German drug price curbs will hamper orphan drug development, says BIO Deutschland

The lower house of the German parliament has now passed a law curbing the cost of branded drugs (The Pharma Letters April 6 and March 22). Pharma groups will henceforth be obliged to give state health insurers a 16% discount on new drugs - up from 6% - while the government also intends to impose a freeze on prices.

These measures will apply from August 1, 2010 until the end of 2013 and will save the state health insurers 1.15 billion euros a year. They are crucial to stemming the burgeoning cost of drugs and keeping the insurance system's finances on an even keel, says the government.

In response, the German biotechnology industry association, BIO Deutschland, said it feared that the new rules would hamper the development of new drugs to treat rare diseases, or 'orphan drugs.' A disease counts as rare when no more than five in ten thousand people are afflicted by it. Of around 30,000 known diseases, up to 8,000 fall into this category.