Last week, President Trump demonstrated once again that he will not allow wealthy allies to continue benefiting from American strength without paying their fair share. At NATO, allies have now committed to raising defense spending to 5% of GDP by 2035, generating a cumulative “Trump Trillion” in additional spending since Trump’s first term. In 2025 alone, allies purchased $54 billion in U.S. defense equipment, supporting nearly 200,000 American jobs. The President secured $3 billion in new defense deals, covering missile production, drone acquisitions, and expanded European partnerships that benefit U.S. manufacturing.

The message is clear: the era of one-sided arrangements is over. Now, that same accountability must extend to pharmaceutical innovation.

For too long, European governments have imposed aggressive price controls on American-developed medicines while their citizens benefited from every breakthrough those medicines represent. New research by the Office of Health Policy shows Americans account for nearly 80% of the innovative revenue for drugs launched between 2020 and 2025. No other country comes close. That gap is the direct result of foreign government policy that shifts the burden of R&D costs onto American patients, who effectively subsidize the healthcare systems of wealthy nations that simply opt out of paying full price.

When wealthy allies refuse to pay fair prices for prescription drugs, they don’t just harm American companies. They threaten the innovation pipeline that patients around the world depend on.

The Trump administration took critical action in June by launching a Section 301 investigation into Germany’s underpayment for innovative pharmaceuticals. The investigation will assess whether Germany’s pricing policies unfairly burden U.S. commerce and warrant a stronger response.

Germany answered by doubling down. Last week, the German Bundestag passed a sweeping overhaul of the country’s statutory health insurance system in its final session before the summer recess. The legislation forces additional drug-price reductions on pharmaceutical companies as part of a broader push to cut billions of euros in health system costs. The Bundesrat cleared the bill the same day, putting the law on track to take effect January 1. Germany already imposes strict price controls that strip billions of dollars annually from innovation. This new law makes a bad situation significantly worse.

Germany is not the only concern. Switzerland is advancing new pricing restrictions that expand administrative price controls and impose mandatory volume-based clawbacks of up to 40% on innovative medicines. The implications extend far beyond Switzerland’s borders. Not only will these measures reduce the recognized value of life-saving medications and dilute future innovation, they contribute to a global pricing spiral that has direct implications for the availability of innovative medicines worldwide.

These are state-induced price control mechanisms that create real trade-policy exposure and warrant Section 301 scrutiny.

The Administration has laid the groundwork and is right to continue pressing high-income trading partners to contribute more to financing pharmaceutical innovation. A trade agreement framework that includes meaningful commitments on innovative medicine spending is not just a health policy goal. It is a national security and economic competitiveness imperative.

NATO allies finally heard the message on defense spending. It is time for Europe and Switzerland to hear it on life-saving medications.