31 October 2024
Christina BerndtMarkus Grill
Harald Schumann
Eli Lilly invested in Germany after government ‘promise’ to make medicine prices confidential
Shutterstock
Eli Lilly invested in Germany after government ‘promise’ to make medicine prices confidential
31 October 2024Internal documents indicate that the federal government inserted a confidentiality clause into a new law in part to help secure a multi-billion euro investment from the US pharmaceutical company.
Amid debates about medicine supply bottlenecks and the relocation of production to Asia, the German government in April celebrated a new production site for a US pharmaceutical giant. When Federal Chancellor Olaf Scholz, Health Minister Karl Lauterbach and Malu Dreyer, the then Minister President of Rhineland-Palatinate, symbolically broke ground on the construction of an Eli Lilly facility in Alzey in the central Rhine-Hesse region, there was great enthusiasm.
Shortly before the event, Lauterbach had launched the Medical Research Act (MFG), a law allowing pharmaceutical companies to keep secret the prices they receive from health insurers for new drugs. The law is a boon for the notoriously secretive sector and particularly Eli Lilly.
The prices countries pay for medicines are shrouded in secrecy, although Germany is more transparent than many, making public the ‘discounts’ its authorities negotiate with manufacturers. The new law will put an end to that, enabling firms like Eli Lilly — which recently launched a new weight loss drug — to keep pricing information hidden.
And now documents obtained by Investigate Europe and its partners Süddeutsche Zeitung, NDR and WDR imply that the Indianapolis-headquartered firm helped engineer the confidentiality clause in the Medical Research Act. "Eli Lilly is linking its investment decision [in Alzey] to the federal government's promise to enable confidential discounts on innovative medicines," read the notes of a senior official in the Federal Health Ministry from a meeting in September 2023.
The consequences will ripple across Europe and beyond. When a new drug is launched on the market in Germany, pharmaceutical companies are initially free to choose the price. But after a year a panel of doctors, health insurers, hospitals and a body known as the Federal Joint Committee assess the value of the medication. If they decide that the new drug has no proven additional benefit compared to previously available therapies, the company must grant a discount, which is often more than 50 per cent. This discount price has so far been publicly available – and has an impact beyond Germany, acting as a guide for other European countries who also want discounts. If this is no longer visible, many will be threatened with rising prices.
Shortly before the event, Lauterbach had launched the Medical Research Act (MFG), a law allowing pharmaceutical companies to keep secret the prices they receive from health insurers for new drugs. The law is a boon for the notoriously secretive sector and particularly Eli Lilly.
The prices countries pay for medicines are shrouded in secrecy, although Germany is more transparent than many, making public the ‘discounts’ its authorities negotiate with manufacturers. The new law will put an end to that, enabling firms like Eli Lilly — which recently launched a new weight loss drug — to keep pricing information hidden.
And now documents obtained by Investigate Europe and its partners Süddeutsche Zeitung, NDR and WDR imply that the Indianapolis-headquartered firm helped engineer the confidentiality clause in the Medical Research Act. "Eli Lilly is linking its investment decision [in Alzey] to the federal government's promise to enable confidential discounts on innovative medicines," read the notes of a senior official in the Federal Health Ministry from a meeting in September 2023.
The consequences will ripple across Europe and beyond. When a new drug is launched on the market in Germany, pharmaceutical companies are initially free to choose the price. But after a year a panel of doctors, health insurers, hospitals and a body known as the Federal Joint Committee assess the value of the medication. If they decide that the new drug has no proven additional benefit compared to previously available therapies, the company must grant a discount, which is often more than 50 per cent. This discount price has so far been publicly available – and has an impact beyond Germany, acting as a guide for other European countries who also want discounts. If this is no longer visible, many will be threatened with rising prices.
Federal Chancellor Olaf Scholz and officials at an event marking Eli Lilly's investment in Alzey in April 2024.
The documents obtained by Investigate Europe and its partners confirm that Eli Lilly's demands and the government's concessions did indeed exist. A freedom of information request for documents relating to the law was submitted in December 2023, but the files only arrived in September after Investigate Europe filed a lawsuit for inaction. The contents of the files are therefore only now becoming known, after the law was passed in the German parliament.
In a document dated 13 September 2023, Germany’s Federal Health Ministry, said: "The CEO of Eli Lilly, Dave Ricks, can be informed that the Federal Health Ministry is complying with Eli Lilly's request and is planning to enable confidential discounts for the manufacturer's price within the framework of the Medical Research Act."
According to the document, the company had already "informed the Federal Health Ministry in a conversation with a department head weeks earlier that the investment would involve an amount in the low single-digit billions". Notes taken by the department head suggest Eli Lilly’s stance was unmistakably clear: "Eli Lilly is linking its investment decision to the federal government's promise to enable confidential discounts on innovative medicines."
In November 2023, the minister was presented with a document marked "EILT SEHR!" (“Very urgent!"): "The company Lilly, which had linked its investment decision in Alzey to the prospect of a confidential reimbursement amount, is particularly in favour of such a regulation."
In a document dated 13 September 2023, Germany’s Federal Health Ministry, said: "The CEO of Eli Lilly, Dave Ricks, can be informed that the Federal Health Ministry is complying with Eli Lilly's request and is planning to enable confidential discounts for the manufacturer's price within the framework of the Medical Research Act."
According to the document, the company had already "informed the Federal Health Ministry in a conversation with a department head weeks earlier that the investment would involve an amount in the low single-digit billions". Notes taken by the department head suggest Eli Lilly’s stance was unmistakably clear: "Eli Lilly is linking its investment decision to the federal government's promise to enable confidential discounts on innovative medicines."
In November 2023, the minister was presented with a document marked "EILT SEHR!" (“Very urgent!"): "The company Lilly, which had linked its investment decision in Alzey to the prospect of a confidential reimbursement amount, is particularly in favour of such a regulation."
“Eli Lilly is linking its investment decision to the federal government's promise to enable confidential discounts on innovative medicines."”
— Notes of a Federal Health Ministry official
When questioned about the documents, Eli Lilly denied they had pressured authorities. "At no time did our company link the investment decision in Rhineland-Palatinate to such a commitment on the part of the federal government.” A spokesperson said the company and its CEO were only "made aware" of the key points of the Medical Research Act "when [it] became known", that the Federal Health Ministry was favourably considering the introduction of confidential reimbursement amounts".
A spokesperson for the Ministry of Health said: "Minister Lauterbach is not aware of any notes in which he would have commented on this topic to Eli Lilly. For him personally, Eli Lilly's position played no role in the development of the pharmaceutical strategy."
However, the documents suggest Olaf Scholz was personally involved in preparing the charm offensive. The documents repeatedly refer to the fact that discussions had already taken place in the Federal Chancellery at an early stage. For example, Jörg Kukies, State Secretary in the Federal Chancellery, spoke to Eli Lilly's CEO three times in early 2023 about a pharmaceutical law and the introduction of secret drug prices. On 16 February, Chancellor Scholz himself spoke to Ricks on the phone. Sources close to the government in Berlin suspect that it was Scholz who imposed the secret price clause on Lauterbach. The Chancellery did not respond to requests for comment.
Lauterbach suddenly came out in favour of secret prices in 2023. He had for years vehemently rejected such demands from the industry. He explained his sudden rethink in an interview with Investigate Europe, NDR, WDR and SZ in June by saying that he had always hoped "that other countries would publish the prices like we do". This hope had been dashed. “The responsible department in my office really likes the proposal," he stressed
A spokesperson for the Ministry of Health said: "Minister Lauterbach is not aware of any notes in which he would have commented on this topic to Eli Lilly. For him personally, Eli Lilly's position played no role in the development of the pharmaceutical strategy."
However, the documents suggest Olaf Scholz was personally involved in preparing the charm offensive. The documents repeatedly refer to the fact that discussions had already taken place in the Federal Chancellery at an early stage. For example, Jörg Kukies, State Secretary in the Federal Chancellery, spoke to Eli Lilly's CEO three times in early 2023 about a pharmaceutical law and the introduction of secret drug prices. On 16 February, Chancellor Scholz himself spoke to Ricks on the phone. Sources close to the government in Berlin suspect that it was Scholz who imposed the secret price clause on Lauterbach. The Chancellery did not respond to requests for comment.
Lauterbach suddenly came out in favour of secret prices in 2023. He had for years vehemently rejected such demands from the industry. He explained his sudden rethink in an interview with Investigate Europe, NDR, WDR and SZ in June by saying that he had always hoped "that other countries would publish the prices like we do". This hope had been dashed. “The responsible department in my office really likes the proposal," he stressed
However, there is no indication in the documents of such enthusiasm from the ministry's experts. Instead, the officials warn the minister "that enabling a confidential reimbursement amount would lead to considerable problems" and probably also "to additional costs".
Paula Piechotta, a budget expert, member of the German Federal Parliament for the Green Party and doctor, said: "The massive concerns of parliament and virtually all stakeholders in the healthcare system were also shared by the experts in the ministry — as we can see from the documents that have now been published."
It is striking that other companies were less interested in secret prices. According to industry sources, none of the members of the Association of Research-Based Pharmaceutical Companies, apart from Eli Lilly, had any major interest in pushing for the confidential pricing agreement. A ministry document from November states that "a large part of the pharmaceutical industry" does not consider this "a central measure".
For Eli Lilly, however, the deal is likely to be worth its weight in gold. This is because the company launched a weight loss injection at the end of 2023. With a similar drug, its competitor Novo Nordisk has just become the most valuable company in Europe.
Paula Piechotta, a budget expert, member of the German Federal Parliament for the Green Party and doctor, said: "The massive concerns of parliament and virtually all stakeholders in the healthcare system were also shared by the experts in the ministry — as we can see from the documents that have now been published."
It is striking that other companies were less interested in secret prices. According to industry sources, none of the members of the Association of Research-Based Pharmaceutical Companies, apart from Eli Lilly, had any major interest in pushing for the confidential pricing agreement. A ministry document from November states that "a large part of the pharmaceutical industry" does not consider this "a central measure".
For Eli Lilly, however, the deal is likely to be worth its weight in gold. This is because the company launched a weight loss injection at the end of 2023. With a similar drug, its competitor Novo Nordisk has just become the most valuable company in Europe.
Eli Lilly's Mounjaro is the latest high-profile weight loss jab to be launched in Europe.Shutterstock
However, there is a crucial difference between the companies. There are two drugs from Novo Nordisk with the same active ingredient (semaglutide), which helps with weight loss. One of the drugs (Ozempic) is approved for the treatment of diabetes, the other, higher-dose drug (Wegovy) for the treatment of obesity. Eli Lilly, on the other hand, only markets one drug for both indications: Mounjaro (active ingredient: tirzepatide) is available in various dosages.
Public health insurance funds only reimburse medication for diabetes; patients have to pay for "lifestyle drugs" for weight loss themselves. This makes secret prices particularly attractive for Eli Lilly. The reimbursement decision on Mounjaro is due shortly – and Eli Lilly will probably have to grant a large discount, as the Federal Joint Committee has not certified any additional benefit for Mounjaro in most cases.
Experts expect that Eli Lilly will now make use of the new right to a secret price for the first time with this medication. The company would not comment on the matter. However, the advantage would be clear: those wanting the drug for weight loss would pay a high price for their injection – and would not find out how big the discount is that health insurance funds receive on the same drug. And doctors would remain unaware of how expensive Mounjaro is compared to similar drugs. "In most EU countries, discount negotiations are treated confidentially," Eli Lilly said in a response, justifying its demand for secret prices. "This should also apply to Germany."
A November 2023 memo from internal Federal Health Ministry documents stated that the possibility of secret prices should be restricted due to public opposition to the legislative plans. It should remain in place only for "medicines that are only partially reimbursable due to lifestyle indications". This "would ensure that the commitment to Lilly would be honoured, as Mounjaro would be covered". But in the end this limitation has not been put in the law. So the supposed €2.3 billion boon from the new Eli Lilly facility in Alzey could still cost people in Germany dearly.
Health insurance funds in particular fear drastic price increases. Even if the price of only 10 per cent of all new drugs were to remain secret, "additional costs of up to €840 million would be conceivable in the first year alone", the National Association of Statutory Health Insurance Funds (GKV) has calculated. Because new medicines are added every year, "€8 billion in additional annual costs could build up within a decade", said GVK pharmaceuticals director Stefanie Stoff-Ahnis. “Every secret price puts an additional burden on the financial situation of the statutory health insurance funds without improving the care situation for patients." In response, Lauterbach's ministry said: "The massive additional costs feared by the statutory health insurance side as a result of the regulation are based on uncertain assumptions."
Public health insurance funds only reimburse medication for diabetes; patients have to pay for "lifestyle drugs" for weight loss themselves. This makes secret prices particularly attractive for Eli Lilly. The reimbursement decision on Mounjaro is due shortly – and Eli Lilly will probably have to grant a large discount, as the Federal Joint Committee has not certified any additional benefit for Mounjaro in most cases.
Experts expect that Eli Lilly will now make use of the new right to a secret price for the first time with this medication. The company would not comment on the matter. However, the advantage would be clear: those wanting the drug for weight loss would pay a high price for their injection – and would not find out how big the discount is that health insurance funds receive on the same drug. And doctors would remain unaware of how expensive Mounjaro is compared to similar drugs. "In most EU countries, discount negotiations are treated confidentially," Eli Lilly said in a response, justifying its demand for secret prices. "This should also apply to Germany."
A November 2023 memo from internal Federal Health Ministry documents stated that the possibility of secret prices should be restricted due to public opposition to the legislative plans. It should remain in place only for "medicines that are only partially reimbursable due to lifestyle indications". This "would ensure that the commitment to Lilly would be honoured, as Mounjaro would be covered". But in the end this limitation has not been put in the law. So the supposed €2.3 billion boon from the new Eli Lilly facility in Alzey could still cost people in Germany dearly.
Health insurance funds in particular fear drastic price increases. Even if the price of only 10 per cent of all new drugs were to remain secret, "additional costs of up to €840 million would be conceivable in the first year alone", the National Association of Statutory Health Insurance Funds (GKV) has calculated. Because new medicines are added every year, "€8 billion in additional annual costs could build up within a decade", said GVK pharmaceuticals director Stefanie Stoff-Ahnis. “Every secret price puts an additional burden on the financial situation of the statutory health insurance funds without improving the care situation for patients." In response, Lauterbach's ministry said: "The massive additional costs feared by the statutory health insurance side as a result of the regulation are based on uncertain assumptions."