Germany's lower house of parliament passes healthcare reform

Germany's lower house of parliament approved a bill to curb health insurance costs, despite criticism from drugmakers, and it is now set to be considered by the upper chamber, the Bundesrat.

Germany's lower house of parliament approved a bill on Friday aimed at reining in health insurance costs, ‌despite fierce criticism from drugmakers who say tougher pricing measures could hurt profits and deter investment.

The bill now goes to the Bundesrat, the upper chamber representing Germany's 16 federal states. Failure to secure a majority there could send the legislation to a mediation committee. Sources familiar with ‌the matter told Reuters on Friday that Bundesrat approval was likely.

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)," said Health Minister Nina Warken.

The system covers most of the population and ⁠is ​funded primarily through payroll contributions, split ⁠between employees 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 OPPOSE THE REFORM 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 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. Alexandra Bishop, AstraZeneca president for Germany, said the measures penalise innovation and put investments in Germany at ⁠risk.

"This is not a signal ⁠for the future," Bishop said. "What we need is a policy that treats health and economic strength as one – and recognises innovation as a competitive advantage, not a target for cuts."

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