Drug price reforms cloud outlook for German pharma

It is anything but a happy new year for German pharma. The government’s drug price reforms, which have now been enacted, will make a “severe” dent in the sector’s revenues, noted Cornelia Yzer, general manager of the German pharmaceutical association, the VFA. The mandatory discount drug firms must offer state health insurers has risen from 6% to 16%, and a three-year price freeze will last until the end of 2013.

Moreover, newly-introduced drugs will now be subject to a vetting process to gauge whether they are an improvement on existing treatments before a price is agreed (The Pharma Letters November 12 and October 29, 2010). The government hopes to save around 2.2 billion euros ($2.86 billion) a year from 2011 onwards.

Having proved “a bastion of stability” during the financial crisis, pharma is now having a crisis imposed on it, said Ms Yzer. The annual winter survey of the VFA’s 45 members shows that confidence has dwindled. Only about a third of companies expect revenue to rise in the domestic market this year; last year the figure was 69%. 49% expect falling sales.