Germany Advances Legislation to Lower Drug Prices

Germany is preparing legislation that would lower payments for the most advanced medicines sold in Europe’s largest economy. The measure would expand centralized price negotiations already used by German authorities. Under the proposed rules, manufacturers would face additional limits on what they can charge once a drug reaches the market.

Officials said the changes aim to reduce spending on prescription medicines.

The United States accounts for a large share of global spending on pharmaceutical research and development. Revenue from American sales has historically supported the cost of bringing new treatments to market. European governments have maintained price controls that result in lower payments for many medicines compared with prices paid in the United States.

The difference has been cited by U.S. trade officials as a factor in ongoing negotiations. The United Kingdom reached an agreement late last year to increase payments for certain innovative drugs by 25 percent in exchange for relief from tariffs. Germany’s planned legislation moves in the opposite direction.

Section 301 Investigation U.S. trade authorities are conducting a Section 301 investigation into European Union manufacturing practices. Officials have indicated the review could be expanded to examine pharmaceutical pricing policies. The investigation already covers manufacturing overcapacity that affects American employment.

Any expansion would examine whether European price controls shift research costs onto U.S. consumers and manufacturers.