Several EU Member States apply clawbacks and mandatory rebates (“clawbacks”) to control healthcare expenditure. Clawbacks require companies to return a portion of their revenues when pharmaceutical spending exceeds a predefined budget cap. Mandatory rebates, by contrast, are fixed, upfront discounts applied uniformly across categories of prescription medicines. In both cases, these mechanisms apply a one-size-fits-all approach, disregarding the specific value, clinical benefit, or innovation level of individual medicines.
In 2007, Italy implemented clawbacks as part of ongoing efforts to reform its pharmaceutical system. Similarly, in 2012, Greece implemented clawbacks as a reaction to the global financial crisis. Since then, clawbacks and mandatory rebates have become key tools for controlling healthcare costs across Europe. Yet their growing use threatens sustainable access to innovative medicines. This blog explores the origins, impact, and complexity of these mechanisms across EU Member States. It also offers first steps for companies to engage policymakers and drive much-needed reform.
Clawbacks state, origins and impact
Clawback measures primarily target pharmaceutical expenditure, which accounted for an average of 15% of healthcare expenditure in the EU since 2000—after rebates and discounts. Most clawback policies target only pharmaceuticals, sparing other sectors like medical devices and nutritional products. Italy and France are exceptions, as both apply clawbacks to medical devices as well.
Policymakers have acknowledged that clawbacks and rebates have been overused. Nonetheless, reliance on these mechanisms is expected to increase across EU countries. This stems from the fact that these policies are effective at containing public pharmaceutical expenditure and straightforward to administer. They are also more politically acceptable solutions for securing funding, as opposed to reallocating resources from other parts of the health system (i.e., through reforms towards prevention or value-based healthcare).
The impact of clawback contributions on pharmaceutical companies varies across Europe. Greece stands out for having one of the highest clawback rates in Europe (27.3%), while other countries, such as Portugal and France, have adopted clawback mechanisms with a lower impact on overall pharmaceutical expenditures—6.6% and 6%, respectively.
These measures have grown over time and will likely continue increasing. In Greece, clawback obligations from the pharmaceutical industry rose 20-fold over a decade. The figure increased from €75 million in 2012 to €1.5 billion in 2022, and is expected to reach €2.1 billion in 2025. Inbeeo’s analysis of clawbacks in the UK, Germany, Italy and France, showed how companies’ mandated contributions have increased since 2018, indicating a rising trend (Figure1).
Figure 1 Estimated size of clawbacks and mandatory rebates in 5 European markets (2018-2021).
Clawbacks threaten sustainable access to innovative medicines
Clawbacks and rebates may provide policymakers with a short-term solution to rising healthcare costs. However, these measures also raise long-term sustainability concerns due to their negative impact on the pharmaceutical industry and healthcare systems. They discourage pharmaceutical companies from investing in new therapies due to reduced return on investment. As a result, healthcare systems and patients face a growing risk of reduced access to essential and high-value therapies. Additionally, the broader economy faces risks. Barriers to medical advancements deepen Europe’s lag behind the United States and China in innovation, undermining market attractiveness, global competitiveness, economic productivity, and GDP growth.
Without measures to control rising pharmaceutical expenditure while maintaining a healthy market, Europe’s healthcare system risks losing its dynamism and ability to meet the needs of an aging population.
The complexity of discussing European clawback mechanisms
Inconsistent clawback terminology
One of the main challenges lies in the inconsistent terminology and labelling used for clawbacks and rebates across countries. While the theoretical distinction is clear—clawbacks refer to contributions companies must repay when pharmaceutical spending exceeds a certain threshold, while rebates are prospective discounts applied to all prescription medicines—the lack of common terms across EU markets makes it difficult to identify, compare, share knowledge, and engage in meaningful discussions.
For example, in France, the ‘clawback’ payment is referred to as the ‘M Contribution’ or ‘safeguard clause’ contribution, as regulated through the annual Loi de Financement de la Sécurité Sociale (LFSS). In Portugal, the legislation defines mandatory clawbacks as ‘Special contribution by the pharmaceutical industry” (Contribuição extraordinária sobre a indústria farmacêutica), determined by the annual State Budget Law. This makes it challenging to identify clawback mechanisms to start with.
In addition, the terms are used for applications at an industry-wide level, as well for the application at the level of specific products. This diversity increases the complexity of discussing clawbacks and mandatory rebates and of advocating for clawback reforms across the region.
While this blog focuses on industry-wide cost-containment measures, let’s take a deeper dive into the application at both industry-wide and product-specific clawbacks and mandatory rebates first.
Industry-wide cost-containment measures
Industry-wide clawbacks are policies targeting entire company portfolios. For example, in Belgium, the National Institute for Sickness and Invalidity Insurance (RIZIV/INAMI) applies the clawback mechanism to all products listed as reimbursable pharmaceutical specialties. Clawbacks are based on annual company turnover for these products. Since 2020, the Belgian government has capped the clawback contribution at maximum 4% of the pharmaceutical specialties budget.
Similarly, mandatory rebates at the industry-wide level are fixed discounts that policymakers apply to across companies and products. For instance, in Germany, the government applies applies a mandatory 7% discount to all new pharmaceuticals introduced to the market.
Product-specific cost-containment measures
In contrast, product-specific clawbacks refer to budget caps for individual medicines. For example, the Croatian Health Insurance Fund negotiates product-specific financing agreements for new medications, particularly high-cost medicines. These agreements include budget ceiling agreements and volume cap agreements.
Similarly, mandatory, product-specific rebates are discounts that payers directly request and negotiate with manufacturers. For example, in France, payers request product-specific price reductions and calculate them prospectively, using a comprehensive set of criteria that justify the discounts.
Figure 2 summarizes the key differences between clawbacks and rebates, highlighting how the scope of their respective application can differ. It outlines which types of measure is applied in which markets.
Figure 2: Clawbacks and mandatory rebates can be applied at industry- and product-level.
Varying clawback configurations
Coming back to industry-wide clawback mechanisms, another challenge arises: their configuration varies significantly between EU countries. This variation leads to different implications for pharmaceutical companies planning to launch products in these markets. Below, we outline three country examples to illustrate the diversity in configuration of industry-wide clawbacks and mandatory rebates.
In Hungary, the Drug Economy Act defines four main types of tax regimes and clawback mechanisms:
- Article 36 (1), part one, defines a 20% monthly repayment on reimbursed medicines sold in pharmacies. Authorities calculate the amount based on monthly turnover;
- Article 36 (1), part two, introduces an additional 10% repayment for long-reimbursed medicines without generic competition. This may increase the total repayment to 30%;
- Article 37 establishes a clawback triggered when the Health Insurance Fund exceeds its spending thresholds. In such cases, authorities require manufacturers to contribute to the budget overruns;
- A windfall tax, introduced in December 2022, targets companies with profits above set thresholds. The government set the rate at 28%, raised it to 40%, and plans to reduce it to 20% in 2025 before phasing it out.
The payment obligation lies with the Marketing Authorisation Holder (MAH) or, if the MAH does not distribute in Hungary, with a distributor approved by the tax authority.
To offset these obligations, the government introduced a tax relief, allowing companies to reduce their windfall and clawback payments by up to 50%. The reduction is based on qualifying R&D investments made in the previous tax year.
In Italy, the clawback system includes three main mechanisms:
- Law 27/2006 introduces the Payback 5% mechanism. Companies must either apply a 5% price cut to reimbursed medicines or pay an equivalent amount. The rule exempts certain products, such as AIFA-designated innovative medicines.
- Law 122/2010 establishes the Payback 1.83% mechanism. This rule applies to all reimbursed medicines without exception and requires MAHs to pay a fixed percentage of retail sales to the Regions.
- Laws 222/2007 and 135/2012 define the Expenditure Ceiling Payback. When national pharmaceutical spending (including retail and hospital) exceeds pre-set caps, authorities calculate MAH contributions based on each company’s market share.
Italy also applies separate but similar payback rules to medical devices.
In the UK, there are two parallel clawback schemes that differ in nature: one voluntary and one compulsory.
- The Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) applies to companies that opt in:
- Companies must pay a set percentage of NHS sales revenue, depending on whether the product is a newer or older presentation (e.g., different strength, formulation, pack size)
- The VPAG repayment rate varies each year. In 2025, it will be 22.9% for newer presentations, and 10% for older ones
- Companies can receive a potential top-up of up to 25%, based on price reductions
- From 2025, under the Statutory Scheme, newer presentations face a 15.5% clawback (rising to 20.1% by 2027)
- Older presentations face a 10.6% clawback, plus a potential top-up linked to historical price decreases
In both schemes, MAH or the first UK-based supplier is liable. Both schemes cover branded NHS-reimbursed medicines. Excluded products include unbranded generics, parallel-distributed medicines, and new active substances (within the first 36 months).
What are the first steps for companies wishing to discuss clawbacks?
Establish shared terminology for internal alignment
Before addressing clawbacks and mandatory rebates with policy makers, it is essential to clarify the terms and definitions to ensure internal and external alignment. A clear understanding of these terms enables companies to build a consistent EU-wide response.
Clawback models challenge the pharmaceutical sector, yet they can bring potential advantages. Retrospective paybacks, for instance, do not directly impact the public list price of medicines, which helps protect external reference pricing in other markets. Additionally, clawback mechanisms could, in theory, serve as a pricing and reimbursement safeguard. This could faster commercialisation of new therapies.
Beyond internal alignment, collaboration between policymakers and the pharmaceutical industry is a critical next step in reshaping the clawback and rebate system in Europe. Amid economic uncertainty, tight healthcare budgets, and rising costs, such collaboration is essential to ensure sustainable patient access to innovation. The aim should be to find a balance between cost containment—ensuring fair distribution of resources across the healthcare system—and fostering a dynamic, sustainable market environment in Europe. This is key to driving innovation, expanding access to life-saving therapies, and investing in the long-term health of both patients and the economy.
At Inbeeo, we help pharmaceutical companies across the EU navigate the challenges of clawbacks and mandatory rebates. We collaborate with companies to engage with policymakers, explore alternatives, and align internal priorities with external expectations.
Interested to explore how we can help you manage the impact of clawbacks on your portfolio in the EU? Reach out to get started!