Germany to close loophole in drug pricing laws which pharma firms are exploiting

Some pharmaceutical companies have been exploiting a 'loophole' in the German government's widely trumpeted clampdown on drug prices (The Pharma Letter, July 9). The legislation will now have to be tightened, which the Ministry of Health says will happen by January 1 next year. What an 'embarrassing lapse' for Health Minister Philipp Roesler, writes Jennifer Lachman in the FT Deutschland.

The new law freezes drug prices for three years from August 1, 2010 (based on prices one year earlier) and raises the mandatory discount drugmakers must offer state health insurers from 6% to 16%. This is supposed to save the system 1.15 billion euros ($1.5 billion) a year.

The law says, however, that if a company has reduced prices before August 1, this voluntary reduction can be offset against the new obligatory discount of 16% (up to a maximum of 10%). It now seems that some firms raised prices in July only to lower them to the original level by August 1 in order to exploit the relief on the mandatory discount. A restriction stipulating that the offset would only apply if the drug cost less than it did in August 2009, which would have prevented such 'fiddles,' is missing, said the German trade journal Pharmazeutische Zeitung.