Germany has made clear it will press ahead with plans to cut drug prices for pharmaceutical companies, dismissing US accusations of unfair trade practices as “unfounded”. Berlin authorities said they are compelled to take these measures and intend to force manufacturers to offer deeper discounts to plug a hole in the budget of the state‑run compulsory health insurance system.
Germany’s Federal Health Ministry said deeper drug discounts are needed to curb excessive public healthcare spending. In a written reply, the ministry said the stability of the compulsory health insurance system is under threat and urgent action from all market participants is required. Only this way, officials believe, can rising insurance premiums and associated labour costs be contained.
Germany’s proposed cost‑cutting plan affects most healthcare sectors – from hospitals to psychiatric care. The measures are aimed at tackling a funding deficit expected to exceed €40 billion (approximately $45.5 billion).
Last week, the United States launched an investigation into drug pricing in Germany to determine whether these practices are unjustified or discriminatory, threatening import tariffs in response. Chancellor Friedrich Merz said he expects the US to honour its trade commitments to Europe. Meanwhile, Donald Trump’s administration is seeking to narrow the gap between US and European drug prices by pushing European prices higher.
The pharmaceutical industry is pressuring the German government, warning that stiff discounts could deter investors and slow patient access to new drugs. Bayer chief executive and EFPIA regional chairman Stefan Oelrich said that if European healthcare systems do not accept higher prices, companies may redirect investment to other regions. In response to these complaints, the ministry is exploring a shift from variable to fixed discounts to provide predictability for business.
Germany traditionally remains one of the fastest markets for launching new drugs: according to EFPIA, as of January, more than 90% of drugs approved in Europe between 2021 and 2024 were available in Germany, compared with the EU average of 45%. A final vote on the bill in the Bundestag is scheduled for 10 July. If the upper house demands a conciliation procedure, approval of the reform will be delayed until at least September.