US probes Germany over alleged underpayment for drugs

The United States has launched an investigation into allegedly unfair pharmaceutical pricing policies in Germany, a step that could eventually justify new tariffs.

"This investigation will seek to determine whether persistent underpayment for innovative pharmaceutical products by Germany is unreasonable or discriminatory and burdens or restricts U.S. commerce," the office of US Trade Representative Jamieson Greer said in a statement on Thursday.

Greer is relying on a provision of a US trade law that could justify tariffs depending on the outcome of the investigation.

He said the move followed months of talks with the German government, which apparently failed to produce a breakthrough.

In April, the US and the United Kingdom had announced "a ground-breaking arrangement on pharmaceutical pricing that will help drive investment and innovation in both countries," Greer said. 

"Germany should follow suit with constructive negotiations to address this imbalance."

The measure is part of a broader push by President Donald Trump's administration to bring down comparatively high drug prices in the US.

The US has already imposed tariffs on several countries over the issue, while others have reached agreements with Washington that include shifting production to the US.

The investigation is based on a provision of a US trade law from 1974.

The US has used the mechanism, for example, to impose punitive tariffs on China.

Washington also opened investigations against the European Union and other countries in March under the same provision. The allegation at the time was structural overcapacity.

In a landmark ruling in February, the US Supreme Court struck down a large share of Trump's tariffs.

Since then, the president has relied on new legal tools, though these are either time-limited or require trade imbalances.