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US intensifies pressure on Germany over pharmaceutical pricing policies

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The Trump administration is continuing to press the German government to raise pharmaceutical prices in Germany.

According to German Foreign Policy, Washington argues that the pharmaceutical industry’s research and development investments are financed primarily through the US market.

The White House contends that other countries continue to benefit from medical innovation despite contributing little to its cost.

President Donald Trump has accused Germany and other countries of “global freeloading.” On June 18, the United States launched a Section 301 investigation against Germany, citing the country’s “persistent underpayment for innovative medicines” in an effort to improve profit conditions for the pharmaceutical industry operating there.

German Chancellor Friedrich Merz rejected the demand, although the Economy Ministry said it remains open to negotiations.

Boehringer Ingelheim and Merck have already made concessions by offering selected medicines at lower prices through the new TrumpRX platform.

At the same time, together with companies including Bayer, they are pressing for higher drug prices across EU countries, warning that they could otherwise delay or withhold the launch of new medicines in Europe in order to prevent international price comparisons.

Trump accuses Germany and the EU of “freeloading”

The United States has the highest pharmaceutical prices in the world, followed by Switzerland, Germany and Canada.

The Trump administration says it intends to change that. Claiming to have identified “global freeloading,” the White House blames what it describes as “socialist healthcare systems” in Germany and across the European Union.

In May 2025, Trump signed an executive order stating that the United States would henceforth use the lowest price charged for a medicine in any industrialized country as the benchmark for its domestic pharmaceutical market.

The order states that the objective of US trade policy is “to support manufacturers in raising prices abroad while using the resulting additional revenue to reduce prices directly for American patients and taxpayers.”

The White House embraces pharmaceutical industry arguments

The previous administration frequently clashed with the pharmaceutical industry. After reducing the prices of 10 widely used medicines in 2024, then-President Joe Biden declared, “We beat Big Pharma.”

The issue has taken a different direction under the Trump administration. In contrast to Democrats, Republicans have broadly accepted high drug prices as justified.

The administration has embraced the pharmaceutical industry’s argument that elevated prices are necessary to finance research spending.

The report argues that this claim conflicts with the fact that companies such as AstraZeneca and Bayer have been reducing their own laboratory operations while increasingly acquiring promising biotechnology startups.

It also argues that the administration overlooks the industry’s practice of grouping substantial marketing expenditures under the category of “development.”

Confrontation with Germany, compromise with Britain

In line with Trump’s May 2025 executive order, US Trade Representative Jamieson Greer spent months attempting to persuade the German government to reallocate healthcare resources in favor of the pharmaceutical industry.

Those negotiations failed. As a result, in mid-June Greer initiated Section 301 proceedings against Germany over what he described as “persistent underpayment for innovative medicines.”

Greer also openly criticized Germany’s proposed Health Insurance Contribution Stability Act, saying he was “particularly concerned by reports that Germany will rapidly enact legislation that would further reduce spending on innovative medicines.”

The United States has already reached an agreement with the United Kingdom. To avoid the threat of higher tariffs on British pharmaceutical exports, London agreed, among other measures, to pay higher prices for newly launched medicines.

According to an analysis published in the British Medical Journal, the agreement will cost the National Health Service (NHS) approximately 51.5 billion euros by 2036.

The study’s authors argue that the required reallocation of resources will create major gaps in healthcare provision and could result in as many as 229,000 additional deaths.

Berlin stands firm: “Drug pricing is our domestic affair”

The German government has firmly rejected Washington’s claims as unfounded.

Chancellor Friedrich Merz and Health Minister Nina Warken pointed to the EU-US trade agreement, which includes a 15% tariff on pharmaceutical imports.

Merz described pharmaceutical price regulation in Germany as “entirely a domestic matter,” while Warken rejected any concessions, saying there was “very little room for maneuver.”

Only the Federal Ministry for Economic Affairs indicated a willingness to negotiate. A ministry spokesperson said Berlin would seek dialogue with the United States on the issue.

On Tuesday, representatives from the Health Ministry and the Federal Chancellery met with European Commission Director-General for Trade Ditte Juul Jørgensen to discuss a common strategy.

German pharmaceutical companies yield to Trump

In July 2025, Trump sent letters to 17 pharmaceutical companies demanding that they reduce US prescription drug prices to the lowest level charged in any other developed country.

Two German drugmakers, Boehringer Ingelheim and Merck, received the letters, which called on them to apply “most-favored nation” pricing in the United States.

Both companies agreed.

Boehringer Ingelheim said, “We will continue to work constructively with governments, regulators and patient organizations to ensure patients have access to affordable medicines while making sure life-saving medical innovation remains possible.”

The company now offers three medicines at substantially discounted prices through the TrumpRX platform.

Merck also lists three medicines on the platform and has agreed to expand domestic production of fertility treatments in the future.

“Through our collaboration with President Trump and his administration, more families in the United States will now have access to innovative fertility treatments and, we hope, realize their dream of having children,” Merck Chief Executive Danny Bar-Zohar said.

Bayer backed Trump’s election campaign

Other pharmaceutical manufacturers, including Bayer, are also seeking a “proactive” agreement with the administration out of concern that they could otherwise face stricter cost-cutting measures.

The Leverkusen-based company has not criticized Trump’s policies. It donated $122,000 to his election campaign, sponsored his inauguration and now supports his criticism of Berlin and Brussels.

Chief Executive Bill Anderson said in an interview:

“Yes, I understand the US government’s frustration with European pharmaceutical policy. Every European government wants to create jobs in the pharmaceutical and biotechnology sectors. But when it comes to pricing innovative medicines, they are willing to pay only a fraction of what the United States pays. That is unacceptable.”

Stefan Oelrich, a member of Bayer’s Pharmaceuticals Executive Committee, also argued that “prices for new products in Europe must increase.”

Oelrich said he personally conveyed that position to EU Health Commissioner Olivér Várhelyi during the commissioner’s visit to Bayer’s Berlin office in June.

According to the EU Transparency Register, Bayer lobbyists and members of Várhelyi’s cabinet have held numerous meetings, suggesting the issue has remained high on the agenda.

The Leverkusen-based company also joined other pharmaceutical manufacturers in sending a letter on the matter to the European Commission.

Major pharmaceutical companies pressure the EU

Seeking additional leverage, major drugmakers argue that fewer medicines are being submitted for approval in EU countries because manufacturers want to avoid creating price benchmarks that could be used by the US government.

“These are not empty threats; this is already happening. Europe is on a path where, in the end, almost no new medicines will be approved,” said Matthias Berninger, Bayer’s chief public affairs officer.

The German Association of Research-Based Pharmaceutical Companies (VFA), founded by Bayer, previously used the same argument in its campaign against the Health Insurance Stability Act.

In a full-page newspaper advertisement, the lobbying group urged lawmakers not to undermine pharmaceutical industry profits in order to safeguard medicine supplies.

“Members of the Bundestag, you will decide whether tomorrow’s medicines reach Germany,” the advertisement stated.

The report argues, however, that the legislation places virtually no burden on the pharmaceutical industry while preserving favorable business conditions for the sector.

“Spending on pharmaceuticals is expected to continue increasing,” the advertisement added.

Since the US Supreme Court ruled that the Trump administration’s tariff increases were unlawful, the administration has based much of its aggressive trade strategy on Section 301 proceedings such as the case against Germany.

The legal basis for those proceedings is a provision of the US Trade Act of 1974. In the case against Germany, Berlin has until Aug. 10 to submit its response, while a public hearing is scheduled for Sept. 22.

Europe

NATO unveils 32-nation defence strategy to counter adversaries

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NATO Supreme Allied Commander Europe (SACEUR) Alexus Grynkewich has unveiled a new defence strategy aimed at rendering any attack against an alliance member entirely futile.

Speaking at the Warsaw Security Forum, Grynkewich said the concept, titled the “Theory of War”, is designed to prevent hostile elements from infiltrating NATO territory and waging conflict there.

Arguing that they aim to reassure the one billion people living within the alliance’s borders, Grynkewich maintained that they also wish to send a message to adversaries such as Russia that NATO is prepared for a potential invasion.

“If we are attacked, we are ready to fight even tonight,” Grynkewich said.

Three-stage defence plan enters into force

Approved by all 32 alliance members, the plan combines land forces and conventional weapons systems with advanced technologies such as unmanned aerial vehicles, counter-drone systems, and artificial intelligence.

Lessons drawn from ground and air combat in Ukraine, as well as current conflicts in the Middle East, play a decisive role in shaping the strategy.

According to Grynkewich, the new defence doctrine rests on three fundamental phases that form the core of NATO’s approach:

The first pillar of the plan, the “block” phase, focuses on preventing hostile forces from seizing allied territory.

In this context, NATO ground components will engage directly with attacking units, restrict their manoeuvrability, and neutralise forces attempting to breach alliance borders.

Should the assault continue, the second phase (“blunt”) will come into play, deploying autonomous systems requiring minimal human intervention alongside advanced sensor networks to slow the momentum of the attack and wear down advancing forces.

These systems will detect threats in real time, combining capabilities across different operational domains to halt the adversary’s advance.

The final stage, the “break” phase, will target not the attacking units directly, but the operational warfighting system that sustains them.

Command centres, supply chains, and logistics routes will be struck using long-range precision strike systems and sensor networks, eliminating the adversary’s ability to sustain military operations.

“Enemy commanders will not be able to direct their troops, their supply lines will be severed, and their logistics vehicles will be destroyed,” Grynkewich said.

Strategy aims to defend borders rather than gain territory

Noting that NATO has no intention of acquiring territory and that the strategy is entirely defence-oriented, Grynkewich said, “We have no plan, intention, or ambition beyond protecting our citizens and our territory.”

Stating that he considers the likelihood of a direct attack on alliance territory to be low, the commander nevertheless stated that they would respond without hesitation to any attempt targeting allies.

Addressing questions regarding US commitment to the alliance, Grynkewich recalled that Washington reaffirmed its adherence to Article 5 at the NATO summit in July.

Article 5, which forms the cornerstone of NATO’s collective defence principle, stipulates that an armed attack against one ally is considered an attack against all members.

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Germany detains two Turkish suspects over Polish Starlink arson

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Polish authorities have announced that German police detained two Turkish citizens suspected of setting fire to a Starlink station near Warsaw last month.

Tomasz Siemoniak, Poland’s minister coordinating the special services, told a news conference in Warsaw on Monday that Poland has requested the suspects’ extradition and has “no doubt” that Russian secret services were behind the arson attack.

“It should also be noted that Russian intelligence agencies are increasingly turning to people linked to the criminal underworld,” Siemoniak said at the press conference.

In a post on X, Prime Minister Donald Tusk described the incident as another “act of hybrid warfare” and said those responsible for the sabotage would be brought to justice in Poland.

Interior Minister Marcin Kierwinski said the two Turkish citizens would be charged in Poland with carrying out an act of sabotage on the orders of a foreign intelligence agency.

Power supply equipment at a Starlink ground station serving Eastern Europe, including Poland and Ukraine, caught fire on the night of 23 September.

The incident did not cause a major disruption to internet service. The blaze, however, completely destroyed the station’s electrical system and backup generator.

Poland, a key transit route for Western aid to Ukraine, has faced a series of suspicious incidents recently.

Numerous cyberattacks have targeted public utilities, including water and energy infrastructure as well as hospitals.

In addition, damage to a railway line between Warsaw and the Ukrainian border was attributed by officials to Russian sabotage.

In late July, a Russian missile also landed in Poland.

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LSE study finds post-bailout Greece turned into a cafe economy

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A new study prepared by the Hellenic Observatory at the London School of Economics (LSE) has examined the structural transformation of the Greek economy following the bailout era.

According to reporting by the Greek Reporter, the study titled “The Café Economy”, authored by Michalis Nikiforos, Vlassis Missos, Christos Perros, and Nikolaos Rodousakis, revealed that the country has become excessively dependent on Accommodation and Food Service Activities (AFSA), a sector encompassing all tourism-related fields including restaurants, bars, hotels, entertainment, and short-term rentals.

The researchers pointed to a fundamental issue that is often overlooked behind the “café economy” characterisation. According to the study, despite promises of a new “development model”, Greece has over the last 15 years remained trapped in a growth cycle built on an exceptionally fragile foundation.

Labour productivity declined as tourism expanded

The study reported that following austerity policies and structural reforms that liberalised labour and product markets, tourism-linked activities expanded disproportionately compared to other sectors. This unbalanced growth became one of the primary drivers of the economy’s broader loss of productivity.

Contrary to the productivity gains promised by bailout reforms, an opposite trend took hold across the Greek economy. While labour productivity suffered a steep decline, employment shifted toward low-productivity sectors, led by accommodation and food services.

The researchers identified the contraction in aggregate demand and the sharp erosion of real wages as the main causes of this productivity collapse. Between 2009 and 2024, labour productivity fell by 16% and remained below pre-crisis levels.

The slide in real wages was even more pronounced. Across the country, real wages dropped by between 26% and 35%, while losses in the tourism sector reached as high as 60%. The authors described this outcome as a severe process of income redistribution operating against labour.

The shift of employment toward the AFSA sector accounted for approximately one-third of the total decline in labour productivity. The loss of hundreds of thousands of jobs in productive sectors such as manufacturing, alongside the scarcity of employment in high-technology and innovation fields, deepened this decline.

Greece enters regression under a dual model

According to the study, Greece’s development model is displaying a historical regression by evolving into a “dual” structure typically observed in underdeveloped or transition economies. In this model, economic growth relies on deploying labour, cheapened through wage suppression, into low-productivity sectors.

Noting that the three bailout programmes implemented between 2010 and 2018 triggered a deep recession instead of boosting competitiveness, the researchers stated that the Greek economy has never fully emerged from this slump.

The study also recalled that the International Monetary Fund (IMF) had in the past apologised for underestimating the negative impacts of severe fiscal contraction.

Educated young population works in low-wage jobs

Data published by the LSE showed that the workforce in the AFSA sector underwent a fundamental transformation between 2009 and 2023:

Employment in the sector surged by 87%. Gross Value Added recorded 11% growth. AFSA became the largest employer in the Greek economy.

On the other hand, the sector is characterised by low wages, precarious working conditions, and an increase in part-time work. Although the educational attainment of tourism employees has risen, workers are increasingly employed below their qualifications.

Eurostat figures confirm that Greece, behind Spain, has one of the highest rates in Europe of young graduates who are overqualified yet employed in unskilled jobs.

More than 86% of young university graduates working in the tourism and hospitality sector are employed below their qualification levels.

Structural risks deepen while external balance improves

The report titled “The Café Economy” listed the advantages along with the severe vulnerabilities generated by this development path:

The positive effect emerged in the external balance. The tourism sector provided a significant contribution to correcting the current account balance. The trade surplus in travel services rose by five percentage points between 2009 and 2023, covering approximately half of the total current account deficit contraction over the same period.

Conversely, overreliance on tourism and a low-productivity, low-wage, labour-intensive services economy brought heavy structural weaknesses:

Social and environmental degradation: The disproportionate growth of the sector lays the ground for environmental and cultural deterioration, frequently described through the concept of “overtourism”.

Housing crisis: The proliferation of short-term rentals and foreign property acquisitions drives up rents, making housing costs unaffordable for local workers.

External dependence: As the café economy expands at the expense of other sectors, reliance on external demand and seasonal fluctuations multiplies; entire regions remain exposed to shifts in tourist flows.

The researchers warned that low-wage policies erode economic competitiveness over the long term by weakening incentives for technological innovation and progress.

Noting that the thesis claiming market liberalisation automatically delivers productivity has been undermined by the Greek experience, the study stated that dependence on low-productivity sectors such as AFSA creates an economic dilemma. Even if these activities support demand and foreign currency inflows, they damage long-term productivity and social sustainability.

The report noted: “A successful way out for Greece requires policies that do not merely stimulate demand, but also strategically promote high-productivity sectors, support technological upgrading, and ensure inclusive growth. Without such a change of course, the ‘café economy’ risks becoming not a temporary adjustment process, but a long-term stagnation equilibrium.”

The study concluded with a call to re-evaluate structural reforms in light of real economic and institutional conditions, and to prioritise development focused on high productivity.

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