The German head of Swiss pharmaceutical giant Roche, Hagen Pfundner, has advocated for a reduction in the value-added tax (VAT) applied to medications within Germany. In an interview with “Welt” Pfundner questioned the rationale behind VAT application on essential medicines, noting that Germany is among a small number of EU nations maintaining the full VAT rate, while the majority apply a reduced rate.
This call for change is rooted in increasing international competitive pressures facing the pharmaceutical industry. Discussions surrounding lower drug prices and new trade barriers are ongoing 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 often gaining access to innovative therapies at an earlier stage. He highlighted a substantial disparity, with approximately 30% more innovation reaching the US market, particularly in areas such as gene and cell therapies, compared to Germany – a difference that is even greater in some other European countries. He warned that these delays in drug market entry could potentially widen in the future.
Beyond VAT, Pfundner also pointed to additional burdens on the German pharmaceutical sector. These include a mandatory 7% discount, alongside a further 20% discount when medications are used in combination therapies, such as cancer treatments. “Plus, plus, plus” he stated, emphasizing that these measures are increasingly viewed by the US government as trade barriers impeding access to innovative pharmaceuticals entering Europe.
Pfundner has therefore urged policymakers to create more favorable conditions for the industry. He emphasized that approximately one in five working hours within the sector are consumed by bureaucratic processes, diverting resources needed for research and development. He stressed the urgency for significant changes within Germany to prevent a loss of competitiveness. While acknowledging signals from Chancellor Friedrich Merz (CDU) indicating a commitment to strengthening the German pharmaceutical landscape and advancing upon the previous government’s strategies, Pfundner stated that initial discussions are currently underway.
