Expenditure On Retail Pharmaceuticals Per Capita, 2019 (USD$ PPP)
Prescribed Medicines: $825
Over-The-Counter Medicines: $110
Total: $935

Source: OECD (2021), Health at a Glance 2021: OECD Indicators, OECD Publishing, Paris, https://doi.org/10.1787/ae3016b9-en.

Expenditure On Retail Pharmaceuticals By Type Of Financing, 2019 (%)
Government/Compulsory Plans: 82%
Voluntary Health Insurance Plans: 0%
Out-Of-Pocket: 17%
Other: 0%

Source: OECD (2021), Health at a Glance 2021: OECD Indicators, OECD Publishing, Paris, https://doi.org/10.1787/ae3016b9-en.

“Pharmaceuticals are arguably the most regulated area of medicine in Germany. Market entry of pharmaceuticals for humans is the shared responsibility of the Paul-Ehrlich-Institute (PEI) (blood, blood products, sera, vaccines, advanced therapy medicinal products, allergens and tissues) and the Federal Institute for Pharmaceuticals and Medical Devices (Bundesinstitut für Arzneimittel und Medizinprodukte – BfArM) (all other drugs). National regulation applies if the medication has not yet been approved through the centralized authorization procedure of the European Medicines Agency (EMA), which applies in all EU Member States. It is mandatory for orphan drugs (to treat rare diseases), drugs against cancer, viral diseases and a few others, but manufacturers can choose it also for other drugs. The mutual recognition procedure (MRP) is used when a manufacturer whose drug has market entry in another country also applies for the drug’s admission in Germany. In this case, market entry may only be refused by the BfArM in cases of public danger.

“The national criteria for licensing pharmaceuticals are: scientifically proven safety and efficacy. This includes stages of testing in studies with healthy humans (phases I and II) and controlled clinical trials in people affected by the target disease (phase III). Based on the EU-wide standard on “good clinical practice” (Directive 2001/20/EC of the European Parliament and Council and Directive 2005/28/EC of the European Commission), extensive formalization and documentation of study procedures is required. However, only a marginal beneficial effect needs to be demonstrated in order to fulfil the efficacy criteria, and cost-effectiveness is not a determining factor. This has led to the admission of active substances that are merely minor modifications rather than real product innovations. Licensing is, in any case, limited to five years, after which an application for an extension is required.”

Source: Blümel M, Spranger A, Achstetter K, Maresso A, Busse R. Germany: Health system review. Health Systems in Transition, 2020; 22(6): pp.i–273.

“Unlike many other countries, Germany does not have a “positive list” of SHI-covered, i.e. reimbursable, pharmaceuticals. Market entry for most drugs means SHI coverage; however, there are a few but important exceptions:
“ƒ OTC drugs are not reimbursed by sickness funds except for children under the age of 12. The Federal Joint Committee also lists OTC drugs and the indications for which they may be prescribed in adults (see below).
“ƒ Drugs for “trivial” diseases (common colds, oral cavity drugs with the exception of antifungals, laxatives and drugs for motion sickness) are legally excluded from the benefits basket for insured adults over 18.
“ƒ So-called lifestyle drugs (e.g. drugs for the treatment of erectile dysfunction), even if prescription-only, are legally excluded from the benefits basket.

“Exceptions are determined by the Federal Joint Committee. The prescription of some OTC drugs is permitted if a drug is considered a standard of therapy in the treatment of serious diseases (e.g. acetylsalicylic acid as an antiplatelet aggregation inhibitor in coronary heart disease) and listed in the Pharmaceutical Directive, Annex I. Off-label use is allowed for (1) pharmaceuticals listed in the Pharmaceutical Directive, Annex VI, when prescribed within the defined framework (patient group, indication, dosage, duration of treatment); (2) when used within a clinical study according to §35c 2 SGB V; or (3) in order to treat a serious life-threatening disease or a disease that impairs the quality of life permanently, for which no other therapy is available and where the therapy can be expected to lead to an improvement.”

Source: Blümel M, Spranger A, Achstetter K, Maresso A, Busse R. Germany: Health system review. Health Systems in Transition, 2020; 22(6): pp.i–273.

“The regulation of pharmaceutical prices differs between the inpatient sector and the ambulatory sector. While hospitals may negotiate prices with wholesalers or manufacturers, the distribution chain and prices are much more regulated in the ambulatory sector. In both sectors ex-factory prices are basically determined by manufacturers without negotiations involving governmental agencies, direct price controls or profit controls (except for newly licensed drugs with beneficial effect in the ambulatory sector, see below). However, price setting by companies takes into consideration (indirect) regulatory mechanisms that apply to some parts of the market, such as reference pricing for pharmaceuticals covered by SHI.

“The “Pharmaceutical Price Ordinance for Prescription-only Pharmaceuticals” (Arzneimittelpreisverordnung) is the legal basis which regulates pricing in the German pharmaceutical market. It applies to the entire prescription-only market, independent of the source of payment. It applies to human and animal drugs and to community pharmacies, but not to institutional pharmacies or to vaccines, blood replacement and dialysis-related drugs, for which sickness funds negotiate prices with manufacturers.

“For prescription-only drugs, pharmacists are paid through a flat-rate payment of € 8.35 per pack plus € 0.21 for the Pharmacy Emergency Service plus a fixed margin of 3%. The margin is calculated from the manufacturer’s price plus the margin of 3.15% for wholesalers (excluding VAT). For nonprescription pharmaceuticals, pharmacies can freely determine the prices, and no pharmacy margin is set. Although price reductions have been observed for travel packages, some lifestyle pharmaceuticals and selected high-price pharmaceuticals (in competition with hospital pharmacies), the overall price level has not decreased as the abolition of fixed prices in 2004 was also used to instigate price increases. The retail price of all pharmaceuticals contains an additional 19% VAT. Unlike most EU Member States, Germany does not have a reduced VAT for pharmaceuticals (European Commission, 2019).”

Source: Blümel M, Spranger A, Achstetter K, Maresso A, Busse R. Germany: Health system review. Health Systems in Transition, 2020; 22(6): pp.i–273.

“Reference prices imply that sickness funds only reimburse pharmaceuticals up to a predefined ceiling (the so-called “Festbetrag”, or fixed amount) defined per group of marketed equivalent or similar products. Patients pay the difference between the reference price and the market price. Pharmaceuticals that are priced at least 30% below the reference price are exempted from co-payments (Figure 2.3).

“While the Federal Joint Committee is responsible for selecting and classifying drugs into reference price groups, the Federal Association of Sickness Funds determines the reference prices for these groups and the Federal Institute for Pharmaceuticals and Medical Devices (Bundesinstitut für Arzneimittel und Medizinprodukte – BfArM) publishes the latest list every 14 days. Reference prices can be set for drugs with (1) the same active ingredients, (2) pharmacologically and therapeutically comparable active ingredients and (3) therapeutically comparable effects (§35 SGB V). Reference pricing applies to off-patent medicines and to patented medicines without additional therapeutic benefit compared to already available products.”

Source: Blümel M, Spranger A, Achstetter K, Maresso A, Busse R. Germany: Health system review. Health Systems in Transition, 2020; 22(6): pp.i–273.

“Pharmaceutical manufacturers and wholesalers are obliged by law to grant discounts (Herstellerrabatt) to the sickness funds (§130a SGB V). Since 2014 the manufacturer discount of 7% has applied to reimbursable drugs without a reference price and 6% for off-patent drugs with the same active ingredient (i.e. generic drugs) without a reference price (Figure 2.3). A further discount of 10% is due for off-patent drugs with the same active ingredient (the so-called generics discount, §130a para. 3b). This discount does not apply to pharmaceuticals which are at least 30% below the reference price. Thus, the overall discount is 16% for generics that are not subject to the reference price regulation, and 10% for those with a reference price but a price not reduced by at least 30% below that level. Sickness funds can negotiate and conclude additional individual discount agreements with drug manufacturers (§130a SGB V). For pharmaceuticals with the same active ingredient, these agreements assure the manufacturers the exclusive dispensation of their drug: pharmacies are obliged to dispense the discounted products unless the prescribing physician has excluded substitution. Furthermore, pharmacies are also obliged to grant discounts to the SHI as the largest customer. Since 2015 this discount has been set by law at € 1.77 per prescription-only drug.”

Source: Blümel M, Spranger A, Achstetter K, Maresso A, Busse R. Germany: Health system review. Health Systems in Transition, 2020; 22(6): pp.i–273.

Health Systems Facts is a project of the Real Reporting Foundation. We provide reliable statistics and other data from authoritative sources regarding health systems in the US and sixteen other nations.

Page last updated Oct. 23, 2022 by Doug McVay, Editor.