Germany introduces new drug vetting procedure in clampdown on prices

Germany’s pharmaceutical industry has always been able to set its own prices for the branded drugs it brings to the domestic market. But now change is afoot. The government is determined to “break the price monopoly” of the industry, as the Health Ministry put it last year. Last summer it introduced a three-year price freeze and raised the mandatory discount drugmakers must offer state health insurers from 10% to 16% (The Pharma Letter October 1 and September 17, 2010). Since the beginning of this year, private health insurers can also demand the discount.

The government has now finalized a new vetting procedure to establish whether a newly-launched drug is an improvement on existing treatments. If so, the manufacturer will negotiate a discount with the state insurance system; if not, the drug will be subject to a fixed-price regime, which covers around half the medicines in the state health insurance market. This will limit their cost to that of comparable drugs.

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