German Pharma industry up in arms over drug price curbs

German Health Minister Philipp Roesler has now fleshed out the governing coalition's proposals to contain the cost of branded drugs in Germany (The Pharma Letter March 22) ' and the pharmaceutical industry lobby has 'reacted with fury,' reports the Financial Times Deutschland. Cornelia Yzer, general manager of the trade group VFA, has accused him of plunging the industry into 'crisis.'

Noting that Germany's public health insurers spent over 32 billion euros ($43.32 billion) on drugs last year, a 5.3% increase on 2008, Mr Roesler said the government would ensure that 'pharmaceutical companies will no longer be able to set the prices for medicines...on their own.' Pharma groups will henceforth be able to dictate the price of a new branded drug for one year only. After that, Germany's state insurers will be able to negotiate discounts on the new treatments. The industry had been hoping to secure a two-year grace period.

Once a drug hits the market, the pharmaceutical group will have to produce a comprehensive study demonstrating that the new product is an improvement on existing drugs. The study will be assessed by the Ministry of Health's Joint Committee or the Institute for Quality and Efficiency in healthcare. The assessment will typically focus on Phase III research, but the authorities may require additional research. If an additional benefit is established, the drugmaker and the insurers will begin to negotiate a price; if they cannot agree, the authorities will decide on a discount to the sales price based on international comparisons.