Prime Highlights
- Germany has approved health insurance reforms that increase mandatory rebates on branded medicines to reduce healthcare spending.
- The government expects the reforms to save billions of euros, while drugmakers warn the measures will increase pressure on the pharmaceutical industry.
Key Facts
- The mandatory rebate on branded medicines will rise from 7% to 15.5%, while a proposed variable rebate system has been dropped.
- Germany is one of Europe’s leading markets for innovative medicines because of its fast reimbursement process for new drugs.
Background
Health insurance reforms have been passed in Germany to bring down the cost of healthcare despite the fierce resistance by pharmaceutical companies and other industrial organizations. It is estimated that the health care insurance costs will go down, as well as the cost of production for the pharmaceutical industries.
These reforms were passed in the German parliament before the country’s second chamber approved them. The package includes higher co-payments for prescription medicines, stricter insurance rules for married couples and changes to drug pricing.
Under the new law, the mandatory rebate that pharmaceutical companies must pay on the list prices of branded medicines will increase from 7% to 15.5%. However, the government dropped an earlier proposal for a variable rebate system after objections from the pharmaceutical industry.
The German government expects the reforms to save around €16.3 billion in public health insurance costs next year. By 2030, the savings might reach above €38 billion.
Several global drugmakers had criticised the proposed changes. Earlier this year, Eli Lilly and Boehringer Ingelheim reduced planned investments in Germany because of concerns over drug pricing measures. Novartis and Pfizer also expressed opposition to the reforms.
The Association of Research-Based Pharmaceutical Companies (VFA), Germany’s leading pharmaceutical industry group, said the new rules would place additional pressure on research-based drug companies and could affect healthcare services. The group estimated that the higher fixed rebate could increase the industry’s costs to about €3.2 billion in 2027.
Germany remains one of Europe’s most important markets for new medicines because of its fast reimbursement system for innovative drugs.
