German lawmakers approve healthcare shake-up aimed at taming costs
Germany Passes Healthcare Reform to Control Rising Insurance Costs
By Andreas Rinke, Maria Martinez and Maggie Fick
Final Approval and Legislative Intent
BERLIN, July 10 (Reuters) - Germany's upper house gave final parliamentary approval on Friday to a bill aimed at reining in health insurance costs, despite fierce criticism from drugmakers who say the measures will deter pharmaceutical industry investment in the country.
Drugmakers including Eli Lilly, AstraZeneca, Pfizer and Merck KGaA have said the proposals send the wrong signal as Europe seeks to compete with the U.S. and China for life sciences investment in research and manufacturing.
Economic and Political Implications
Containing health insurance costs, which are shared by workers and employers, is a key part of Chancellor Friedrich Merz's effort to revive Germany's economy by reducing financial and administrative burdens on businesses.
"After years of rising health insurance contributions, we have finally created the basis for stable finances in the statutory health insurance (system)," Health Minister Nina Warken said.
The system covers most of the population and is funded primarily through payroll contributions, split between employees and employers.
Impact on Workers and Employers
As costs rise, higher contribution rates increase labour costs for companies and reduce workers' take-home pay, making healthcare financing both an economic and political issue.
"In short: We are not cutting across the entire system, but limiting future increases to the development of the overall economy," Warken said. "That is a responsible way to handle insured persons' contribution money."
The healthcare reform is part of a long-awaited broader economic package announced by the government last week.
Drugmakers Voice Strong Opposition
Industry Concerns and Criticisms
DRUGMAKERS OPPOSE THE CHANGE
The legislation aims to narrow a growing funding gap in the health system through higher mandatory rebates from drugmakers, tighter limits on hospital cost increases and changes to payments for a range of health services.
"The law in its current form will become a political boomerang," said Wolfgang Grosse Entrup, head of Germany's VCI chemical industry association.
"In an economically difficult phase, the competitiveness of Germany as a pharmaceutical location is being deliberately put at risk because the fear of genuine reforms of the welfare state is too great," he added.
Specific Measures and Industry Response
The pharmaceutical industry has objected in particular to an increase in the statutory manufacturer discount to 15.5%, a higher rebate on patented vaccines and a price freeze for those vaccines from 2027 to 2030.
German drugmaker Merck KGaA called the legislation "a hard blow to Germany's pharmaceutical sector".
"It endangers patient care, harms the development of new medicines, and weakens Germany's position as an innovation hub," the company said in a statement.
AstraZeneca said the changes would lead to reduced access to medicines for patients, less clinical research and a shift of production "to other countries that value innovation".
"This is not a signal for the future," said Alexandra Bishop, the company's president for Germany.
Additional Information
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(Reporting by Andreas Rinke and Maria Martinez;Additional reporting by Maggie Fick; Editing by Linda Pasquini, Mark Potter and Helen Popper)