corner
Healthy Skepticism
Join us to help reduce harm from misleading health information.
Increase font size   Decrease font size   Print-friendly view   Print
Register Log in

Healthy Skepticism Library item: 18886

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

 

Publication type: news

Kresge N, Donahue P
Drugmakers May Lose as Merkel Bids to Break Price ‘Monopoly’
Bloomberg News 2010 Nov 11
http://www.bloomberg.com/news/2010-11-11/astrazeneca-drugmakers-may-face-added-german-price-pressures.html


Full text:

Drugmakers face more than 2 billion euros ($2.76 billion) in price cuts in Germany, their biggest market in Europe, after lawmakers in Berlin approved the first controls on the cost of innovative medicines.

The law, backed by the lower house today, gives companies a one-year window to negotiate prices with insurers after introducing new drugs, potentially affecting Novartis AG’s multiple sclerosis treatment Gilenya and AstraZeneca Plc’s blood thinner Brilinta among other medicines that haven’t been approved yet in Europe. If no agreement is reached, the Health Ministry would set a maximum price, and the drugs would undergo a cost-benefit analysis by a semi-state agency.

“We are breaking the price monopoly of the pharma industry,” Jens Spahn, a lawmaker with Chancellor Angela Merkel’s Christian Democratic Union party who sits on parliament’s Health Committee, told the lower house, or Bundestag.

The deals that drugmakers strike with German insurers may put pressure on sales elsewhere, because other countries use German prices as a reference, said Elmar Kraus, a Frankfurt- based analyst for DZ Bank AG. Today’s curbs come on top of temporary rebates and price freezes on drugs that the government imposed last summer. Those measures will cost drugmakers 2.7 billion euros next year, according to the VFA, a Berlin-based group representing 45 drug producers.

“Everyone is trying to save,” Kraus said in an interview. “Some are waiting for the Germans. German drug prices have a certain reference function for a range of other countries.”

Companies now generally can set prices for medicines that offer an additional benefit for patients over similar treatments or lower-priced generics.

Merkel’s Plan

The changes make up a central element of Merkel’s reform of the health-care system in Germany. The government, faced with an aging population and ballooning costs, is seeking to ward off an estimated 11 billion-euro shortfall in the public insurance system next year.

Drug spending by the statutory “sick funds” that insure more than 70 percent of the country’s population rose 5.3 percent to 32 billion euros last year as companies increased their prices for patent-protected medicines by 8.9 percent, Health Minister Philipp Roesler has said, describing plans to reduce drug costs as a “paradigm shift” for Germany. The drug pricing plan will save 2 billion euros, the ministry has said.

Prices for generic drugs, many of which are already fixed through mandatory discount contracts, fell 2 percent last year.

Germany, the world’s third-biggest drug market after the U.S. and Japan, was one of the last countries in Europe in which drugmakers were allowed to set prices for their products. Today’s law will only affect drugs not yet approved for sale.

Bayer’s View

Bayer AG, Germany’s biggest drugmaker, is already selling its anti-clot drug Xarelto for European hip and knee surgery patients but has yet to win regulatory approval for people with irregular heartbeats, the biggest part of what the company has said could amount to more than 2 billion euros a year in sales.

It’s not clear how the law will affect Bayer’s new drugs, Rolf Ackermann, a spokesman for the Leverkusen-based company said in a telephone interview yesterday. The law being voted on today would require drugmakers to negotiate with an association that represents Germany’s public insurers, rather than negotiating with each insurer individually. That puts pharmaceutical companies at a disadvantage, he said.

“The coalition has promised market-oriented reforms and more competition in the health care system,” he said. “This is exactly the opposite — a monopoly. It doesn’t have anything to do with competition.”

‘Open to Dialogue’

Also awaiting approval in Europe is AstraZeneca’s Brilinta, set to compete with the $9.8-billion-a-year blood thinner Plavix from Sanofi-Aventis SA and Bristol-Myers Squibb Co. A European Medicines Agency panel recommended the medicine be cleared on Sept. 24.

Laura Woodin, a spokeswoman for London-based AstraZeneca, declined to comment yesterday on what impact the law might have, saying the drug hasn’t yet been approved and the measure hasn’t become law. Brilinta will be sold as Brilique in Europe.

“AstraZeneca is open to dialogue with all participants of the German health care system to guarantee patient access to innovative medicines,” Woodin said in a telephone interview.

It’s too soon to tell whether Novartis’s Gilenya, approved in the U.S. in September and still under review in Europe, will be affected, Eric Althoff, a spokesman for the company in Basel, Switzerland, said in an e-mail yesterday. The pill may take 13 percent of the market within the next year, analysts at Leerink Swann & Co. said yesterday.

Insurance Premiums

Today’s step is among the final measure for a health reform that was a pledge of Merkel’s campaign for re-election last year. Merkel can also rely on her lower-house majority to back an increase in health-care premiums to be voted on tomorrow.

The two laws are a scaled-back version of changes originally proposed by Roesler, a member of Merkel’s Free Democratic Party coalition partners. He championed a plan to decouple premiums from income by introducing a single flat-fee payment.

That plan was quashed by the Christian Social Union, the Bavarian sister party of Merkel’s CDU. Instead, the government plans to limit a supplemental contribution that insurers can charge to 2 percent of wages, with any amount exceeding that to be paid through tax revenue.

 

  Healthy Skepticism on RSS   Healthy Skepticism on Facebook   Healthy Skepticism on Twitter

Please
Click to Register

(read more)

then
Click to Log in
for free access to more features of this website.

Forgot your username or password?

You are invited to
apply for membership
of Healthy Skepticism,
if you support our aims.

Pay a subscription

Support our work with a donation

Buy Healthy Skepticism T Shirts


If there is something you don't like, please tell us. If you like our work, please tell others.

Email a Friend








Far too large a section of the treatment of disease is to-day controlled by the big manufacturing pharmacists, who have enslaved us in a plausible pseudo-science...
The blind faith which some men have in medicines illustrates too often the greatest of all human capacities - the capacity for self deception...
Some one will say, Is this all your science has to tell us? Is this the outcome of decades of good clinical work, of patient study of the disease, of anxious trial in such good faith of so many drugs? Give us back the childlike trust of the fathers in antimony and in the lancet rather than this cold nihilism. Not at all! Let us accept the truth, however unpleasant it may be, and with the death rate staring us in the face, let us not be deceived with vain fancies...
we need a stern, iconoclastic spirit which leads, not to nihilism, but to an active skepticism - not the passive skepticism, born of despair, but the active skepticism born of a knowledge that recognizes its limitations and knows full well that only in this attitude of mind can true progress be made.
- William Osler 1909