In June 2026, the US launched a Section 301 probe into Germany's medicine pricing system, a move manufacturers and investors should see as part of a wider global trend.

In June 2026, U.S. Trade Representative Jamieson Greer initiated an investigation under Section 301 of the Trade Act of 1974 into Germany’s pricing and reimbursement system for innovative medicines. According to the U.S. Trade Representative (the "USTR"), the investigation aims to determine whether persistent underpayment for innovative medicines by Germany is unreasonable or discriminatory and burdens or restricts US commerce. A public hearing is scheduled for 22 September 2026.

Although directed at Germany, the investigation should not be viewed as Germany specific. It reflects increasing US scrutiny of how innovative medicines are valued and reimbursed outside the United States in the major developed jurisdictions and will influence pricing and reimbursement discussions across multiple jurisdictions.

1. What is being challenged?

The investigation challenges several core elements of Germany’s pricing and reimbursement framework for innovative medicines.

The law at the centre of the German system for innovative medicines is the German Act on the Reform of the Market for Medicinal Products (the Arzneimittelmarktneuordnungsgesetz or "AMNOG"). Following market launch, manufacturers can initially market innovative medicines at a freely determined price. During the first six months, however, the medicine undergoes an early benefit assessment by the German Federal Joint Committee (Gemeinsamer Bundesausschuss or "GBA"). The assessment forms the basis for negotiating a reimbursement amount with the National Association of Statutory Health Insurance Funds (GKV-Spitzenverband), which generally applies from the seventh month after launch, thereby leading to a regulated price.

According to the USTR notice initiating the Section 301 investigation, the investigation will initially focus on the following aspects of the German system: 

• First, pursuant to the Medical Research Law (Medizinforschungsgesetz or "MFG") in force since 2025, the regime conditions the confidentiality of a manufacturer's reimbursement amount on acceptance of a 9% price discount and payment of additional administrative costs;

• Second, the investigation will review certain measures aimed at reducing pharmaceutical expenditure, including the introduction of an additional mandatory rebate for patented medicines from 2027 onwards. With the entering into force of the GKV Contribution Rate Stabilisation Act (GKV-Beitragssatzstabilisierungsgesetz) in July 2026, an additional mandatory rebate of 8.5% has been introduced, bringing the total mandatory discount for patented medicines to 15.5% from 2027.

The US position justifying the investigation rests on two core arguments. The first and central argument concerns the allegedly disproportionate burden placed on US patients and consumers in financing global pharmaceutical innovation. Accordingly, Germany's pricing policies reduce revenues of manufacturers and, as a result, contribute to reduced investment in R&D. Because higher US prices support and fund global R&D costs, the USTR argues that Germany unfairly shifts its fair share of pharmaceutical innovation costs onto US patients and consumers. Second, the USTR calculates that US consumers pay 3.9 times more than consumers in Germany for brand-name medicines.

The debate also involves other aspects which are not explicitly mentioned by the USTR but are likely to feature in the hearing in September. German reimbursement amounts serve as reference prices in several other jurisdictions, which may amplify the commercial impact of German pricing policies beyond the bilateral context. Further, the combination of negotiated reimbursement amounts, statutory rebates and the recently introduced additional mandatory rebate create cumulative pricing pressure.

2. The broader US policy strategy

The Section 301 investigation is part of a broader US policy to monitor how innovative medicines are priced and reimbursed in the major developed jurisdictions. Moreover, it should not be perceived as individual concerns of the USTR and the current US administration alone. Rather, it reflects a broader question within the United States about whether other developed jurisdictions contribute sufficiently to financing the increasing cost of pharmaceutical innovation. Whether or not one agrees with that assessment, the perception of other jurisdictions free riding on US R&D has gained traction across the US political spectrum. Manufacturers and investors must therefore assess these developments as part of a global trend rather than a Germany-specific event.

The US-UK Arrangement on Pharmaceutical Pricing, concluded in April 2026, whereby the UK agreed to increase public spend by its National Health Service on innovative medicines in return for zero tariffs on UK pharmaceutical exports, raised the question of whether threatening tariffs would be a precedent for US engagement with other jurisdictions on pricing and reimbursement for innovative medicines. The Section 301 investigation into Germany shows that the answer is yes, albeit through a different policy instrument. The USTR is already in discussions with further high-income jurisdictions, such as France, Japan and Canada.

3. The German and European perspective

The German policy position is primarily based on the argument that reimbursement amounts are not intended simply to reduce manufacturer prices. Rather, they assist in incentivising innovation. Under the AMNOG framework, reimbursement is linked to the demonstrated additional therapeutic benefit of a medicine compared with the appropriate comparator therapy. Medicines demonstrating greater clinical value have a stronger basis for achieving higher reimbursement amounts.

From a broader European perspective, European pricing and reimbursement systems differ across jurisdictions but share one important characteristic: they are embedded in complex integrated national healthcare systems. Changes to the healthcare system inevitably affect insurers, hospitals, healthcare professionals, patients and manufacturers. Reforms therefore cannot be assessed by looking at pricing and reimbursement of manufacturers alone.

An important feature is universal or near-universal healthcare coverage. European systems require regulated prices, rebates and value/benefit assessments, but they also provide predictable reimbursement and access to innovative medicines across the entire eligible patient population.

That broader access must form part of any comparison with the US system. Looking at discretionary pricing in isolation risks overlooking the commercial value of a healthcare system in which reimbursement enables manufacturers to reach virtually all eligible patients. The appropriate comparison is therefore not simply price versus price, but the overall balance between pricing, reimbursement and patient access.

4. Current legal and political questions

Several important legal and political questions remain unresolved, although they play a major role in the context of the Section 301 investigation.

First, trade measures affecting the European Union fall within the competence of the European Commission rather than individual Member States, adding complexity to any negotiations with Germany.

Second, any future tariff measures would need to be considered in the context of the EU-US trade deal agreed in August 2025, which the European Commission considers to provide a 15% all-inclusive tariff ceiling for EU exports including pharmaceuticals.

Finally, this increased scrutiny by the US administration is likely to focus greater political attention on pricing and reimbursement for innovative medicines across Europe. Other European member states will likely raise their voices on how they view any German plans to resolve the dispute.

5. What manufacturers and investors should consider to mitigate risk

Regardless of the outcome of the investigation, pharmaceutical manufacturers should recognise that trade policy, market access and supply-chain strategy are becoming increasingly interconnected. However, certain measures can be taken to mitigate the risks associated with this development.

First, manufacturers should begin by building greater flexibility into any upcoming regulatory filings. Marketing authorisations, manufacturing licences and product documentation should, wherever possible, support multiple manufacturing sites and production steps. This enables manufacturers to adapt their supply chains more quickly if trade measures impact pharmaceuticals produced in a particular jurisdiction.

Second, supply-chain resilience must be a strategic priority. This is not only driven by the prospect of tariffs, but also by other regimes affecting trade relationships such as the US BIOSECURE Act, export and import bans, and increasing regulatory scrutiny of supply chains and rules of origin. The same considerations are becoming increasingly relevant in M&A transactions, where investors in certain sectors are paying closer attention to geopolitical exposure, supply-chain resilience and regulatory dependencies.

Finally, geopolitical developments should become an integral part of commercial decision-making. Pricing and reimbursement can no longer be viewed in isolation from trade and industrial policy. Trade, legal, regulatory and supply-chain functions should work together to assess risks and prepare for different policy outcomes.

The Section 301 investigation reflects a broader shift in the relationship between pricing and reimbursement for innovative medicines, trade policy and industrial policy. Pharmaceutical manufacturers who build regulatory flexibility, resilient supply chains and coordinated commercial strategies today will be better positioned to respond to tomorrow’s policy environment. Investors who understand how pricing, reimbursement and market access dynamics shape commercial outcomes will be better placed to identify opportunities and support long-term growth.