Comments on the Section 301 Investigation Regarding Germany’s Persistent Underpayment for Innovative Pharmaceutical Products

Introduction

We welcome the opportunity to provide comments and analysis to the USTR inter-agency Section 301 committee on its investigation pursuant to the Trade Act of 1974, as amended (Trade Act), with respect to Germany’s persistent underpayment for innovative pharmaceutical products. 

Founded in 1980, the Mercatus Center at George Mason University is the world’s premier universitybased source for market-oriented ideas—bridging the gap between academic ideas and real-world problems. The Mercatus Center advances knowledge about how markets work by training graduate students, conducting research, and applying economics to offer solutions to society’s most pressing problems. Our mission is to generate knowledge and understanding of the institutions that affect the freedom to prosper and to find sustainable solutions to overcome the barriers that prevent individuals from living free, prosperous, and peaceful lives. This comment, therefore, does not represent the views of any particular affected party or special interest group; it is intended to assist the USTR in its decisionmaking. 

We wish to address the following: Acts, policies and practices of the German government related to persistent underpayment for innovative pharmaceutical products; why these practices are unreasonable, how these practices burden U.S. commerce and the nature and level of that burden; why these practices are actionable under Section 301(b) of the Trade Act; what actions the USTR should take in response; and the extent to which the policies, practices and acts result in the United States paying a disproportionate share of global R&D costs for innovative pharmaceuticals.

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