Health insurance reform: New gentle cycle for the pharmaceutical industry

The rising costs of medication are a key reason why local health care is becoming more expensive. As part of its health insurance reform, the government wants to slow down price increases. However, how strong the brake should be remains controversial. It is now becoming apparent in the negotiations that the pharmaceutical industry could come out better than originally planned.

This was one of the topics discussed by the Bundestag Health Committee in its hearing on Wednesday. Parliament only passed the cash reform in July, but the government factions have already submitted numerous amendments. Basically, the aim is to close the financial gap in statutory health insurance between income that is too low and expenses that are too high. To this end, patients, doctors, hospitals and industry should make savings contributions.

In the case of pharmaceutical companies, the contribution would be that they charge statutory health insurance companies less for medication. While companies currently have to grant a 7 percent discount on the prices of patent-protected drugs, former Health Minister Nina Warken (CDU) actually wanted to introduce a flexible, higher discount if drug costs rise more than the health insurance companies' income. This has now become a fixed discount of 15.5 percent, which is more calculable for the industry. The increased manufacturer discount should actually apply from next year.

But now this is set to fall even further, in some cases back to the existing level of seven percent. At least that is the proposal of a commission that included representatives from the government, industry associations, health insurance companies and science, among others. However, only companies that research, invest, produce to a certain extent in Germany and pay their employees standard wages would benefit from the lower discount. With this so-called location clause, the government wants to prevent pharmaceutical companies from moving abroad and closing their local laboratories and production facilities. They also want to reduce the great dependence on foreign drug production.

“The CDU, SPD and CSU have completely caved in to the pharmaceutical industry and are burdening normal and low earners in the statutory health insurance with one billion in additional costs, for which there is no concept for financing,” criticized the Leipzig Green MP Paula Piechotta. Of the industry's original savings contribution of 4.1 billion euros annually, only around 1.6 billion euros remained, she calculated. The umbrella association of statutory health insurance companies (GKV-Spitzenverband) set the amount even lower. The Association of Research-Based Pharmaceutical Companies, however, said the regulation was not that expensive.

“We reject the current proposal for the design of a location clause and support the opposing vote of the National Association of Statutory Health Insurance Funds,” emphasized Carola Reimann, Chairwoman of the AOK Federal Association. “As a result, it would be expected that the increased manufacturer discount would become almost ineffective.” Reimann suggested an alternative model: pharmaceutical companies that do not meet the location criteria should have to grant higher discounts and thus finance the lower discounts for companies with local production.

The Commission that submitted the proposal has not itself presented a solution to the foreseeable new gap in treasury finances. There wasn't enough time available for that. “The decision about the counter-financing of an expanded location clause must be made at the political level,” says the commission report.

The pharmaceutical industry associations welcomed the location clause, but called for further improvements. In recent months they have threatened to emigrate and cancel investments if politicians do not meet their needs. Some companies in the industry are under pressure from higher import tariffs in the USA.