#Policy: Are We Underpricing Our Health? Germany's Willingness to Pay for Medicine Ignored

The bad news for Germany’s economy continues. Recently, the country dropped out of the top 20 nations in terms of purchasing power, trailing behind countries that were once less wealthy. This declining purchasing power reflects deeper challenges that go beyond simple economics. It raises an important question: Does purchasing power alone explain why children are waiting for fever syrups, why antibiotics are running out, why diabetic patients can’t access their medications, and why the list of unavailable medicines grows every day? Are we too poor, or are we simply not paying enough for the services and products we need?

It’s estimated that between 500 and over 1,500 medications are currently unavailable or difficult to obtain. While supply chain disruptions—especially the outsourcing of active ingredient production to countries like China—play a role, there’s more at stake. The reliance on foreign manufacturers for cheaper pharmaceutical products is risky, but it doesn’t fully explain the ongoing crisis. After the initial COVID-related disruptions, we should have seen improvements as companies worked to secure their market presence in Germany.

But the more significant issue lies elsewhere: Do pharmaceutical companies have sufficient incentive to supply the German market? The answer seems rooted in rebate contracts and pricing pressures imposed by the healthcare system. The widely praised pricing negotiations, driven by organizations like the G-BA (Federal Joint Committee) and the AMNOG law, may have secured lower drug prices, but at what cost? This relentless focus on cost-cutting appears to be directly impacting the availability of life-saving medications.

The Missing Link: Listening to Citizens’ Willingness to Pay

A crucial issue emerges here: Are regulatory authorities genuinely acting in the interests of citizens? Are they listening to the needs of the population, particularly vulnerable groups like children and chronically ill patients? Germany’s healthcare institutions operate without direct parliamentary oversight—key decision-makers are not elected by the public—and their actions often prioritize cost savings. However, this financial focus might overlook the preferences and willingness to pay of the citizens.

We need to have a public discussion about this. Many citizens may be willing to pay more for essential medicines if it ensures a stable supply, particularly for the most vulnerable groups. The missing drugs and empty pharmacy shelves are a clear signal that the current system is failing to incorporate the public’s preferences into regulatory decisions.

Regulatory bodies must shift their approach from solely negotiating lower prices to guaranteeing a reliable supply of essential medicines. This requires reevaluating the decision-making frameworks used by institutions like the G-BA and AMNOG, incorporating more evidence about citizens' willingness to pay and their aversion to shortages. Citizens should also be aware of how much supply stability costs and be part of that conversation.

A Path Forward: Aligning Policy with Public Preferences

Ultimately, the loss of purchasing power in Germany is a symptom of deeper systemic issues. The true cause of medication shortages lies in a regulatory framework that prioritizes short-term financial gains over long-term supply stability. If the voices of those affected—patients, children, and families—were truly considered, it would be clear that the public may be willing to invest more in healthcare to prevent such shortages.

Germany’s healthcare system must adopt a more balanced approach, integrating the preferences and willingness to pay of its citizens into regulatory decisions. Decision-makers need to incorporate solid evidence about these preferences into their frameworks. Doing so is not only a matter of economic responsibility but also a reflection of our commitment to the well-being of all citizens. Only by addressing these gaps in our regulatory and decision-making processes can we ensure that Germany’s children, patients, and vulnerable populations receive the care they need when they need it most.