Bayer AG, Roche Holding AG and other drugmakers are warning that a German government proposal to tighten price controls on prescription drugs could end up restricting access to new medicines in Europe’s biggest healthcare market.
The proposal “lacks a fair balance between measures to foster innovation and cost-containment,” Bayer Pharmaceuticals Division director Dieter Weinand said. “Incremental innovation is not recognized and rewarded adequately.”
At the heart of the plan is a 250 million euro (US$268.95 million) revenue ceiling for medicines in their first year on the market. Once companies reach that threshold, controls would begin to restrict the price. Currently, drugmakers can charge whatever they want in the first year a medicine is on sale regardless of how much they earn.
Drugmakers are finding themselves under pressure to lower costs as aging populations and costly new therapies leave governments around the world struggling to contain healthcare spending.
While pharmaceutical stocks soared after US president-elect Donald Trump’s victory eased concerns about price controls in that market, executives at AstraZeneca PLC and GlaxoSmithKline PLC have warned that cuts are ahead there and elsewhere.
“We need to put the brakes on prices precisely when an especially expensive medicine is aimed at a large number of patients,” German Minister of Health Hermann Groehe told the Lower House of Parliament late last week, adding that short-term measures must be combined with “long-term price curbs.”
Three new drugs would have last year bumped into the proposed ceiling: Gilead Sciences Inc’s Harvoni and Solvani medicines for hepatitis C, and Biogen Inc’s multiple-sclerosis drug Tecfidera.
The government’s proposal would also extend existing caps on price increases for some older medicines — set to expire next year — until 2022. Together, the two measures could save about 1.9 billion euros annually, with the bulk of the savings coming from extending the restrictions on older drugs, according to a draft version of the new law, which German Chancellor Angela Merkel’s coalition aims to pass in February and take effect later next year.
The Social Democratic Party of Germany (SDP) argues that the proposals are too generous to drugmakers overall, and are calling for a lower ceiling on new-drug revenue and pushing to keep the prices public.
“Industry says that publishing the discounts would make it harder to set prices abroad,” SDP lawmaker Edgar Frank said.
German patient spending should not become a political tool to strengthen the pharmaceutical industry’s bargaining position elsewhere, Frank said.
German spending on medicines increased 3.9 percent to 18 billion euros in the first half, according to Germany’s National Association of Statutory Health Insurance Funds, an umbrella organization that helps determine what is covered in the public plans used by about 90 percent of the population.
Insurers helped push through the country’s first controls on prescription-drug prices five years ago. While drugmakers can set their own price in the first year a new medicine is on the market, they must undergo an assessment during that time to determine whether their medicine is superior to what is already available.
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