exclusive
Did the US pharmaceutical company Eli Lilly use a billion-dollar investment in Rhineland-Palatinate to pressure the federal government to change the law? The company denies this. However, internal documents from the Ministry of Health confirm the suspicion.
Alzey in Rhineland-Palatinate, on April 8th of this year: Federal Chancellor Olaf Scholz drives a red spade into the sand and ceremoniously celebrates the symbolic groundbreaking for a “lighthouse project,” as he says. In the coming years, a state-of-the-art pharmaceutical plant belonging to the US company Eli Lilly will be built here with around 1,000 jobs. “Whatever we as a federal government can do to further strengthen Germany as a pharmaceutical location, we will do that.”
Research by WDR, NDRSüddeutscher Zeitung (SZ) and the Research team “Investigate Europe” now show what the Chancellor could have meant by that. Internal documents from the Ministry of Health confirm the suspicion that the pharmaceutical giant may have linked its settlement in Rhineland-Palatinate to a change in the law.
regulation with international Effects
Specifically, it is about German price regulation for the pharmaceutical industry, on which the whole of Europe depends. Until now, pharmaceutical companies have been allowed to freely choose the price when a new drug comes onto the market in Germany. Only after a year does a committee made up of representatives from doctors, health insurance companies and clinics evaluate the value of the new drug. If it comes to the conclusion that the new preparation has no proven additional benefit compared to previously available therapies, the pharmaceutical company must grant a discount, which is often more than 50 percent. This German discount price is currently publicly visible – and has effects far beyond the borders.
Many other European countries also want a correspondingly high discount from pharmaceutical companies. Eli Lilly is now demanding that the discounts be kept secret in the future. “In most EU countries, discount negotiations are treated confidentially,” explains Lilly when asked. “In our opinion, this should also apply to Germany.”
Investment linked to commitment?
According to documents that WDR, NDRSZ and Investigate Europe won with the help of the Freedom of Information Act, the company could have used its billion-dollar investment to enforce the desired secret prices in a new law. After a meeting with Lilly company representatives on August 30, 2023, the head of the important pharmaceutical department in the Ministry of Health noted that Lilly was planning an investment “in the low single-digit billions” in Rhineland-Palatinate. But then the experienced civil servant, who has been doing the job for many years, writes: “Eli Lilly is linking its investment decision to the federal government’s promise to enable confidential discounts on innovative medicines.”
Months before the department head’s conversation with Lilly, the Chancellery had discussed the sensitive issue with the company. At the beginning of 2023, the State Secretary in the Federal Chancellery, Jörg Kukies, spoke three times with the head of Eli Lilly, David Ricks, about pharmaceutical policy and the introduction of secret drug prices in Germany. On February 16, Chancellor Scholz even picked up the phone and called the head of Eli Lilly.
Pharmaceutical company denied
Another memorandum from the ministry two months later also states: “The supporter of such a regulation is in particular the Lilly company, which linked its investment decision in Alzey to a promised confidential reimbursement amount.” Elsewhere, regarding the secret prizes, it says: “The CEO of Eli Lilly may be informed that the BMG is honoring Eli Lilly’s request.”
Confronted with the quotes from the files, the US pharmaceutical company denied that it had put pressure on the federal government: “Our company has never linked its investment decision in Rhineland-Palatinate to such a commitment from the federal government.” Eli Lilly was only “drawn to the fact that the Ministry of Health had positively examined the introduction of confidential reimbursement amounts” “when the key points of the Medical Research Act became known”. The decision to invest in Rhineland-Palatinate had already been made and announced.
Law passed with secret prizes
When asked, the Ministry of Health itself did not comment specifically on the quotes from the files. A spokesman simply said: “Minister Lauterbach is not aware of any notes in which he commented on this issue to Eli Lilly. For him personally, Eli Lilly’s attitude played no role in the development of the pharmaceutical strategy.”
The Bundestag and the Bundesrat have now decided on the secret prizes as part of the Medical Research Act. As soon as it is announced, it can now come into force. Almost all health care experts believe the regulation is harmful. It leads to higher prices in other European countries – and also in Germany, because doctors no longer know the exact prices for certain medicines, and therefore no longer know whether a medicine is more expensive or cheaper than another of the same quality.
Ministry employees warned Lauterbach
In May, Minister Karl Lauterbach had an interview with WDR, NDRSZ and Investigate Europe responded to the massive criticism from experts about the planned secret prizes by pointing out that “the specialist department at my company really likes the proposal”. The ministry’s files tell a different story. Accordingly, the officials warned their minister “that allowing a confidential reimbursement amount would lead to significant problems in implementation.” “At the same time, much of the pharmaceutical industry does not see this as a key measure.” The officials also warn of “additional costs” because “essential elements of effective drug control … would no longer be applicable.”
Meanwhile, criticism of Lauterbach is also increasing in the government coalition. The budget politician and Bundestag member of the Green Party, Paula Piechotta, a doctor herself, says: “The massive concerns of Parliament and virtually all actors in the healthcare system were – as we can see from the documents that have now been published – also shared by the experts in the ministry.”
Health insurance companies fear drastic increases
The head of the Federal Joint Committee, the former Saarland Health Minister Josef Hecken (CDU), criticizes the fact that the secret prices “unnecessarily weaken a previously effective and good instrument for the benefit of the pharmaceutical industry.” Above all, the health insurance companies fear drastic cost increases: If the price of only ten percent of all new drugs were to remain secret, “additional costs of up to 840 million euros would be conceivable in the first year,” the umbrella association of statutory health insurance companies (GKV) has calculated.
But because more new drugs are being added every year, “eight billion euros in additional annual costs could build up within a decade,” says GVK pharmaceutical director Stefanie Stoff-Ahnis. Lauterbach’s ministry counters this: “The massive additional costs feared by the GKV side as a result of the regulation are based on uncertain assumptions.”
Negotiations about price for Diabetes medication
The pharmaceutical company Eli Lilly is currently negotiating with health insurance companies about the price of its new diabetes drug Mounjaro, which is also known as a weight-loss injection. Health insurance companies pay for diabetes patients, but those who want to lose weight have to pay for it out of their own pocket. It is expected that Lilly will have to grant a significant discount for Mounjaro because the Federal Joint Committee of health insurance companies and doctors has not certified any additional benefit for the drug in several indications.
Experts expect that Lilly will now make use of its right to a secret price for the first time with this product. The company itself does not want to comment on this. But the advantage would be clear: those who want to lose weight pay a high price for their injection – and do not find out how big the discount that health insurance companies get on the drug. Doctors, on the other hand, remained unclear about the exact costs of Mounjaro compared to comparable preparations.