The German coalition government is putting into place new rules that will allow health insurers to influence the pricing of new medications. The changes are intended to save the healthcare system around €2 ($2.7) billion) a year. “This could impact innovation, because cutting the price of drugs will reduce the incentives for biopharma companies to invest in R&D,” says Marion Kronabel, managing director of the European Association of Pharma Biotechnology, part of the European Federation of Biotechnology. Germany allows firms to set prices for branded drugs, and prices are higher than in most countries. Under the new rules, the branded drug sector will be allowed to set prices for their products only in the first year after launch. After this, drug firms and insurers will enter negotiations, overturning the industry's requests for two years' price protection. The new law, which will be enacted by the end of this year, could potentially trigger patent law changes to extend a drug's protection from generic competition, Kronabel believes. She also points at more pressing concerns, “Overall, this legal change and this approach for cost reduction will have less of a harmful influence on the biotechnology industry in Germany than the issue of taxes on R&D expenses and venture capital profits in Germany.”