Germany Plans To Reveal Rebated Drug Prices

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Germany is considering legislation that would force drug companies to report previously private negotiations with insurers.

After the change, which could go into effect April 20, pharmaceutical companies would have to report rebated prices to databases such as IMS Health. Instead of referring to “rebates” negotiated between drugmakers and insurers, the proposed law would refer to “reimbursements.”

“Practically speaking, it’s the same thing that we’ve been doing for years,” stated Ann Marini, a spokeswoman for the National Association of Statutory Health Insurance Funds.

Hagen Pfundner, head of Roche’s German business, disagrees.

“Some people think it is pure semantics, but it’s a huge difference,” he states. The change means that negotiations with insurers are really about price instead of the negotiated discounts. Pfundner stated the proposal could limit flexibility for drugmakers given that rebates are renegotiable and usually apply for a limited time or volume, while prices are not (Bloomberg).

Importantly, Pfundner also suggested reimbursement levels in Germany might influence other European markets. German prices are influential because many other countries use them as a reference. Furthermore, many countries are looking for ways to lower costs. Spain, France and Italy have reduced the number of drugs for which they will reimburse patients, mandated the increased use of generic medicines, and lowered the amount they will pay for some products since the economic crisis.

Germany is Europe’s largest market for medicine, yet is known as a tough setting for drugmakers, due to drug price freezes and strict reimbursement structures that have already deterred several companies from launching products there.

Reuters reports that the German pharma market underwent a “sea change” three years ago when “Berlin allowed statutory medical insurers working through the Federal Joint Committee, or G-BA, to pool their bargaining power in price talks with the drugs industry. Statutory insurers pay medical bills for about nine out of 10 Germans and the private insurers who cover the rest use the same prices.”

“The insurers follow the lead of the Institute for Quality and Efficiency in Health Care (IQWiG), an advisory panel of medical experts, which assesses the ‘additional benefit’ of new drugs over existing ones.” Reuters notes that “Germany’s IQWiG presents an additional hurdle for drugmakers whose products have already been licensed by European regulators” because they have a “history of discounting statistical evidence previously acknowledged by the EU regulator.”

When confronted with Germany’s regulatory scheme, “[t]here could be an increasing number of opt-out decisions,” said Pfundner (Reuters). While IQWiG and the German government believe they are simply ensuring they get the best value for money, some believe German patients could miss out on new medicines if companies face the risk of low prices in Germany becoming the benchmark across the world.

However, Reuters notes: “drugmakers will be reluctant to miss out on the world’s third-largest pharma market which, according to healthcare information firm IMS Health, was worth $42 billion in 2012.”

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The change was approved by a majority of the parliamentary health committee on Feb. 12. Parliament is scheduled to vote Feb. 20 on the proposal, which would become law by April 1.

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