In law, before reaching a conclusion, we have a responsibility to examine the full record carefully, honestly and without preconception. When the evidence reveals a serious problem, we also have a responsibility to act.
As general counsel for an American biopharmaceutical company, that mindset was at the forefront of my decision to provide written evidence and live testimony for the U.S. Trade Representative’s Section 301 investigation into Germany’s pharmaceutical pricing and reimbursement policies. A Section 301 investigation is the United States’ formal process for examining whether another country’s acts, policies and practices are unreasonable or discriminatory and burden American commerce. As an American drug manufacturer that has witnessed firsthand the impact of Germany’s policies, it is logical for us to offer perspective.
I’d argue it’s also our responsibility to do so. The stakes of this particular investigation extend well beyond a trade dispute or a disagreement over pricing. They reach patients and families confronting a devastating diagnosis and asking a question no one wants to face: “What if there is no treatment?”
Medical breakthroughs can turn that question into hope. But breakthroughs do not happen overnight. They are the product of decades of scientific work, repeated failure, and sustained investment by companies committed to solving difficult health challenges. This work can continue only within a global ecosystem that recognizes the value of medical progress, rewards genuine breakthroughs and supports future investment.
Today, that ecosystem is increasingly at risk. Wealthy countries benefit from American innovation while contributing far less to the global investment that makes it possible, deepening an imbalance in which the U.S. healthcare system shoulders a disproportionate share of the costs required to sustain pharmaceutical innovation worldwide.
Germany is a clear and consequential example. At a time when governments should be strengthening incentives for innovation and sharing more fairly in its costs, Germany is adding measures that further suppress prices and create additional barriers for new treatment options. Policies like government price setting, mandatory rebates and reimbursement restrictions treat medical innovation as a burden to be managed rather than an investment in future health. Germany is also one of the world’s largest and wealthiest economies; its choices matter beyond its borders, because they risk setting a precedent that other countries may follow.
The fallout is clear from a trade and commerce perspective because suppressing the value of medicines does not eliminate the cost of innovation. It shifts that cost elsewhere, onto the U.S. healthcare system, and ultimately weakens the American life sciences industry that supports research, clinical excellence, high-skilled jobs and manufacturing.
Ironically, it also hurts the governments responsible for implementing these policies. Stakeholders across Europe have become increasingly vocal that these approaches make their markets less attractive for research, investment and new product launches. Even Germany has recognized the risk, recently establishing a joint working group with France [bundesgesundheitsministerium.de]focused on ensuring the continued availability of innovative medicines.
The patient consequences may not be the direct focus of USTR’s investigation, but they are the most important side effect to confront [breastcancernow.org]. When policy systematically undervalues innovation, investment becomes harder to sustain, the pace of discovery can slow and patients may wait longer [euronews.com] for – or worse, never see – the treatments they and their loved ones desperately need.
The “cost of innovation” argument has been overly litigated, but the fact remains that for every drug discovered that changed the landscape of a disease, there are countless others that failed. Years ago, an oncology researcher at our company threw celebratory memorial services for compounds that didn’t make it, because those “failures,” while heartbreaking, were the necessary building blocks of truly transformative science. Now, we have medicines on the market that save lives, thanks to that graveyard of molecules. This is the reward we are given by a system that allows for the uncertainty of medical research: the gift of necessary failure.
Reasonable people can disagree about policy, but it shouldn’t be controversial to examine evidence honestly and act when the facts show that the current approach is unsustainable. Likewise, it’s important to acknowledge that governments face legitimate, increasing fiscal pressures. Greater investment in health cannot be considered in isolation; it requires difficult choices about public priorities, how healthcare resources are allocated, and where existing spending can deliver greater value. The answer cannot simply be to constrain access or systematically undervalue medicines to balance finite budgets.
Countries like Germany that benefit from medical breakthroughs should contribute fairly to the system that produces them, and the USTR Section 301 process offers an opportunity to confront this challenge with facts instead of rhetoric. Finding a sustainable, global solution may require difficult tradeoffs, but we have a collective responsibility to make them thoughtfully for patients waiting for the next breakthrough, the next advance, and the next reason for hope.
Perry Siatis, Executive Vice President, Chief Counsel & Secretary, AbbVie.
