The German government is dropping plans to introduce variable discounts on medicines after receiving pushback from the pharmaceutical industry, according to a June 15 report. An anonymous government source said the administration will replace variable discounts with fixed reductions to help drugmakers plan for the shift. The original proposal would have tied discount rates to Germany’s overall spending on medicines and healthcare revenues, limiting visibility into future costs for companies. Details of the size of the new fixed discounts have not yet been disclosed.
The change in policy comes less than two weeks after Boehringer Ingelheim and Eli Lilly withdrew planned investments in Germany in response to the proposed healthcare reforms. BioSpace did not receive an immediate response from Lilly regarding whether it will reconsider its actions following news of a move toward fixed discount rates. Boehringer responded that it has “no comment” on whether it would revisit its decision.
Hundreds of jobs and billions of euros are affected by these decisions. At Boehringer, concerns over the proposed reforms led management to cancel plans for a €900 million ($1 billion) infrastructure expansion between 2027 and 2030. On the same day as Boehringer’s announcement, Eli Lilly CEO Dave Ricks said his company was halving a planned investment in a German plant intended for manufacturing GLP-1 drugs Zepbound and Mounjaro. Originally, Lilly had planned a €2.3 billion ($2.7 billion) investment but will now run the site at half capacity when it opens next year, resulting in half as many jobs as initially expected.
Ricks said that Germany’s reforms would make it “the least supportive country in Europe” for such investments.
Last week, Pfizer CEO Albert Bourla also signaled that Pfizer was reviewing its external engagements, as well as “the timing, scope and future prioritization of certain planned investments in Germany.”
Industry responses mirror actions taken during similar disputes elsewhere; last September, Merck withdrew from a $1.3 billion project and AstraZeneca paused around $270 million in research site investments amid pricing disagreements with U.K. authorities.
