Germany to cut $2.7B from pharma spending

While U.S. lawmakers wrapped up voting on healthcare reform, Germany's government was working on a little reform of its own. The coalition government agreed on new rules that will cut as much as 2 billion euros, or $2.7 billion, from pharma spending.

Germany has been one of the last countries in Europe to allow drugmakers the authority to determine prices. But now, the government will let local producers Bayer AG and Merck KGaA, as well as foreign drugmakers that sell their medicines in Germany, to set prices for the first year after a drug's introduction on the market. After that, prices will have to be negotiated by drugmakers and insurers. And insurers will be able to impose mandatory rebates.

"We will ensure that pharmaceutical companies will no longer be able to set the prices for medicine one-sidedly and on their own," Health Minister Philipp Roesler said at a press conference. No word yet on how drugmakers are reacting.

- see the Bloomberg story