Germany isn't the
most popular market among drugmakers these days, thanks to strict pricing
policies that have put a hurt on sales. Now, a proposed law could see the
country fall further out of pharma's favor--and compromise the industry's international
pricing power.
Germany is considering
legislation this week that would force drugmakers to report the reduced prices
they negotiate with insurers, potentially pressuring prices lower elsewhere in Europe.
Pharmaceutical companies would have to report rebated
prices, instead of their original list prices, to databases such as IMS Health, said Ina Klaus, a
Health Ministry spokeswoman in Berlin. The revised law will make it clear that
the list price isn’t what’s paid in Germany, she said. German prices are
influential because other countries use them as a reference.
While incremental, the
change would add to the pressure on drugmakers, which have faced a series of
moves by European companies to keep medicine prices down in the wake of the
economic crisis.
“Some people think it’s
pure semantics, but it’s a huge difference,” Hagen Pfundner, head of Basel, Switzerland-based
Roche Holding AG’s
German business, said at a press conference last week in Frankfurt.
The change was approved by
a majority of the parliamentary health committee on Feb. 12. Parliament is
scheduled to vote Feb. 20 on the proposal, which would become law by April 1.
The provision is part of a
law that would also scrap a plan to conduct cost-benefit analysis -- and
negotiate prices -- for drugs that are already on the German market. Bayer AG’s blood thinner
Xarelto and Amgen Inc.’s Prolia for osteoporosis were among the first
categories of older drugs targeted for review.
Negotiating Rebates
Drugmakers have had to
negotiate rebates on new
innovative medicines with German insurers for the past three
years. Now instead of referring to rebates negotiated between drugmakers and
insurers, the law will refer to reimbursement. The shift may seem small, but it
means the talks are really about price, not discounts, Pfundner said.
The change would also strip
some of the flexibility in the system from drugmakers, Pfundner said. A rebate
is often good for a limited time or volume and is renegotiable, he said. Not so
for a price.
Other countries look to Germany for reference prices for their drugs, he said,
meaning that reimbursement levels in Germany have influence outside the
country’s borders.
Countries including Spain,
France and Italy have reduced the number of drugs for which
they will reimburse patients, mandated the increased use of generic medicines
and lowered the amount they will pay for some products since the economic
crisis.
List Price
This week’s revision in
Germany would put into law a position that the Health Ministry has held for the
past two years, said Ann Marini, a spokeswoman for the National Association of
Statutory Health Insurance
Funds.
Drugmakers are allowed to
set a list price for a new innovative medicine for the first year it’s on the
market; the association negotiates rebates after a cost-benefit assessment run
by the Federal Joint
Committee, the
German body that makes drug
reimbursement decisions. That process started this month for
Roche’s latest breast cancer medicine, Kadcyla.
“Practically speaking, it’s
the same thing that we’ve been doing for years,” Marini said.
Some pharmaceutical
companies have kept medicines off the market after an unsatisfactory
cost-benefit assessment meant they’d have a poor negotiating position on price.
German drugmaker Boehringer Ingelheim GmbH made two applications for its
diabetes medicine Trajenta before deciding not to sell the medicine in its home
market.
The revisions to the law
also uphold a price freeze on drugs introduced in 2010 and reduce a mandatory
discount on drug sales to 7 percent from 16 percent.