German price cuts denounced by industry
pharmafile | March 30, 2010 | News story | Sales and Marketing | Germany, IQWIG
Pharma industry organisations have reacted angrily to new government plans in Germany which would enforce mandatory price reductions one year after a drug’s launch.
Health Minister Philipp Rösler had already signalled a major shake up to medicines pricing, but the sector reacted with surprise and anger at the strong measures contained in the proposals.
He said he hoped to promote competition as well as create significant savings to the statutory health insurance system, which previous governments have struggled to control.
The proposed reforms include raising the mandatory discount for branded drugs sold to the statutory health system from the existing six per cent to 16 per cent.
Prices will be frozen at August 2009 levels until the end of 2013 and the current fixed price system for some patented drugs, as well as the discount price contract system for generic medicines, will be retained.
Rösler wants to introduce a new system which would set prices on new, innovative drugs, which he said entirely accounted for the increase in medicines spending last year.
Cost-benefit assessment for drugs
The new system allows pharma companies to set prices themselves for the first 12 months after launch, but they must produce a costs-benefits dossier, which the authorities then assess.
If they judge a drug doesn’t offer additional benefit compared to existing treatments, it’s immediately put under the fixed price system. Prices for drugs that do offer additional benefit, will be subject to central negotiation on prices for the statutory system, Rösler said.
German industry association the VFA attacked the plans, saying they went back on a promise to reform and de-regulate the sector to benefit all sides. It said the reforms would be nothing less than ‘poison’ Germany’s status as a location for investment.
VFA spokesperson Cornelia Yzer said: “The coalition contract promised a competitive reorganisation and deregulation for the drugs sector. These points in contrast, contain enforced measures and can hardly be beaten for their bureaucratic complexity.”
The BPI, another pharma group, also heavily criticised the price freeze and increased mandatory price cuts, as well as the continuation of the discount system.
Dr Bernd Wegener, chairman of the BPI, said the new system relied on defining the ‘utility’ of a drug, but said the German government and its cost effectiveness body IQWIG had been unable to establish a workable and internationally recognised rating.
He said that without this the system could instead be misused as a pure cost saving measure.
Germany’s generics industry association generics industry ProGenerika was also critical of the plans. Peter Schmidt, ProGenerika manager, said in the statement: “The generics industry rejects these suggestions without any ifs or buts. They are part carelessly targeted, part vagaries and part nonsense.”
Rösler was made Health Minister last year when his party, the centre-right FDP, formed a coalition with Angela Merkel’s CDU party, and his proposals were only unveiled after a long consultation with his political partners.
He said they would be drafted into a bill over the coming weeks with the aim of them being made law by the start of 2011.
The plans were welcomed by the association of statutory health insurers, the GKV Spitzenverband. Chair Doris Pfeiffer said: “It is good that the government is acting decisively on the high prices of medicines. Price negotiations combined with a sensible benefit analysis are the key to preventing excessively high prices for new drugs.
“Along with the short-term measures also announced, and the retention of the discount contract system which individual insurers can arrange, it is a good package overall.”
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