Study says US push to lift German drug prices would raise costs on both sides

What the study found

Research led by Thomas Hwang argues that pushing Germany to raise prices would increase spending in both countries. Hwang - who specializes in drug pricing and regulation - said the "internal contradictions" between the two US policy tools were one reason he undertook the analysis.

The findings "call into question the underlying assumption that US payers would benefit from higher German prices," he said. "Ultimately, the higher costs will be borne by taxpayers and patients, and it would harm both the US and Germany." Hwang added that GKV provided data for the work but did not influence the result.

The team modeled a 25% German price increase, echoing a US UK arrangement from last year. In that case, the study estimates US Medicaid's net annual projected savings would fall by about $300 million, while Germany's yearly drug spending would rise by about €5.5 billion, or $6.2 billion.

Washington's push and the policy clash

The Trump administration has argued Germany underpays for medicines and should shoulder more of the research and development bill. In June, it launched a tariff investigation that pointed to German health reforms passed this year to cut medicine spending and relieve pressure on the federal budget.

Simultaneously, Washington is seeking to lower its own costs by linking payments to an international cap defined by the lowest, or near-lowest, price across a group of countries that includes Germany. That mix undercuts the claim that higher German prices would translate into lower costs for American patients, the study says.

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Drugmakers have also lobbied for higher prices in Europe, warning that failure to raise them could delay launches and restrict investment. In the UK, companies last year secured lower rebate obligations to the National Health Service after calling the market "uninvestable," and the US committed to refrain from levying tariffs on UK pharma exports for at least three years.

What this means for your portfolio

Berlin's Health Ministry said German and US officials will keep talking in mid-November as Chancellor Friedrich Merz's government explains its pricing policy. The ministry added that Germany remains in regular touch with European Union partners regarding the US tariff investigation.

In plain English: the US push for higher German prices and its own move to cap payments to the lowest international levels pull in opposite directions. For investors, that signals policy noise with real budget stakes for US public programs and Germany's health system, and a backdrop that can sway pharma pricing power, launch timing, and margins.

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