„A mistake repeated more than once becomes a decision“. The aphorism attributed to the author of The Alchemist, Paulo Coelho, could be applied to Germany’s rules governing the dispensing of medicines. In the view of the domestic pharmaceutical industry, a recent policy set out by the Federal Joint Committee (G-BA) – the highest body of self-administration in Germany’s healthcare system – risks repeating an error seen before: enforced price pressure that, over time, leads to risky dependencies and, in the worst case, to supply shortages.

That is precisely what happened with so called generics. These low cost copies of chemically produced medicines have become indispensable to modern healthcare. In Germany, they account for almost 80 per cent of pharmaceutical demand. Yet sustained downward pressure on prices has driven many manufacturers out of domestic production. Their place has increasingly been taken by suppliers from Asia, particularly China and India, which now hold more than 60 per cent of the approvals required for production. Observers warn that China, in particular, could in future use its market dominance as a foreign policy lever – much as it has recently done with rare earths and other critical raw materials.

Manufacturers now fear that a similar dynamic could emerge in the biosimilars market. Like generics, biosimilars are lower-cost alternatives to medicines whose patents have expired. Unlike generics, however, they are produced not chemically but biotechnologically, using genetically modified cells derived from animals or plants. Their active substances are therefore not identical to the original biologic, but – as the name suggests – similar. Biologics have been in use for more than 40 years, and the first biosimilar was approved in the EU around two decades ago. Today, such medicines are widely used to treat chronic and serious conditions including cancer, multiple sclerosis, rheumatism and diabetes. Compared with conventional drugs, which often act broadly, biopharmaceuticals are generally considered more targeted.

As much as biologics and their copies have improved treatment options, financing them poses a challenge for healthcare systems. Development, approval and production are significantly more complex and time-consuming than for conventional medicines, requiring substantially higher investment. According to industry association AG Pro Biosimilars, development costs for biosimilars alone can reach up to 300 million euros – around 60 times the cost of developing a generic drug.

For Germany’s chronically cash-strapped health insurers, this is a growing problem. Expenditure is already rising rapidly due to an ageing population, and the increasing share of high-priced medicines adds further pressure.

But German health policymakers are unwilling to forgo the benefits of biopharmaceuticals — and especially their lower-cost alternatives. A law that came into force in 2019 therefore mandated, among other things, faster access to biosimilars. The Federal Joint Committee (G-BA) was tasked with helping to implement this requirement. Composed of representatives from health insurers, physicians, dentists and hospitals, the body decides which medical services are covered by Germany’s statutory health insurance system. Under the Act to Improve the Safety of Pharmaceutical Supply, the committee is to „set out, with a lead time of three years, the details governing substitution at the pharmacy level.“

Substitution of biologics at the pharmacy level would mark a genuine novelty. Until now, it has been solely up to physicians to decide whether patients receive an original biologic or a follow-on product. For conventional, chemically synthesised medicines, the situation has been different since 2002. Under the so-called aut idem rule, introduced as part of legislation to curb pharmaceutical spending, pharmacists have been required to dispense lower-cost alternatives unless the prescribing doctor explicitly rules this out.

This principle is now set to be extended to biotechnologically produced medicines. Paradoxically, it is biosimilar manufacturers themselves who are sounding the alarm. They fear that automatic substitution of original biologics with lower-priced copies at the pharmacy level will not strengthen their industry but instead trigger another wave of production withdrawals – effectively replaying the experience of the generics sector.

The concern centres on a specific clause in the G-BA’s proposed amendment to Germany’s pharmaceutical guidelines. It stipulates that substitution should „primarily be carried out using a medicine for which an agreement (…) exists that is effective for the health insurer.“ These „agreements“ refer to rebate contracts between health insurers and pharmaceutical companies. Pharmacists would therefore be required, when replacing original biologics with biosimilars, to prioritise products covered by such rebate arrangements.

While almost all biosimilar manufacturers already grant discounts to health insurers, the industry warns that the new rules could encourage insurers to rely more heavily on exclusive contracts with individual suppliers. The legally mandated automatic mechanism would give such arrangements a greater cost advantage than contracts involving multiple providers.

From the perspective of AG Pro Biosimilars, the consequences are predictable. If only the cheapest supplier wins insurers’ tenders, other companies will eventually withdraw from production. „With these plans, policymakers are heading towards the same vicious circle they fell into with generics“, says Walter Röhrer, head of Pro Biosimilars. „That is neither economically sound nor comprehensible.“

So far, these warnings have largely gone unheeded. In early December, the G-BA adopted its decision on the planned amendments to the pharmaceutical guidelines. The legislative intent, notes G-BA chairman Josef Hecken, is unambiguous. „The aim is also to reduce costs for the insured community in the biologics segment. The G-BA’s task is therefore to promote the prescribing and dispensing of cost-effective biologics – without jeopardizing patient safety or access to medical progress. From my point of view, today’s decision achieves that.“

The decision will now be submitted to the Federal Ministry of Health for review. If no objections are raised, the new rules could come into force as early as April 2026.