After February’s snap election that brought Friedrich Merz to power, a coalition between his conservative CDU/CSU bloc and the centre-left SPD has outlined an agreement this month that will serve as the framework for the new German government’s healthcare agenda . While the accord presents broad healthcare reforms, the key takeaway for Germany’s biopharma industry is its designation as a “Pilot Sector.” While this designation may signal continuity with the previous administration’s pharma strategy aimed at boosting innovation, it has brought with it few specific pharma-oriented measures.
Pharma, Recognised as one of Germany’s Flagship Sectors
The recently finalised coalition agreement, or Koalitionsvertrag, between Germany’s conservative Christian Democratic bloc (CDU/CSU) and centre-left Social Democratic Party (SPD) is not a binding plan or agenda. It does, however, outline a framework for the new government’s healthcare priorities, and indicate the direction the incoming coalition will take over the next four years.
For drugmakers, the most significant element of the new government’s 144-page agreement is perhaps the designation of pharma along with MedTech as a “Pilot Sector” for the German economy. While this designation comes with few specifics as to how the government plans to support the industry, it does show a willingness to pursue some of the goals of the previous administration’s pharmaceutical strategy.
The strategy, released in December 2023 by the Olaf Scholz-led government, was aimed at reinstating Germany as a leading pharma innovation hub. The country, which went from 1,400 patent applications in 2000 – 17 percent of the global pharmaceutical total – to 849, or 9 percent, in 2021, has been steadily losing ground as a biopharma leader.
Setting out several pharma-friendly proposals – from steps to strengthen clinical research and incentivise domestic manufacturing to regulatory simplification and a refined HTA reimbursement process – the overall strategy direction recognised the importance of the country’s pharma innovators.
While the incoming government’s plans appear to reinforce these intentions, they make few commitments. No financial investments are mentioned and few specifics are provided as to how the sector will be bolstered. The government has said, for example, that it will reduce the bureaucratic complication of conducting clinical trials, yet the legislative and regulatory steps needed to do this remain unclear.
Redefined HTA Reimbursement Price “Guardrails”
One proposal set forth in the coalition accord that may negatively impact pharma is the intention to further develop reimbursement price “guardrails” within the German health technology assessment (HTA) process, AMNOG. These so-called guardrails, introduced in 2023, are aimed at imposing limitations on the pricing of innovative medicines subject to HTA.
They include the comparison of new therapies to lower-cost comparator treatments and limit reimbursement for patent-protected medicines. However, while the intention to further “develop” AMNOG’s pricing structures, including guardrails, was put forward in the new agreement, how this will be played out was not specified.
According to an analysis from Baker McKenzie, while the industry’s repeated calls to eliminate guardrails continue unrecognised as with the previous government, there is no indication that the AMNOG framework will see substantial changes. “Personalised medicine” is mentioned specifically, perhaps signalling future attention to gene therapies and other individualised treatments that are currently at a pricing disadvantage due to a lack of data in small patient populations.
GPs as Gatekeepers and Potential Direct Sale Discounts
There are other schemes included in the incoming government’s plans that may have an effect on biopharma. The recent agenda agreement aims to reinforce the role of general practitioners (GPs) as gatekeepers. This means that under the country’s statutory health insurance (SHI), which covers some 90 percent of the population, patients will be required to consult a GP to get an appointment with a specialist. The measure may reduce the country’s healthcare expenditures, but it could also reduce prescriptions for innovative medicines, most often prescribed by specialists.
A potential win for pharma and for pharmacies that stand to gain as much as EUR 15,000 per year, is the reinstatement of “prompt payment discounts” on prescription drug prices. These discounts, based on a regulatory loophole, had permitted pharmaceutical companies to provide cash discounts for direct sales to pharmacies until the German Federal Court of Justice ruled against them in 2024.
While the discounts essentially undermine the statutory uniform pricing floor for prescription medications, they allow drugmakers to bypass wholesalers and provide discounts of as much as three percent on direct sales to pharmacies.
