Germany plans significant cuts in drug pricing and reimbursement – How would the GKV-Beitragssatzstabilisierungsgesetz impact pharmaceutical companies?

By Dr. Dr. Adem Koyuncu & Maximilian Aretz on April 30, 2026

Posted in Food and Drug Law, Germany, Life Sciences & Digital Health, Pharma

I. Background – From Pharma-Dialogue to Compulsory Price Cuts

Tomorrow, on 29 April 2026, the German Government is expected to adopt a new law to stabilize the finances of the statutory health insurances. This draft law titled “GKV-Beitragssatzstabilisierungsgesetz” (GKV-BStabG) proposes manifold cost-containment measures that would also significantly impact pharmaceutical companies. As such, the new law inter alia proposes new (tightened) pricing rules and compulsory markdown payment obligations for drug companies.

The GKV-BStabG proposes a mix of spending cuts and revenue-increasing measures projected to save the German healthcare system almost €20 billion in 2027 and more than €42 billion by 2030. The cuts in pharmaceutical spending are expected to contribute around €1.9 billion savings in 2027.

The scope of the proposed cost containment measures appears to have hit the German pharmaceutical industry a bit off-guard. Over the last months, the German Government had initiated a Pharma & MedTech Dialogue (see our earlier blog on this dialogue) that gave hope that the Government was open to listen to the industry needs. While the GKV-BStabG is not final and will likely evolve during the legislation process, it clearly shows the Government’s primary interest in short-term cost-cuttings.

This article outlines the key proposals in the GKV-BStabG affecting the pharmaceutical industry and provides an overview of the roadmap of the legislation process. The proposed reform in Germany may also interfere with other international trends like the Most-Favored-Nation (MFN) pricing developments in the US.

II. GKV-BStabG – Key changes proposed for drug pricing and reimbursement

In the following, we summarize the key changes proposed in the GKV-BStabG that are aimed at reducing the expenditures on pharmaceuticals in Germany.

Increased Compulsory Markdown Payments

For patented prescription drugs, the draft law proposes to increase the compulsory markdown that drug manufacturers must pay to the German statutory health insurers off their list prices (Herstellerabschlag). Currently at 7%, this markdown would temporarily rise by 3.5% for the first half of 2027. From July 2027 onward, the fixed 3.5% would be replaced by a dynamic compulsory markdown that would apply in addition to the general 7% markdown. The dynamic component would tie the markdown level to spending growth for patent-protected drugs.

This increase of the compulsory markdown payment, which essentially works like a price cut and reduces margins, is expected to yield savings of around €1.1 billion in 2027. Currently, there is hefty opposition against this proposal by industry groups which also criticize this as unpredictable and opaque. The Health Ministry justifies this proposal by referring to the rising costs.
Extension and tightening of the Reimbursement Price Freeze

For long, Germany applies a reimbursement price freeze (Preismoratorium) under which health insurers only reimburse drug prices up to the frozen amount. This practically forces companies to stay below the frozen amount. The price free is now proposed to be extended by four years through the end of 2030. Further, in an effort to close loopholes, the GKV-BStabG would tighten the price freeze by making it company-independent: It would then also apply to a newly launched drug if another drug with the same active ingredient and comparable form is already on the market and subject to the price freeze. This means that most reimbursement price levels will remain effectively frozen for years.
Binding price-volume-discounts for AMNOG price negotiations

Volume-dependent price agreements under the AMNOG price negotiations will be sharpened (for information on the AMNOG process, see our previous blog). Under the AMNOG rules, volume-related aspects must be incorporated into the reimbursement price negotiations between the drug companies and the health insurance association (GKV-Spitzenverband). Currently, however, there is no fixed formula to apply if the negotiations fail to include volume-related aspects like specific tiered discounts. Instead, the issue is referred to the AMNOG arbitration body (Schiedsstelle) and according to the health insurances, this arbitration practice results in dissatisfactory volume discounts. Against this background, the draft law imposes a statutory fallback-rebate when no volume-based agreement is reached. In the future, no arbitration will be required for this point.

This measure would reduce the drug manufacturers’ negotiating leverage and, subsequently, will also reduce net revenues especially for high-volume drugs. Industry groups highly criticize this automatic rebate-mechanism as a proposal that would undermine the value of the AMNOG benefit assessment and that disregards the individual level of innovation of the respective product.
New Competitive Bidding for Patented Drugs

The draft envisages a controversial pilot program that authorizes health insurers until 31 December 2030 to engage in tender-style rebate contracts for certain patent-protected medicines (Rabattverträge für Arzneimittel mit patentgeschützten Wirkstoffen). For the first time, health insurers could let innovative drugs directly compete with “therapeutically comparable” products to secure lower prices (similar to generics). The draft law targets five specific drug classes identified by their active mechanisms – for example, “JAK-inhibitors” and “PARP-inhibitors”.

There is significant pushback from the industry as this proposal could lead to additional price erosion for novel therapies. Furthermore, industry voices warn that this approach could make certain advanced therapies economically unviable in Germany which could reduce the availability of treatment options for patients.
New additional 7 % Discount on Innovative Vaccines

Innovative vaccines will also be hit by the GKV-BStabG: the draft law imposes a new and additional 7% markdown payment obligation for manufacturers of officially recommended vaccines (Schutzimpfungen) that are under patent or regulatory data protection. Notably, this would apply in addition to the existing (international reference price-based) markdown payment obligation for these vaccines. The new rebates would add a significant new cost burden on innovative vaccines.
Reimbursement exclusions for homeopathic and anthroposophical medicines
Reimbursement restrictions for Cannabis-based medicines
Increase in patient co‑payments for medicines: under the GKV-BStabG, the minimum co‑payment that patients have to pay for medicines would rise from €5 to €7.50, and the maximum co‑payment from €10 to €15.

III. Rollback of Controversial Existing Pricing Measures

Separate fromthe above-noted new cost-containment measures, the draft GKV-BStabG also envisages to repeal two controversial existing measures that pharmaceutical companies had been heavily criticizing: (1) The combination markdown and (2) the AMNOG “pricing guardrails”.

The so-called “combination markdown” (Kombinationsabschlag) imposed a 20% markdown payment obligation when certain medicines were used in combination. It meant a major financial burden for companies who offer combination treatments as well as extensive bureaucratic complexity. Now, the ministry seeks to repeal this instrument and notes that it “has not proven effective as a cost-containment measure in its current form”.

The GKV-BStabG also seeks to repeal the so-called AMNOG “pricing guardrails” (Preisleitplanken). The guardrails established tight limits for the negotiated reimbursement prices for new drugs. While there are exceptions from the guardrails that incentivize local clinical trials in Germany (see our previous blog), the industry has been sharply critical of them and tried to get the guardrails overturned through (unsuccessful) constitutional court proceedings. Repealing the guardrails would restore greater flexibility for value- and benefit-driven pricing for new drugs under AMNOG.

IV. Next Steps and Timing of the Legislative Process

The German Federal Health Ministry is moving quickly to advance the GKV-BStabG. This already became evident in the consultation process: after publication of the draft law on 16 April 2026, stakeholders were given only 4 days (which included 2 weekend-days) to comment on the 157‑page draft.

Tomorrow, on 29 April 2026, the cabinet of the German Government is expected to adopt the (possibly revised) draft GKV-BStabG. Then, the draft will be submitted to the German Parliament (Bundestag) for the regular legislative process. This process will include the involvement of the German Federal Council (Bundesrat). The Government aims to pass the GKV-BStabG until the summer break. Most provisions of the new law would then take effect on 1 January 2027.

As with other complex legal reforms, it is likely that amendments will be made to the initial draft during the legislative process. This is even more likely in the situation of the GKV-BStabG as this draft law not only affects pharmaceutical companies but all players of the German healthcare system. Therefore, interested companies and stakeholders should carefully analyze the draft law and consider weighing in with their comments and concerns through the available avenues and platforms.

V. Final Remarks

In an earlier blog, we wrote that the German regulation of drug pricing and reimbursement is one of the most complicated legal areas in the entire world of life sciences laws. With the new GKV-BStabG, the German government plans to add some additional complexity to this system.

The draft GKV-BStabG came as a serious surprise for the pharmaceutical industry, especially as it was presented during the ongoing Pharma & MedTech Dialogue (see our previous blog). This dialogue was aimed at strengthening Germany as a place for pharma and life sciences companies by addressing issues like innovation incentives and regulatory streamlining. Industry representatives invested significant efforts to support a pro-innovation policy. Insofar, the GKV‑BStabG stands in stark contrast to these expectations for the dialogue. Instead of innovation-friendly reform steps, it focuses on broad cost‑cutting measures and short-term savings.

The proposed reform of the German drug pricing and reimbursement rules may also interfere with other international trends like the Most-Favored-Nation (MFN) pricing developments in the US. Therefore, companies and stakeholders should also consider such ramifications when reviewing the draft GKV‑BStabG and following the upcoming legislation process.

The Life Sciences Team of Covington & Burling LLP in Frankfurt (Germany) will continue monitoring the developments in this area and is well positioned to assist clients in navigating through the ongoing and upcoming legislative projects.

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