German pharma counts cost of drug pricing reforms

Recent government drug pricing reforms have cost the German pharmaceutical industry billions of euros, according to the latest annual overview of the pharma market from industry association BPI. The government imposed a three-year price moratorium last year and hiked the discount that manufacturers are obliged to offer state health insurers from 6% to 16%.

Still, the industry’s overall performance was broadly encouraging. There are 903 registered pharmaceutical firms in Germany, says the BPI, and last year they produced goods worth a total of 26.9 billion euros ($36.37 billion), a 1.6% increase on 2009. Exports, helped by the strong global economy, rose 8% to 55 million euros, compared to a marginal decrease the previous year. A total of 5.5 billion euros were invested in R&D; in 2009 the figure was 5.4 billion.

However, German pharma’s commitment to R&D is a challenge to politicians, says Henning Fahrenkamp, chief executive of the BPI. The industry is assuming that R&D will be bolstered by favorable tax treatment. Tax incentives for R&D already exist in other countries, and it is high time this competitive disadvantage was remedied; otherwise, the future of innovation in Germany will be bleak, says Mr Fahrenkamp.