Pharmaceutical prices in Germany are high compared with most other wealthy nations, though not as high as in the United States. As part of its efforts to control costs while still ensuring access to a range of therapies, Germany mandates that all newly introduced drugs be subject to an assessment of their benefits in relation to a comparator, typically the current standard treatment. In a new issue brief, Sophia Schlette and Rainer Hess show how Germany's system encourages drug companies to invest in truly innovative therapies that improve health outcomes.