Roche’s German Head Calls for VAT Reduction on Pharmaceuticals
Hagen Pfundner, the head of Swiss pharmaceutical giant Roche in Germany, has advocated for a reduction in the value-added tax (VAT) on medications within the country. Pfundner’s appeal, voiced in an interview with “Welt” questions the rationale behind maintaining the full VAT rate on essential pharmaceuticals while reductions are applied to sectors like hospitality. He highlighted that Germany is among a limited number of EU nations retaining this standard rate for medications.
The call for change comes amid increasing international competitive pressures within the pharmaceutical industry. Discussions surrounding lower drug prices and evolving trade barriers are prevalent in the United States, while countries like China are significantly increasing investment in research and development. Pfundner expressed concern that patients in the US are already gaining access to new therapies earlier than those in Germany. He cited a disparity, particularly in innovative fields like gene and cell therapies, where the US market sees roughly 30% more innovation compared to Germany, with some European nations experiencing an even greater difference. This trend, he warns, is likely to intensify.
Beyond the VAT, Pfundner also drew attention to layered regulatory burdens impacting the German pharmaceutical sector. He pointed out the added complexities of a mandatory 7% discount, followed by a further 20% discount applicable when medications are combined, particularly within cancer treatments. These additional requirements, he suggests, are increasingly viewed by the US government as trade barriers hindering the introduction of innovative medicines into Europe.
Looking toward German policymakers, Pfundner urged a more favorable operating environment. He stated that roughly one in five working hours in the industry is currently consumed by bureaucratic processes, diverting resources critically needed for research and development. He emphasized the urgent need for reform to prevent Germany from falling behind. Chancellor Friedrich Merz of the CDU, he noted, has indicated a commitment to strengthening the German location and evolving the previous government’s pharmaceutical strategy, with preliminary discussions already underway.