Germany may publicize its drug discounts, putting fear into Big Pharma's heart

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.

As Pharmafile reports, lawmakers are weighing a proposal that would force pharma companies to report rebated prices instead of list prices to databases like IMS Health, making public the discounts drugmakers have negotiated with insurers. Parliament will vote on the legislation this Thursday, and, if passed, it would become law by April 1.

While the difference may seem small on the surface, it could carry a big impact if other countries follow Germany's lead. German discounts vary widely, but they can total about 20% of the original price, Pharmafile notes. If published, other nations--many of which look to Germany as a reference--are likely to catch on, forcing prices down in other markets.

"Some people think it's pure semantics, but it's a huge difference," Hagen Pfundner, head of Roche's ($RHHBY) German business, said at a press conference last week (as quoted by Bloomberg).

As Pharmafile points out, the U.K.--another example-setter when it comes to pricing--also negotiates discounts with pharma. But details of those price cuts, or so-called "patient access schemes," have never been released, and the government has no plans to do so.

If the law goes into effect, it would be just the latest German wrench in Big Pharma's plans. Since 2011, the industry has struggled with the country's AMNOG law, which requires drugmakers to prove their new therapies offer benefits over existing products if they want access to top-tier pricing. The evaluation process has drawn ire from drugmakers, more than a few of whom have pulled their products from the market--Europe's biggest--or refrained from releasing them there at all.

But the new proposal also holds a silver lining for drugmakers with existing products on Germany's market. According to Bloomberg, the law would also toss out plans to conduct similar cost-benefit analyses--and subsequent price negotiations--for existing drugs. Bayer anticoagulant Xarelto and Amgen's ($AMGN) osteoporosis med Prolia were among the first groups of older drugs to be tabbed for review, the news service says.

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Special Report: The 25 most influential people in biopharma today - 2013 - Jürgen Windeler - The Institute for Quality and Efficiency in Health Care (Germany)