News Feature | February 20, 2014

German Pharmaceutical Companies May Have To Report Price Rebates

Source: Pharmaceutical Online

By Liisa Vexler

The German government may soon bring in legislation to force pharmaceutical companies to disclose the price rebates that they give insurers. At the moment, companies give the full list prices of their products to database companies such as IMS Health rather than the discounted prices. The change will make it obvious that insurers in Germany do not pay the list price, which is important because German prices are used as a reference in other countries. There is already pressure on companies to lower prices because of the economic crisis and this change could increase that pressure, especially in countries such as Spain, France, and Italy.

The Parliamentary Health Committee approved the revision on February 12th. Parliament will vote on the legislation on February 20th. If passed, it will become law on April 1st.

For the past three years, pharmaceutical companies have had to negotiate with insurers about price rebates on new medicines. According to the new law, these will be referred to as reimbursements rather than as rebates, meaning that the discussions will be about prices rather than about rebates. Hagen Pfunder, head of the German section of Swiss-based Roche Holding AG, said in Frankfurt last week, "Some people think it’s pure semantics, but it’s a huge difference." One difference would be in flexibility: unlike a price, a discount can be made for a set time and can be renegotiated.

Drug producers can set a list price for a new innovative product for the first year of sales. After that, the Federal Joint Committee makes a cost-benefit analysis and decides on the reimbursement. A poor cost-benefit assessment has resulted in some companies deciding to keep new drugs off the market. For example, Boehringer Ingelheim decided not to sell Trajenta, a medicine for diabetes, in Germany. The law would also stop the proposed cost-benefit analysis and price review of drugs such as Xarelto (Bayer) and Prolia (Amgen) that have been on the German market for some time. The new legislation also maintains the price freeze on drugs of 2010 and reduces the compulsory discount from 16% to 7%.