Reversal Of Fortune For German Pharma As Bundesrat Supports Enhanced Drug Price Transparency
This article was originally published in The Pink Sheet Daily
Executive Summary
Germany’s upper house of parliament, the Bundesrat, has decided after considerable wrangling that negotiated and discounted reimbursement prices of drugs sold in Europe’s biggest market will be made public, virtually ensuring that further price erosion will spread across the region.
Despite many industry insiders insisting that negotiated discounts for medicines sold in Germany would remain secret, the country’s Upper House of Parliament (Bundesrat) agreed – albeit with provisos – to pass legislation enhancing the transparency of drug reimbursement prices.
By approving passage of the revised Pharmaceutical Act on Sept. 21 – sent it by the Lower House of Parliament, the Bundestag – the upper chamber likely has cleared the way for fresh drug-price erosion across Europe and even further afield.
Pricing negotiations between pharmaceutical manufacturers and health insurers in Germany have been shrouded in secrecy since the implementation of the Pharmaceutical Sector Restructuring Act (AMNOG) in January 2011 (Also see "Germany's Health Reform Law Stumbles Through Parliament" - Pink Sheet, 11 Nov, 2010.).
The contentious legislation could threaten the profitability of the sector, because if prices are revealed, then other countries in Europe and elsewhere that reference German drug prices will cut theirs too. The decision by the Bundestag, now confirmed by the Bundesrat, to publish the final price will mean this nightmare scenario for the European pharmaceutical industry is likely to happen.
Reluctant Bundesrat
That’s despite the fact the Bundesrat was not completely comfortable with that provision of the Act. And the biopharmaceutical industry was pinning its hopes on prospects the Upper House would block that part of the law (Also see "German Joy For Pharma As Drug Discount Prices Stay Hidden" - Pink Sheet, 14 Sep, 2012.).
The Reichstag’s upper house even has suggested that European price erosion resulting from the revised law could lead to pharmaceutical manufacturers refusing to put their products on the German market. In a written addendum to its Decision on the revised Pharmaceutical Act, the Bundesrat noted this already happened with a drug “indicated for epilepsy” – a silent acknowledgement that GlaxoSmithKline PLC/Valeant Pharmaceuticals International Inc. decided against marketing Trobalt (retigabine) in Germany in May due to wider pricing implications across Europe (Also see "Germany’s IQWiG Downs Two Drugs In One Day" - Pink Sheet, 15 Feb, 2012.).
The Bundesrat therefore has requested the inclusion in the law of a safety mechanism. It wants the federal government to report back to the Bundesrat 24 months after the implementation of the revised Act on developments to date with price structuring and the reimbursement of pharmaceutical products that contain new active ingredients. It points out that this is completely in keeping with the AMNOG’s classification as a flexible and revisable law.
Act Amendments
The revised Pharmaceutical Act also brings with it a range of additional updates.
It will make German pricing law apply to internet pharmacies that export to Germany – a move designed to maintain the competitive edge of German pharmacies and to prevent unnecessary closures.
The Act also will see an easing of controls on over-the-counter drug advertising. The law has been amended to permit adverts to include case histories, provided they are not exploited in an “abusive, repugnant, or misleading manner.”
The revision also permits manufacturers to resubmit dossiers for reimbursement assessment to the Institute for Quality and Efficiency in Healthcare (IQWiG), if they initially were dismissed on purely procedural grounds (Also see "Amended AMNOG Sees New Life Breathed Into Trajenta Reimbursement Bid In Germany" - Pink Sheet, 7 Sep, 2012.). Finally, the Act will transpose the requirements of the European Pharmacovigilance Directive into German law (Also see "Lacking "Mediator," EC Tightens Pharmacovigilance Proposals" - Pink Sheet, 11 Oct, 2011.).