque structure that is difficult for outsiders to understand. outcome? higher prices.
The three largest PBMs in the US are CVS Caremark, part of the CVS drug store and pharmacy chain; Express Scripts, a subsidiary of life and health insurance company Cigna; And Optum Rx, part of healthcare company UnitedHealth. Together they control about 80% of the prescription drug market in the US, according to data published by the industry information service Drug Channels.
US regulators have now started cracking down on these structures. The U.S. Federal Trade Commission (FTC) recently launched an investigation into the largest players over what the agency called “anti-competitive and unfair discounting practices” that artificially inflate the list price of insulin drugs. In February, the FTC reached a settlement with Express Scripts, making fundamental changes to the organization’s business practices.
Comparing apples and oranges?
The situation shows how different drug prices are in the US compared to Germany.
“Add to this the fact that in Germany manufacturers have to prove that new medicines have added therapeutic value over existing therapeutic standards when setting prices,” says expert Uhlmann. “So the bar is set quite high for new and expensive drugs.”
But Germany’s pharmaceutical industry is not alone in feeling pressure from US investigators. More than 20% of Germany’s pharmaceutical exports go to the US. This means that it is more dependent on the US market than almost any other industrial sector in the country. Additionally, it is also facing pressure from Berlin, which is looking for more relaxations as part of planned public health reforms.
And if the US imposes new tariffs in this matter, things could become very uncomfortable. In an April 2025 report for Deloitte, Uhlmann pointed to “severe harm” to the industry in the event of tariffs. “If tariffs between 10 and 35% are implemented for three to four years, it could reduce the industry’s exports to the US, the world’s largest pharmaceuticals market, by 5 to 53%, leading to losses of between €1.3 and €13.4 billion.”
Berlin is not worried (yet)
German Chancellor Friedrich Merz has been relatively relaxed in his public statements on the Trump administration investigation. “Reimbursement for modern, innovative drugs is determined at the federal level through our health insurance funds,” says Merz. “So if Americans want information on that, we’re happy to provide it.”
German Health Minister Nina Warken also tried to dash America’s hopes, saying, “The financial situation of Germany’s health insurance fund is strained, so it will be difficult to pay the higher prices.”
Speaking to DW, pharmaceuticals expert Uhlmann said, “In the past, the rules on price discounting of medicines sold in Germany were always binding and they will remain so in the future.”
This article was originally published in German.