TAPP Responds to USTR Request for Comments on Section 301 Investigation of Germany’s Persistent Underpayment for Innovative Pharmaceutical Products
The Trade Alliance to Promote Prosperity has responded to a U.S. Trade Representative Request for Public Comments on Germany's Persistent Underpayment for Innovative Pharmaceutical Products, pursuant to the agency’s initiation of a Section 301 investigation.
In part, TAPP wrote:
For too long, many high-income countries have relied on government pricing policies that systematically undervalue innovative medicines while depending on American patients, taxpayers, and private investment to finance the research and development that benefits the entire world. Initiating this Section 301 investigation sends a clear message that the United States will no longer ignore trade practices that shift the costs of global innovation onto the American people…
Currently, governments in Europe, Canada, and other advanced economies impose strict price controls on prescription medicines. Drug manufacturers accept government-set prices to gain market access, then rely disproportionately on the U.S. market to recoup research and development costs. The result is a simple reality: American families end up subsidizing lower-cost medicines in other rich nations…
Some foreign policymakers may believe this strategy is fiscally prudent, but it is not a question of money alone. The human cost of delayed cures is immeasurable—and unacceptable to Americans.
Germany represents one of the clearest examples of this challenge. Germany possesses both the financial capacity and sophisticated healthcare infrastructure necessary to recognize appropriately the value of innovative pharmaceutical products. Instead, reimbursement policies that rely upon mandatory discounts, negotiated pricing reductions, and government-directed payment mechanisms systematically reduce compensation for innovative medicines and weaken incentives for future investment—all because policymakers in Germany are willing to let innumerable patients die in order to save numerable euros…
TAPP believes that free and fair trade requires reciprocal responsibility—economic and moral. Nations that benefit from pharmaceutical innovation should contribute proportionately to the costs of developing that innovation. Persistent underpayment by wealthy countries is inconsistent with that principle and creates an uneven competitive environment that disadvantages American companies and the workers, researchers, and patients who depend upon continued investment in medical innovation…
Accordingly, TAPP encourages USTR to conduct a thorough examination of Germany’s pharmaceutical pricing and reimbursement framework, including mandatory discounts, negotiated reimbursement methodologies, government-imposed payment reductions, and any other practices that may constitute unreasonable or discriminatory measures that burden U.S. commerce.
Should the investigation confirm that Germany’s practices unfairly disadvantage American innovators, USTR should pursue all appropriate remedies available under U.S. trade law while continuing to engage Germany in constructive negotiations aimed at establishing a more equitable framework that properly recognizes the value of pharmaceutical innovation.