Germany approves health overhaul to curb insurance costs and drug rebates
Germany pushed through a health overhaul that leans on drugmakers and hospitals to steady statutory insurance, as the system faces a more than €15 billion gap by 2027.
Germany’s Bundesrat gave final parliamentary approval on Friday to a health-care overhaul that raises pressure on drugmakers, hospitals and some patients to keep the statutory insurance system from running deeper into the red. The law lifts the statutory manufacturer discount, tightens limits on hospital cost increases and changes how some health services are paid for, while also freezing prices on patented vaccines from 2027 to 2030.
The package lands in a system that covers about 90% of the population and is financed mainly through payroll contributions split between employers and workers. Those contributions rose by an average of 3% in 2026 after a 2.5% increase in 2025. Without new savings, public health insurers were facing a shortfall of more than €15 billion by 2027, and a commission of experts had already put forward 66 cost-saving measures before the government settled on the current law.
Health Minister Nina Warken said the government is not cutting the system across the board but trying to prevent contribution rates from rising faster than the wider economy. The reform strengthens the financial base of statutory health insurance and broadens financing through greater federal participation and higher pharmaceutical contributions.
The law raises the statutory manufacturer discount to 15.5%, increases rebates on patented vaccines and locks in a price freeze on those vaccines for the next several years. Eli Lilly, AstraZeneca, Pfizer and Merck KGaA objected that the package sends the wrong signal just as Europe is trying to compete with the United States and China for life-sciences investment. Wolfgang Grosse Entrup, who heads the VCI chemical industry association, warned that the law could become a political boomerang, while Merck KGaA said it was a hard blow to Germany’s pharmaceutical sector.
Some of the more controversial patient charges were softened before the vote, including proposed higher prescription co-payments and tighter family co-insurance rules.
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