Weeks after Boehringer Ingelheim and Eli Lilly retracted billions of dollar in German commitments, the nation’s government is reportedly changing a contentious element of its planned healthcare reforms.
The German government is dropping plans to introduce variable discounts on medicines after receiving pushback from industry, Reuters reported Monday.
An anonymous government source told the publication the government will replace variable discounts with fixed reductions to help drugmakers plan for the shift. The original proposal tied the discount rate to Germany’s overall spending on medicines and to healthcare revenues, limiting visibility into the figure. Details of the size of the new, fixed discounts have yet to emerge.
The report comes less than two weeks after Boehringer Ingelheim and Eli Lilly pulled back from planned investments in Germany in response to the government’s proposed healthcare reforms. BioSpace did not receive an immediate response from Lilly to questions about whether the company will reconsider its actions in light of the government’s proposed move to a fixed discount rate. Boehringer, meanwhile, replied that it has “no comment” to the same questions.
Hundreds of jobs and billions of euros rest on the outcomes of the companies’ decisions. At Boehringer, concerns over the proposed German reforms led management to ax plans to invest €900 million ($1 billion) from 2027 to 2030 to expand its infrastructure in the country.
On the day Boehringer disclosed its investment U-turn, Lilly CEO Dave Ricks revealed that his company was halving a planned investment in a German plant. Lilly originally intended to invest €2.3 billion ($2.7 billion) in a German injectable manufacturing site to support the supply of its GLP-1 drugs Zepbound and Mounjaro.
The healthcare reforms drove Lilly to scale back its investment. Under the revised plan, Lilly will open the site as planned next year but run the plant at half the intended capacity. The change will involve a halving of the site’s planned headcount, which was originally 1,000. Lilly’s revised plan reflects Ricks’ belief that Germany’s reforms would make it the least supportive country in Europe.
Last week, Pfizer CEO Albert Bourla applied further pressure to the German government. Bourla told the government that Pfizer was reviewing its “external engagements as well as the timing, scope and future prioritization of certain planned investments in Germany,” Reuters reported.
The series of actions by drugmakers echoes the industry’s response to a drug pricing and market access dispute in the U.K. The long-running argument escalated in September when Merck pulled out of a $1.3 billion project and AstraZeneca paused plans to invest around $270 million in an R&D site. The U.K. later acceded to some of the industry’s requests in its trade deal with the U.S.
