Europe probing Germany's practice of cutting break on fees to some drugmakers

For more than a year, Big Pharma players have been adamantly complaining about the tight-fisted approach Germany takes toward approving new drugs. Its pricing agency has rejected offerings right and left, and drugmakers say it is getting increasingly hard to make any money in the country. But it turns out that at the same time it has been turning its back on some players, the government has been cutting a break to financially struggling German companies.

The European Commission (EC) announced this week that it will take closer look at Germany's practice of exempting some domestic companies from a requirement to pay 16% rebates to health insurers and public health plans, according to PharmaTimes. The EC said it doesn't look like what Germany is up to complies with EC rules because "the aid is neither limited in time nor granted on the basis of a restructuring plan." In other words, the companies don't have to show they have a way to get their financial houses in order.

Drugmakers were already livid about how Germany has been reluctant to approve new drugs, claiming their prices were too high. Then in April, the government said it would take a look at ratcheting back the prices on some approved medications as it continues to try to reduce healthcare costs. The list of 10 drugs includes Boehringer Ingelheim's blood thinner Pradaxa, the osteoporosis drug Prolia from Amgen ($AMGN) and Novo Nordisk's ($NVO) diabetes drug Victoza.

Drugmakers have alternately railed against and pleaded with Germany to take a different approach to cutting healthcare costs. They claim evaluations by Germany's Institute for Quality and Efficiency in Health Care (IQWiG) are just hurting its own citizens. The practice also can depress prices elsewhere if other countries use German pricing as a reference. In January, Pfizer ($PFE) said the "IQWiG method distorts the benefits of personalized cancer medicine" when the agency turned down its new lung cancer drug Xalkori. Drugmakers also have warned Germany that the policy is killing jobs. Last year AstraZeneca ($AZN) put the blame directly on the policy when it eliminated 400 jobs in the country, and Pfizer hinted it was part of the reason it had to cut 500 jobs.

According to Reuters, the investigation by the European Commission was prompted by a complaint from an unnamed German pharmaceutical company.

- read the PharmaTimes story
- here's more from Reuters

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