German Cabinet votes to end Big Pharma's price monopoly

In a move that was largely expected Germany's Cabinet voted on legislation that would break the pharmaceutical companies' grip on prices with a bill aimed at saving the ailing health care system about 2 billion euros ($2.46 billion) a year.

At present, drugmakers are able to name their own price for as long as a product is covered by a patent, and this has resulted in Germany having the highest drug prices in Europe. However, now the firms will have to do more to prove that a drug offers benefits over what is already on the market.

The bill, which may become law by January, enhances legislation passed on June 18 that raises the compulsory wholesale discount for drugs bought by the program. The combined measures will save as much as 1.7 billion euros in 2011, helping the ruling coalition to plug an 11 billion-euro deficit in health spending. The change will also force the firms to negotiate prices with Germany's many health insurers.