Healthy Skepticism Library item: 14880

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Publication type: news

Taylor L.
German govt 'to force drugmakers to sell through wholesalers'
Pharma Times 2009 Jan 5
http://www.pharmatimes.com/WorldNews/article.aspx?id=15023&src=EWorldNews

Full text:

The German government plans to introduce new legislation aimed at forcing pharmaceutical manufacturers to distribute their products through wholesalers rather than selling them directly to pharmacies, a practice which has been growing and is now estimated to account for 17% of the national market by volume, reports the Frankfurter Allgemeine Zeitung (FAZ) newspaper.

FAZ says it has seen drafts of a proposed amendment to current legislation which aims to halt direct-to-pharmacy (DTP) sales of higher-priced medicines. Pharmacies can buy these more cheaply from manufacturers than wholesalers because, under current law, they are required to pay wholesalers a fee based on a percentage of the drug’s value in addition to its price.

Under the proposed new law, wholesalers would charge pharmacists a fixed fee per product plus a percentage-based surcharge to cover their logistics costs, rather than the value-based fee. This, it says, would make them less dependent on winning contracts for the supply of higher-priced drugs. The legal amendments, which the government plans to introduce in 2010, would also give wholesalers the right to require drugmakers to use them to distribute their latest products, according to the FAZ report.

- In a recent study, the Organisation for Economic Cooperation and Development (OECD) has called for increased competition in German pharmaceutical distribution. By international standards, margins in the sector are high, and regulation has prevented more efficient forms of distribution emerging, says the OECD’s 2008 Economic Survey of Germany.

Moving from fixed to maximum reimbursable prices and margins could do much to stimulate competition in distribution and help reduce drug costs, the OECD recommends. Pharmacists could then undercut maximum prices to attract more customers through lower co-payments, and separate margins for wholesalers could be abolished, with pharmacists and wholesalers arranging between them how to share their margins. These new methods of working would likely lead to new and cheaper forms of distribution, “provided that effective competition oversight prevents dominant market positions from arising,” the Survey says.