Germany and UK to seize control of medicines prices
pharmafile | July 1, 2010 | News story | Sales and Marketing | Germany, Lansley, PPRS, UK, global pricing, price cuts
Major changes are afoot in Germany and the UK, the last two European countries with ‘free pricing’ of pharmaceuticals.
Governments in both countries are under pressure to control public spending, and are both set to take more direct control over medicines prices.
German chancellor Angela Merkel has just pushed through a new bill that will oblige pharma companies to negotiate new drug prices based on cost-effectiveness.
The new bill will also force pharma to negotiate with German health insurers, although companies will still retain the ability to set a price unilaterally if an agreement with the insurers had not been reached after 15 months.
The bill aims to start these two proposals in January next year and could run until 2013. Germany has a cost-effectiveness body in IQWiG, but the new legislation will put the decision of cost-effectiveness directly into the hands of the government. Earlier this month, the Bundestag approved proposals to increase rebates paid to pharma companies of patented brands but would simultaneously curb their prices.
The move comes three months after the coalition’s health minister Philipp Rosler said there would be no ‘blank cheque for pharma’ and urged negotiations on new drugs to be undertaken by the German Treasury.
Germany is tightening its controls in an effort to save its healthcare system around €2 billion per year starting from 2011.
Countries across Europe are looking to cut healthcare bills, but reducing the numbers of doctors, nurses or closing hospital wards is often politically unacceptable.
Value Based Pricing
Meanwhile in the UK, health secretary Andrew Lansley has given a clear indication that the current free pricing system for medicines in the UK will come to an end.
Lansley has long espoused a new ‘Value-based pricing’ (VBP) system, but has not yet made it clear how and when prices would be negotiated.
The government wants to introduce VBP for medicines by 2014, but Lansley has confirmed again that he wants to see trials of the system by the end of this year.
The health secretary provided the update at a meeting in Brighton to launch a new NICE ‘quality standard’ system – but also suggested that NICE’s current pivotal role in approving new medicines would in effect be downgraded.
Lansley said the government needed to take “greater responsibility for insuring re-imbursement prices” over which it currently has no influence.
Commenting on the current free pricing system, he called it a “curious post hoc system of looking at the prices asked for by the industry and then seeing whether or not this fits.”
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