GSK freezes prices in Germany as part of PR trail
pharmafile | April 24, 2009 | News story | Sales and Marketing |Â Â GSK, GermanyÂ
GlaxoSmithKline has announced a price freeze on its drugs and vaccines in Germany for 2009.
The freeze applies to drugs prescribed via the country's statutory health insurance scheme, and looks like a continuation of GSK's efforts to smooth relations with governments and stakeholders.
Medicines prices are largely uncontrolled in the German market, unlike anywhere else in Europe, so companies are able to raise costs if they chose – last year the cost of drugs prescribed through the statutory health insurance scheme rose by 3.4%.
But GSK Germany chief executive Cameron Marshall said its freezing measure would help overcome the ongoing challenges facing the economy and health politics.
He said: "Our innovative drugs and vaccines offer an important contribution to German public health, and their use is commensurate with related spending."
Marshall pointed to GSK's work with patient organisations on transparency initiatives and said the price stop further demonstrated the company's social responsibility.
But there is some skepticism around the real significance of the price freeze, and some see it as more a PR stunt than an answer to economic challenges.
Though in Germany companies have the freedom to raise prices, in practice it is rare for them to do so, as it is a price sensitive market where prescribing is tightly monitored, much like the UK.
For this reason, Jim Furniss, the director of market access solutions at Bridgehead International, commented: "I suspect it is good public relations for GSK and probably not much else. In practice, it's most unlikely they would have increased their prices anyway, because companies very rarely do in Germany, though they have the option to do so."
And GSK has been on a wider public relations trail of late under the new leadership of Andrew Witty. The chief executive has promised more transparency, more ethical practice over pricing in developing countries.
In some developed European countries the company is even consulting healthcare officials on what drugs they would like to see coming through the R&D pipeline.
Furniss acknowledged that the activity in Germany could be part of Witty's wider agenda to improve relations with governments everywhere, especially as Germany is an example of a country with marked hostile relations between industry and government.
He added: "It's consistent with [Witty's] argument that the industry, governments and third-party payors should actually be partners rather than adversaries."
And GSK may well have achieved its aim, as the German government has welcomed the move.
Health minister Ulla Schmidt called the price freeze exemplary and called for other pharmaceutical manufacturers to follow its example during the economic crisis.
She said Germany – which offers pharma companies a credit guarantee in the case of income loss – provides a stable environment for pharmaceuticals compared to other countries and asked for co-operation from the industry in return.
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