The big picture: Across the world, high-income countries use price controls to avoid paying their fair share for innovative medicines, placing the burden on the United States to finance these innovations for the world.
The latest: In a welcome step, the United States Trade Representative (USTR) has launched a trade investigation to determine whether Germany’s persistent underpayment for innovative medicines harms U.S. commerce. PhRMA submitted new comments highlighting how Germany’s unfair price controls harm American innovators and patients.
The takeaways:
- Germany systematically undervalues American innovation by using older medicines and generics as price benchmarks for innovative therapies, disregarding additional clinical benefits of newer medicines and imposing harmful mandatory rebates and price freezes on publicly reimbursed medicines.
- As a result, Germany spends just 0.64% of GDP on innovative medicines compared with 1.32% in the United States.
- Germany’s policies also inhibit patients’ access to the latest treatments and cures. Patients in Germany have access to 58% of innovative medicines, while patients in the U.S. have access to 88%.
- Rather than address the United States’ concerns with these policies, Germany recently doubled down on its harmful practices by enacting even stricter price controls.
What's next? USTR should leverage the Section 301 investigation to secure a binding trade agreement that requires Germany to increase its spending on innovative medicines and enact specific policy reforms, similar to the recent U.S.-UK Arrangement on Pharmaceutical Pricing.
The bottom line: American patients and taxpayers should not be expected to finance global pharmaceutical innovation alone. High-income countries like Germany should contribute their fair share to the discovery of tomorrow’s cures and ensure patients can benefit from medical advances.
Brian Picone
Brian Picone is PhRMA’s senior director for international trade. Previously, he was a senior trade policy analyst with the law firm of White & Case LLP and the manager of government affairs at the National Association of Foreign-Trade Zones. He received a master’s degree in public policy from Brown University and an undergraduate degree from Suffolk University.
Brian Picone