Tomorrow, on 30 July 2026, the “GKV-Beitragssatzstabilisierungsgesetz” (GKV-BStabG) will enter into force, marking the culmination of a fast-paced and politically contentious legislative process. The reform, which has attracted significant attention, introduces a broad package of cost-containment measures across the statutory health insurance (GKV) system. Several of these specifically target pharmaceutical spending and reimbursement and are highly relevant for pharmaceutical companies.

This blog discusses the new measures with direct relevance for manufacturers and highlights the key changes made between the draft and the final law. In our earlier blog from 28 April 2026, we have discussed the key elements of the draft GKV-BStabG and its potential implications. The final law retains the overall direction of the reform but introduces several important adjustments that will impact pharmaceutical companies.

I. Continued focus on savings to close the GKV funding gap

Already at the draft stage, the GKV-BStabG clearly signaled the Government’s primary objective: closing the projected GKV funding gap which was estimated by the German Ministry of Health at close to EUR 19 billion for 2027. This objective was expected to be achieved through short-term cost cutting across all sectors of the healthcare system, with a substantial contribution expected from the pharmaceutical industry.

The finally adopted GKV-BStabG confirms this policy direction. While several of the earlier proposed measures have been recalibrated in the parliamentary process, the final law still relies heavily on mandatory discounts, price controls, and new mechanisms to intensify competitive pressure on pharmaceutical companies.

II. Key measures of the GKV-BStabG affecting pharmaceutical companies

In the following, we will discuss the key legislative changes and measures in the GKV-BStabG that are directed to the pharmaceutical industry.

1. Fixed – instead of dynamic – Additional Manufacturer Markdown Payment

The most prominent change compared to the original Government’s draft concerns the compulsory additional manufacturer markdown (Herstellerabschlag) under Section 130a SGB V (some refer to this payment as a “rebate” but this appears rather euphemistic so that we stay with the term “markdown”). Instead of the initially envisaged dynamic mechanism, under which the markdown rate was linked to the GKV spending growth and could have, according to industry projections, reached more than 20% by 2030, the legislator ultimately opted for a fixed additional manufacturer markdown. This additional markdown is set at 8.5% of the company’s sales price.

Together with the already applicable compulsory manufacturer markdown of 7%, this lifts the total compulsory manufacturer markdown for patent protected medicines to 15.5%. This means that pharmaceutical companies have to pay 15.5% of their sales prices back to the payer health insurances.

From an industry perspective, the shift from a dynamic markdown to a fixed amount is significant. Throughout the parliamentary process, the pharmaceutical industry had voiced strong opposition to the dynamic markdown, arguing that its unpredictable annual adjustments would erode the planning certainty required for launch and investment decisions in Germany. The fixed additional markdown does not ease the financial burden – and in the short term arguably increases it, but it preserves a degree of predictability.

The final GKV-BStabG also confirms a set of exemptions from the additional markdown, including:

• Products with a meaningful clinical research nexus to Germany, i.e., where at least 5% of study participants were enrolled in Germany,
• Products for which the health insurance association (GKV-Spitzenverband) and the pharmaceutical company have agreed as part of the reimbursement price agreement to waive the mandatory manufacturer markdown,
• Generics,
• Biosimilars and their biological reference products,
• Medicines subject to a reference price (Festbetrag),
• Patent-free medicines with active substances classified as supply-critical by the federal German agency BfArM;
• Medicines that BfArM has classified “based on their dosage forms and strengths as necessary for the treatment of children,”
• Certain products for which the GKV-Spitzenverband has granted an exemption from the so-called “price freeze” due to improvements in patient care or a lack of therapeutic alternatives, and
• Certain reserve antibiotics.

While this catalogue of exemptions is detailed, it is not necessarily the final word on the matter. Alongside the GKV-BStabG, the coalition parties in the Parliament (CDU, CSU and SPD) that form the German government have adopted a resolution (Entschließungsantrag). The resolution instructs the Government, inter alia, to examine within the Pharma & MedTech Dialogue (which we discussed in an earlier blog from 28 January 2026) whether further exemptions could be introduced. The aim is to strengthen pharmaceutical production, investment and value creation in Germany. The resolution thus opens the door to future measures that may ease the current tension between cost containment and the Government’s stated ambition to strengthen the pharmaceutical industry as a key domestic industry.

2. Additional 9% Compulsory Markdown on Innovative Vaccines

The final GKV-BStabG takes a stricter stance than the earlier draft on vaccines (Schutzimpfungen) that are under patent protection or regulatory data exclusivity. For these vaccines, the GKV-BStabG introduces an additional 9% markdown, which applies on top of the existing markdown obligation based on international reference prices. In the earlier draft, this was proposed at 7%. The final GKV-BStabG has increased this compulsory markdown by two percentage points. This new markdown payment imposes a significant additional cost burden on innovative vaccines.

3. Tightened Price-Volume-Discounts for AMNOG Price Negotiations

The reform further tightens Germany’s price-volume control tools for medicines with new active substances that are subject to the AMNOG procedure. Under the AMNOG rules, volume-related price aspects must be incorporated into the reimbursement price agreement between the companies and the GKV-Spitzenverband. However, until now, there was no fixed statutory formula for this tool in cases where the parties failed to agree on such volume-related discounts.

The GKV-BStabG now closes that gap by introducing a statutory fallback formula for a discount that applies directly to the product’s reimbursement price. This effectively lowers the reimbursement price after a grace period of three years, starting with the initial placing on the market.

The new formula combines two components to determine the discount: a volume-based factor of 1.5% per EUR 100 million of annual turnover, plus a growth-based factor of 1.7% multiplied by the relative increase in the product’s turnover compared to its first full calendar year on the German market (the reference year). While an originally envisaged volume-based factor of 1% was aligned with the established decision-making practice of the AMNOG arbitration board (Schiedsstelle), the new 1.5% factor deliberately exceeds that benchmark to generate additional savings for the GKV system.

This new mechanism reinforces the legislator’s intent to more effectively capture high-volume products and to ensure that rising sales translate into correspondingly proportional savings. At the same time, it materially shifts the balance of power in price-volume negotiations in favor of the GKV-Spitzenverband.

4. Tenders for Rebate Contracts for Patented Medicines

A particularly controversial, and possibly very significant, new element of the GKV-BStabG is the introduction of new tender-like rebate contracts for patented medicines. Until 31 December 2030, health insurance funds will be able to conclude such rebate contracts, including on an exclusive and cross-substance basis, for selected groups of patented medicines that are deemed to have therapeutically comparable effects. Once a rebate contract is concluded, physicians have to preferentially prescribe the contracted products when treating patients of the contracting insurance funds, unless a divergence is justified by medical reasons. The rebate contracts for patented medicines are currently limited to five substance classes: JAK inhibitors, CGRP antagonists, PARP inhibitors, PCSK-9 inhibitors and PD-1/PD-L1 inhibitors.

Industry stakeholders have voiced fundamental concerns against this new feature. Under AMNOG, prices for innovative medicines are formed through the assessments of the individual product’s “added benefit” (Zusatznutzen), a value-based, evidence-driven metric. Rebate contracts, by contrast, as part of tenders, put structurally different innovative products into direct price competition. As a result, the tender system for patented medicines creates an inherent tension with the AMNOG logic. It also risks shifting therapy decisions away from clinical value and towards price alone.

Moreover, the underlying issue will remain that “therapeutically comparable” does not mean that the products are “medically interchangeable”.

5. Prolongation of the Price Freeze

Furthermore, the GKV-BStabG prolongs the existing reimbursement price freeze (Preismoratorium) until the end of 2030 (for more information on the mechanism, see our previous blog). Importantly, the scope of the price freeze has not been broadened beyond the current framework.

The Government had initially proposed to shift the anchor of the price freeze from a company-based to an active-substance-based logic. Under this substance-based approach, the “frozen price” for a new market entrant drug would have been linked to the price of an already marketed drug with the same active substance, even where that product is marketed by another company. Later entrants would therefore have inherited the price level set by earlier third-party launches. This proposal was not retained in the final version of the GKV-BStabG.

Nevertheless, the prolonged duration will continue to limit manufacturers’ ability to adjust list prices in line with inflation or cost developments, effectively locking in current price ceilings for the remainder of the decade.

6. Changes for Medical Cannabis, Homeopathic and Anthroposophical Medicines

The adopted law also contains a number of product-specific measures, including:

• The general exclusion of homeopathic and anthroposophical medicinal products from reimbursement within the GKV system, including the exclusion to offer these as optional statutory benefits (Satzungsleistung); and
• Tightened reimbursement conditions for medical cannabis prescription. This removes the claim to receive medical cannabis in the form of dried flowers, limiting it to the provision of cannabis in the form of extracts.

While more targeted in nature, these measures illustrate the breadth of the reform and its reach beyond classical pricing instruments.

III. Repeal of earlier Cost-Containment Measures

Alongside the new burdens described above, the GKV-BStabG also repeals two very controversial cost-containment measures introduced by the previous Government, both of which had been the subject of persistent industry criticism:

• AMNOG “pricing guardrails” (Preisleitplanken): These guardrails worked effectively as caps on the reimbursement price of new medicines for which the G-BA (Gemeinsamer Bundesausschuss) had determined no, or only a minor, added benefit over the appropriate comparator therapy. Their repeal restores a greater degree of contractual flexibility in AMNOG price negotiations. However, the practical relief will likely, in many cases, be more than offset by the newly introduced cost-cutting measures.
• Combination Markdown (Kombinationsabschlag): This means the 20% compulsory markdown payment for medicines used in G‑BA-designated combination therapies without a confirmed added benefit for the combination. The repeal of this instrument removes a mechanism that the industry had heavily criticised as inconsistent with the AMNOG logic and challenging to operationalise. Hence, this legislative change will provide tangible relief for manufacturers with combination-therapy portfolios, in particular in oncology.

IV. Tomorrow, the GKV-BStabG will enter into force

The German Parliament (Bundestag) adopted the GKV-BStabG on 10 July 2026. The same day, the act also passed the Council of German States (Bundesrat). Today, 29 July 2026, the GKV-BStabG was officially published in the Federal Law Gazette. Tomorrow, most of its provisions (including many of the provisions relevant for pharma companies) will enter into force. From the measures described above, only the additional 9% discount on innovative vaccines will take effect on 1 January 2027.

V. Outlook on German Pharma Policy under the new Minister of Health

With the GKV-BStabG taking effect tomorrow, Germany adds another layer of complexity to what is already one of the most intricate pharmaceutical pricing and reimbursement systems worldwide.

For pharmaceutical companies, the GKV-BStabG reform bill confirms a broader trend towards increasing regulatory intervention in drug pricing and reimbursement, combined with a growing emphasis on cost efficiency and volume control.

However, the GKV-BStabG will not be the last reform. Rather the opposite: The pharma policy reforms are not over and more structural reforms are expected before long. As such, currently the so-called “Pharma & MedTech Dialogue” is ongoing with discussions on industrial policy and innovation incentives and more structural reform measures. We had also mentioned above that alongside the GKV-BStabG, the coalition parties of the German Government adopted a resolution (Entschließungsantrag) that requires the Government to examine exemptions from the manufacturer markdown payments to strengthen local pharmaceutical production and investments.

On top of all these ongoing policy discussions, just these days at the end of July 2026, the German Federal Government is undergoing unexpected but important personnel changes that can impact the pharma and health policy activities. The currently acting Federal Health Minister Nina Warken will move to a new role in the Government and she will be succeeded by Dr. Carsten Linnemann as new Federal Health Minister. Dr. Linnemann is an economist by training and an influential politician from the conservative party CDU. In addition, the current State Secretary in the Ministry of Health, Tino Sorge, will also move on and will be replaced by Dr. Christiane Schenderlein. It is expected that these personnel changes at the highest level of German health policy will also have an impact on the ongoing deliberations for a new German pharma strategy.

Companies operating in Germany should therefore carefully assess the recent legal and policy developments and their consequences for their German and international market access strategies. Insofar, the reforms in Germany may have ramifications with respect to Most-Favored-Nation (MFN) pricing developments in the U.S. and market access strategies in other countries. Companies should also monitor the ongoing policy developments that will shape the next reform of the German drug pricing and reimbursement laws. Again, the next reform will come rather sooner than later.

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Join our webinar on “Pharmaceutical Pricing & Reimbursement” in Germany:

We cordially invite you to our webinar on “Pharmaceutical Pricing & Reimbursement” on 9 September 2026: We will describe how the German pricing and reimbursement system works and highlight current hot topics. A special focus will be the GKV-Beitragssatzstabilisierungsgesetz and how this reform will impact pharmaceutical companies.

➔ Register here: Registration link.

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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 the impact of the GKV-BStabG on their German and international pricing, reimbursement and market access strategies.