Recent years have seen several health reforms in Germany. Faced with exploding health care costs, government is attempting to reduce public expenditure and promote price competition among suppliers and providers. Among other things, health insurance companies are now entitled to directly negotiate discount contracts with Pharmaceutical manufacturers – which will clearly redefine the rules of the game in the market for prescription medicines. But what will be the outcome? Where is the pharmaceuticals industry heading in the longer run? Is a major price decline inevitable, as some experts claim? We have our doubts.