Chancellor Friedrich Merz’s ruling coalition has unveiled a reform to close the growing deficit of compulsory health insurance funds. According to investing.com, the government forecasts that it could reach about 40 billion euros by 2030. The system now costs more than 500 billion euros a year.
The essence of the reform is money and control
The state is increasing pressure on drug prices: pharmaceutical companies will be obliged to give higher discounts, which could rise to about 10.5% from 2027. At the same time, insurers will have the right to group similar drugs and actually push doctors to make cheaper prescriptions.
The pharmaceutical sector is reacting sharply. The Verband Forschender Arzneimittelhersteller (VFA) association is talking about the harshest blow to the industry in the history of such reforms. They say the pressure on prices could lead to some development and jobs leaving Germany.
The mood in the industry is becoming increasingly nervous. Germany’s largest pharmaceutical company Boehringer Ingelheim admits that bringing new drugs to the European market is becoming more difficult and the rules are becoming less predictable. Against this background, there is a worry that innovation will go to places where it is easier to recoup development costs, says the source.
The market is not all calm either. US Insmed has already refused to launch a new drug in Germany, citing uncertain conditions.
The hospital sector is under attack
It is not only pharma that is affected by the reform. Hospitals are also under attack. The authorities want to reduce redundant operations by introducing mandatory second opinions for a number of procedures, as well as to limit the growth in staff costs.
Investors have already reacted. Shares of private hospital operator Fresenius SE have sagged about 20% since February. Company executives have criticized the plan, calling it a missed chance to deeply reform a “chronically inefficient” system.
Amid global pressure (especially from the U.S., where drug price cuts are being discussed), Germany is actually trying to simultaneously hold its budget together and not destroy the pharmaceutical industry. So far, the balance looks delicate: the tighter the austerity, the louder the warnings that innovation may be leaving the country.
