Even as the effort has met with fierce pushback from drugmakers, trade groups and opposition parties in the country’s own government, German lawmakers late Friday voted to pass health insurance reforms aiming to cut healthcare costs next year, in part by hiking up mandatory rebates that pharmas must pay on branded medicines.
Still, previous resistance appears to have spared the pharmaceutical industry from at least one negative outcome in the central European nation, which often serves as a proving ground for innovative drug launches in the EU.
Late Friday, 318 members of Germany’s lower house of parliament, the Bundestag, voted in favor of the financial reform proposal, overcoming 284 ‘no’ votes and 4 abstentions to approve the measure.
The insurance reform was then blessed by the Bundesrat, the country’s upper parliamentary house, formally clearing the way for measures that will impose higher co-pays for prescription drugs and tighter insurance restrictions for married couples, among other changes, German outlet Deutsche Welle reported late last week.
Notably for medicines manufacturers, the healthcare package has lifted the fixed markdown drugmakers must pay on the list prices of their branded products from 7% to 15.5%, according to a Bundestag announcement on July 10. That said, a variable rebate proposal, which the Bundestag noted was “intended to generate regular additional revenue in the long term,” has been nixed from the plan following industry opposition earlier this summer.
By passing the reforms, Germany is aiming to save some 16.3 billion euros ($18.6 billion) in costs across its statutory health insurance system next year, with the potential to lift that figure to upwards of 38.1 billion euros ($43.5 billion) by 2030.
Earlier this year, pharma bigwigs Eli Lilly and local drugmaker Boehringer Ingelheim said they were cutting back on separate planned investments in Germany in light of drug discount measures included in the country’s health insurance reform efforts.
The proposals earlier this year also attracted criticism from leadership at Euro pharma powerhouse Novartis and New York drugmaker Pfizer, among others.
In a small win for the industry, however, Germany in mid-June moved to nix plans for a variable drug discount structure, Reuters reported at the time, opting instead for the fixed rebate plan included in Friday’s measure.
Germany is a key market for branded drugmakers in Europe, due in no small part to the fact that the country’s quick reimbursement turnaround supports some of, if not the earliest potential launch timing for novel medicines in the bloc.
Despite the victory on the variable discount front, Germany’s top trade group representing drugmakers, the Association of Research-Based Pharmaceutical Companies (VFA), came out swinging against the passage of the reform measures late last week, warning (German) that the insurance reforms will place a “considerable burden on the research-based pharmaceutical industry and the medical care of the population in Germany.”
The trade group alleges that, “during the parliamentary process, key burdens on pharmaceutical companies were not reduced but rather further intensified,” caveating that “[w]hile other stakeholders have received some relief, the burdens on the pharmaceutical industry are set to increase in several areas.”
Putting things into perspective, VFA estimates that the fixed manufacturer discount rate of 15.5% will jack up the “burden on industry” from an originally expected 1.1 billion euros to roughly 3.2 billion euros “in 2027 alone.”
VFA also took umbrage with price-quantity regulation and an increase on discounts for vaccines, specifically, in a statement late Friday.
The reform movement in Germany comes as U.S. trade policy—driven by the Trump administration’s tariff threats and drug pricing reforms in the shape of the White House’s “most favored nation” framework—thrusts the competitiveness and pricing policies of other wealthy nations into the spotlight.
Speaking to the German efforts earlier this year, Novartis helmsman Vas Narasimhan told reporters in late April that “[p]olicies like this send the wrong signal to a high innovation industry like ours, where we see U.S. and China actively investing in the biotech ecosystem to make it highly competitive.”
