German lawmakers blessed Chancellor Angela Merkel's healthcare reform plans, limiting the industry's power to set prices. The law gives drugmakers one year to negotiate prices on new drugs or face analysis by a cost-benefit watchdog. "We are breaking the price monopoly of the pharma industry," parliament member Jens Spahn said during debate on the measure (as quoted by Bloomberg).
Echoing Spahn was Germany's health insurance association, which said that with the new law, the drug industry's "price monopoly is finally being seriously attacked for the first time." The group went on to call the new law "real progress." And the chief of Germany's cost-effectiveness agency said the reform will force drugmakers to focus on "real innovation."
The price-setting restrictions stand to cost pharma $2.76 billion (€2 billion), the industry group VFA said. And that's just domestically. The German price cuts could have a ripple effect, because other countries base their drug reimbursements on German prices. "Everyone is trying to save," DZ Bank analyst Elmar Kraus explains. "Some are waiting for the Germans. German drug prices have a certain reference function for a range of other countries."