| The pharmaceutical industry is trying to balance the brave new world of Trump administration tariffs. Top drugmakers argued on Tuesday that Germany artificially lowers drug prices in a way that disadvantages the U.S. market, as the administration weighs whether to punish Germany over its drug-pricing policies. Meanwhile, some pharmaceutical companies are preparing for Section 232 tariffs that could hit some imported medicines and ingredients at rates as high as 100 percent, starting next week. The two proceedings are separate, but they reflect a broader administration effort to use trade policy to change how drug companies manufacture and price medications. The Office of the U.S. Trade Representative (USTR) is leveraging a Section 301 investigation amid concerns that Germany’s policies contribute to Americans bearing a disproportionate share of global pharmaceutical research and development costs. The Section 232 regime, meanwhile, is designed in part to encourage companies to move production to the United States. Why it matters: Major trading partners have, for decades, agreed to exclude most pharmaceutical products from tariffs, and the Trump administration’s trade agenda represents a shift in this long-standing policy. Let’s break down the interplay. - Section 301 tariffs are country-based: In June, USTR launched an investigation into Germany’s pharmaceutical sector to examine whether the country’s pharmaceutical pricing policies are “unreasonable or discriminatory and burden or restrict U.S. commerce.”
The administration moved forward, it said, after “months of meaningful discussions with our German partners” to try and resolve the impasse. A spokesperson for Germany’s health ministry on Tuesday pushed back on accusations that its drug-pricing policies are unfair to U.S. companies and told Politico that the country stands “behind [its] system.” → On Tuesday, USTR held a meeting to hear from drugmakers, academics, consumer groups and other interests as it investigates the world’s third-largest pharmaceutical market (after the United States and China). Drugmakers have embraced the investigation, with AbbVie referring to Germany’s pricing policies as a “systematic undervaluation of innovation.” “Our investments support not only the medicines that succeed, but also the many unsuccessful research efforts that are in the central cost of discovering these treatments,” said Perry Siatis, a senior AbbVie executive, during testimony at the hearing on Tuesday. “Unfortunately, many countries outside the United States, including Germany, use their laws to deny companies like AbbVie reasonable prices that reflect our R&D investments and the value these medicines deliver.” In a statement, AbbVie took aim at new policy reforms in Germany that increase the mandatory rebates drugmakers have to offer up to 15.5 percent, in addition to other changes aiming to lower prices. Other key quotes: - Kevin Haninger, senior vice president of international policy at the Pharmaceutical Research and Manufacturers of America (PhRMA), said that the administration should ensure that Germany “pays its fair share for innovative medicines.”
Haninger said that Germany only spends 0.64 percent of its gross domestic product on branded prescription drugs, compared to 1.32 percent of GDP in the United States, which “burdens the U.S. economy by suppressing needed innovation.” - Thomas Hwang, a Harvard University physician and researcher who has studied drug-pricing policies, said that there isn’t sufficient evidence to argue that Germany’s drug-pricing policies are discriminatory. “Our research indicates that Germany is among the top three countries of origin for innovative medicine,” Hwang told the panel, pushing back on drugmakers’ claims.
Furthermore, he pointed out that U.S. health programs — including Medicare, Medicaid and one run by the Department of Veterans Affairs — also have drug-negotiation provisions or larger mandatory rebates on a percentage basis. (Siatis, of AbbVie, later pushed back, saying that Germany’s rebates apply to a larger portion of its citizens than these more specific populations of patients in the U.S.) - “Of course companies want to make more money in every market. They want to treat any policy that reduces their revenue as unfair,” Megan Whiteman, a researcher at consumer group Public Citizen, told the panel on Tuesday. “Treating disruption in revenue as a standard for unreasonable policies inevitably results in higher costs that would become unmanageable, and it’s not sustainable.”
Whiteman also said that there’s no evidence that raising prices abroad would lead to lower drug prices for Americans. What to watch: There’s a hope from proponents who believe the investigation could be used as a cudgel to get Germany to increase what it pays for medications — and industry experts are telling the administration that they want the push expanded to other countries, including Japan. As part of the investigation, USTR is also considering potential remedies, including tariffs and other measures. A determination could come in the next few months, though the administration likely has until June to decide. - Section 232 tariffs are sector-based: At the same time, Sept. 29 is the next big deadline for the Section 232 regime. That’s when tariffs of up to 100 percent kick in for pharmaceutical companies that haven’t made deals with the Trump administration or who import products from countries that have established bilateral trade deals with the administration.
Drug companies that cut most-favored-nation (MFN) drug-pricing deals have secured tariff relief for several years, and other companies could receive a lower tariff bill — down to 20 percent — if they sign onshoring commitments. The Commerce Department confirmed to me that, as part of the Section 232 effort, it has secured commitments for more than $600 billion in “reshoring investments” from pharmaceutical manufacturers that have agreed to move a majority of their domestic production to the U.S. by Jan. 20, 2029. However, it did not say how many companies were involved in those agreements. There are also several types of products that aren’t subject to the tariffs, including rare-disease drugs, generic medications, and cell and gene therapies, among others. On Tuesday, the Commerce Department released some guidance laying out more details about the exemptions. Still, some companies are scrambling to figure out how to get approved for an exemption from the 100 percent tariffs, a biotech policy adviser tells me. The tariffs, which are set to take effect Sept. 29, also impact the ingredients that go into medications. “We are engaged in collaborative discussions with the administration to mitigate the harm tariffs would have on patients and the crucial biotechnology industry that is so vital to America’s health, prosperity, and national security,” said John Crowley, who leads the Biotechnology Innovation Organization, an industry group with mostly small and midsize members. “There must be no disruption of the flow of medicines to the American people.” The Trump administration is removing about 760,000 people from Affordable Care Act coverage as part of a sweeping crackdown on what officials say are fraudulent or otherwise-improper enrollments. Vice President JD Vance announced the move Tuesday alongside Mehmet Oz, who leads the Centers for Medicare and Medicaid Services, and other senior officials. The administration says the effort will save the federal government an estimated $2.2 billion. The administration is also putting about 419,000 additional enrollees through “additional verification,” in addition to suspending hundreds of insurance brokers accused of improperly enrolling people in Affordable Care Act marketplace plans. CMS has also temporarily halted new agent and broker registrations for the 2027 plan year. “This is what the fraud task force is all about,” Vance said. “Saving the American taxpayers money, and, on the other hand, ensuring that these programs that are very important” are shielded from waste and fraud. → Read more from The Post’s Dan Diamond about the announcement. The Trump administration says it’s trying to change the enforcement approach to improper payments, stopping federal dollars from ever going out to potential fraudsters rather than chasing it down after the fact. According to Dan’s report, it’s using AI analytics and pattern recognition to identify the incorrect or fraudulent payments. Why it matters: The crackdown puts a dent in the program that covers an estimated 19.2 million people. In June, the Department of Health and Human Services said that nearly half of the Affordable Care Act’s enrollment growth from 2021 to 2024 was suspected to be “improper, phantom or fraudulent.” And the administration anticipates that such enrollment peaked at 5.6 million people in 2025. The fight has been about how far fraud efforts should go. Conservatives who have pushed for tougher oversight, including Paragon Health Institute founder and President Brian Blase, argue that fraudulent and “phantom” enrollment has cost taxpayers billions. Democrats and some health policy experts argue that the administration’s broader policies are also pushing legitimate consumers out of coverage. Cynthia Cox, who leads research on the Affordable Care Act at the nonpartisan health research nonprofit KFF, said that people who weren’t fraudulently enrolled may have had their coverage shut off. “Insurers were asked to reach out to these people and they didn’t respond [within] 30 days,” Cox said in a post on social media. “Some were likely fraudulently enrolled, some were likely legitimately enrolled. We don’t yet know the collateral damage.” “There’s no question people who are fraudulently enrolled should have the coverage canceled,” Cox added. “The question is whether all of these people were fraudulently enrolled and whether this was the appropriate process to identify fraud.” David Merritt, senior vice president of external affairs at the Blue Cross Blue Shield Association, said Tuesday that its members have supported stronger eligibility verification and more stringent oversight of agents and brokers, while noting that the exchanges — rather than health plans — make initial eligibility determinations. Blue Cross Blue Shield companies, Merritt added, “will continue working closely with CMS and other federal partners to support strong program integrity, prevent fraud and protect access to affordable health coverage for eligible Americans.” DOCUMENT DROP — Sen. Susan Collins (R-Maine) sent a letter to the White House’s budget director, Russell Vought, and National Institutes of Health director Jay Bhattacharya with concerns about recent reports (including from The Post) about a potential move to add political review to NIH research grants. The formal letter follows a critical statement Collins released about the reported plan. “If the administration seeks additional reforms of NIH, I urge you to submit a legislative proposal to Congress rather than pursue an executive order,” Collins writes in the letter. — Two former Food and Drug Administration commissioners, Scott Gottlieb and Mark B. McClellan, wrote an op-ed in STAT that endorses Heidi Overton to lead the FDA. Overton will appear before the Senate health panel on Thursday, and will likely face some tough questioning from some Republicans — including the panel’s chair, Sen. Bill Cassidy (R-Louisiana), who’s been critical of the administration’s approach to vaccine policy. “Nebraska started work requirements early. Here’s how it’s going,” Bridget Early reports at Modern Healthcare. “Nvidia-backed Iambic files for IPO, disclosing new clinic and dealmaking details,” reports Andrew Dunn at Endpoints News. “CMS sets preliminary cuts to Medicare lab reimbursement rates,” Susan Kelly reports at MedTech Dive. This newsletter is published by WP Intelligence, The Washington Post’s subscription service for professionals that provides business, policy and thought leaders with actionable insights. WP Intelligence operates independently from The Washington Post newsroom. Learn more about WP Intelligence. | 
