German Healthcare System Warned of Financial Overload due to Rising Costs of Innovative Medicines
A recent report by the German Healthcare Expert Council has sounded the alarm over the financial burden of the country’s healthcare system, as the costs of innovative medicines have skyrocketed in the past 15 years. The average price of newly approved, patented medications has increased from around €1,000 to approximately €50,000.
Experts at the council, which presented its annual report in Berlin, expressed concern that a growing share of healthcare expenditures is being allocated to a small number of extremely expensive medications. This trend poses significant challenges for the solidaristic, state-funded health insurance system (GKV).
The report urges a fundamental reform of the pricing mechanisms, including a stricter link between the price of a medication and its additional benefits, as well as regular re-evaluations. The council also recommends the introduction of an artemis budget for high-priced medications, tied to economic growth, or “pay-for-performance” models for one-time therapies, where the price is linked to the actual treatment outcome.
Furthermore, the council criticizes the preferential treatment of so-called “Orphan Drugs” which are medications for rare diseases and suggests that this privilege should be abolished to promote transparency and fairness in the system.
In addition, the council deems the proposed connection between medication prices and location decisions in the Medicines Research Act as inefficient. Instead, the council recommends supporting research through tax-financed incentives and a better digital infrastructure.
The expert council’s conclusion is that without structural reforms, the healthcare system risks a precarious balance between provision of care, innovation and financial sustainability. A dynamic, evidence-based pricing mechanism is essential to secure long-term medical progress and solidarity.
The German Healthcare Expert Council, also known as the Sachverständigenrat Gesundheit & Pflege, was first established in 1985 by the German government and has since published reports every two years, with an annual report introduced in 2023.