Pharmaceutical giants like Pfizer Inc. (PFE.US) are copying the "UK script" by withdrawing investment to pressure Germany and force Europe to relax drug price controls.

Notice that, in the face of resistance from the capitals of various European countries to drug pricing, global pharmaceutical companies are pulling out a "classic playbook" that has recently been successful in the UK: threatening to withdraw investments and expansion plans to pressure policymakers. The latest target is Germany, which is currently debating legislation aimed at tightening drug spending. Previously, the industry won a victory in the UK because the government agreed to increase drug spending (part of a broader agreement to avoid tariffs imposed by the US). Pfizer Inc. sent a letter to the German Chancellor last week, warning that its investments in Germany are at risk due to the country's current drug pricing policy; while Astrazeneca PLC warned that it may not launch new drugs in Germany if these reforms are implemented. Earlier in June, Lilly announced it would cut in half its planned investment of 2.3 billion euros (approximately 2.7 billion US dollars); even Bayer, headquartered in Germany, stated that it would cancel expansion plans worth 9 billion euros. Both companies blamed the proposed legislation for their decisions. "Faced with industry pressure, the British government eventually caved, which delighted the entire industry," said Derry McAteer-McDonald of the UK patient organization "Just Treatment." "They are eager to see other countries replicate this compromise." The German Health Ministry stated this week that no decisions have been made yet, and they declined to comment further on any parliamentary deliberations. Pressure on Germany Critics argue that the UK bowed to pressure from the pharmaceutical industry. However, the British government has stated that the agreement reached with Washington in April ensures tariff-free access for the UK to the US market and also creates a more conducive environment for innovation, providing high-skilled job opportunities. Now, the pressure on Germany is starting to have tangible effects. On Monday, a government official revealed that Germany will cancel some of the industry-opposed plans by changing a variable discount mechanism to a fixed discount mechanism in response to concerns in the market that uncertainty would impact investments. While this move will reduce uncertainty, industry insiders say it does not address deeper concerns about the overall pricing environment in Germany. The proposed legislation will face parliamentary debate in the coming months and may still be modified. Industry insiders say that pharmaceutical companies view the agreement reached in the UK positively not only because it changes the system for valuing and paying for new drugs but also because it includes commitments to innovation and patient access channels. Diederik Stadig, healthcare analyst at ING Groep NV, said that compared to the more deliberate strategy taken in the UK, the actions of pharmaceutical companies in Germany are more reactive, but he agrees that these two cases are very similar. "The German government proposed a change in pricing, stating 'we want to reform pricing.' The industry responded, 'Okay, that sounds good, but it affects our return on investment,'" he said. Stadig pointed out that tariffs, the US pricing policy, the rise of China, and the high profit returns in the US market are making Europe less attractive. "The pharmaceutical industry is making Europe acutely aware of this." Percentage of drug spending as a percentage of GDP Wider struggles over drug pricing Germany's proposed legislation to limit the cost increases in the statutory health insurance system has pushed the country into the center of a broader struggle between drug companies and European governments that began several months ago. In France, the national health authority accused pharmaceutical companies in April of using "coercive pressure" to influence clinical assessments, including threats to withdraw drugs from the market. HollandBio, a Dutch biotech lobbying organization, says that companies are becoming more cautious about reimbursement applications, and the Netherlands may face further slipping down the priority list for drug market access. Additionally, the impact of the "Most Favored Nation Drug Pricing" policy implemented by US President Donald Trump has further intensified this tense situation in Europe. The policy aims to link the high-profit US market prescription drug prices to lower-priced regions, including Europe. Large pharmaceutical companies have reached agreements with the White House to lower drug costs in exchange for tariff exemptions, adding pressure for them to raise prices in other regions. Some critics view Germany's partial concessions as a concerning signal of the pharmaceutical industry's leverage, but they also point out that European countries also have a say because, despite the region's less lucrative profits compared to the US, it still remains an important market. "The US is not the only market in the world," said Sally Kimberley, an analyst at the healthcare think tank Nuffield Trust, but she also added that the pricing agreement between the UK and the US is still a warning for Europe. "The frustrating reality is that the 'UK playbook' here means that the healthcare system will spend more, but its citizens will receive less health benefits," she said.