Following a vote among German legislators, the price freeze on reimbursed drugs，which was introduced in August 2010 and was originally set to expire at the end of 2013， will continue until the end of 2017. (Source: Pharmacg.com)
Germany’s drug price freeze has been extended for a further three years, while the country has also scrapped its retrospective benefits assessment, in a move that could have ramifications for its European neighbours and set a precedent for the pharma industry.
Despite products covered by internal reference pricing being exempted, it still marks a major development in the sector, with Germany’s fellow EU members keeping close tabs on the situation.
The German parliament addressed a number of pharmaceutical policy issues during the round of voting, with another notable development being the decision to scrap the controversial retrospective benefits assessment programme.
Launched before the introduction of the Act on the Reform of the Market for Medicinal Products, the rule has been deemed no longer feasible, when taking into account the significant administrative burden; it was also decided that the extended price freeze would be able to cover any savings lost by abandoning it.
Perhaps the most controversial move by the Bundestag was to end the practice of basing patient co-payments and wholesaler and pharmacy margins on the list prices of products, which are generally set by manufacturers; instead, this will now be based on products’ negotiated prices, which are generally discounted compared to list prices.
Multinational drugmakers have expressed a degree of concern about this particular decision, with regard to the effect it will have on the German pharmaceutical sector’s relationship with other nations.
Although levels of negotiated prices are not generally available at the moment, they will be reported to information databases in the future and so will be revealed to other countries that use Germany as an international reference price source; something that could then result in countries using the information to press for lower prices within their own healthcare systems.
As the new law refers to manufacturers’ rebates as reimbursements, it sets a fixed price rather than a discount that can be temporary and flexible, which manufacturers say could cause problems down the line.
The German pharmaceutical industry association VFA welcomed the abandonment of the retrospective benefits assessment programme and also expressed support for the reduction of the mandatory discount required from manufacturers of reimbursable drugs from 16 per cent to seven per cent.
Despite this, the decision to extend the long-term price freeze was criticised, namely because it does not compensation for inflation, but also because companies will not be able to pass on or refinance their cost increases.
While the cost to the industry resulting from the freeze stood at around €2 billion between 2009 and 2013, a continuation of the moratorium at 2009 levels will see the burden rise to €1 billion in 2014 and €1.2 billion next year, explained VFA chief executive Birgit Fischer.
She explained: “A long-standing price moratorium thus at least requires consideration of the general price development. In our opinion, this should be done by adjusting the price level to the rate of inflation and should be restricted to a clearly-limited timeframe.”
Ms Fischer added that legislators have also failed to sufficiently discuss how fixed-price and reimbursement systems can harmonise in future without jeopardising the healthcare system, adding that parliament has “not done itself a favour”.
A final reading of the new policy measures will take place in the Bundestag in late March, with regulations taking effect from the beginning of next month as Europe looks on.
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