A new law on the books in Germany since the beginning of this year seeks to incentivize innovation by pharmaceutical companies, by structuring pricing models based whether a new drug represents an improvement over existing therapies or not. This creates in effect a two step process to access the sizable German market; first regulatory approval and then, an assessment of efficacy data by a separate German pricing committee. If that pricing committee determines that the new drug offers not benefit over existing therapies, the drug may enter the market under a fixed price regime. If the new drug does offer improvement, then the payers and manufacturer may negotiate a price.
According to the blog The Language of Science, some manufacturers are choosing not to enter the German market at all rather than accept fixed price restrictions on new non-inferior products. In September, Boehringer Ingelheim and Lilly opted not to launch their new oral anti-diabetes drug Trajenta in Germany after the federal commission relegated it to the fixed price model. It is interesting to note that the decision was made by comparing Trajenta to a generic diabetes drug, not to other gliptins in Trajenta's class. Also in September, Novartis pulled their new anti-hypertensive product Rasilamlo after they could not provide differentiating data to the pricing committee's satisfaction.
The German government has presented this law as an incentive to manufacturers to find and develop novel innovative therapies over "me-too" products, perhaps not surprisingly the industry does not see it this way, as their actions of withdrawing products rather than submit to fixed pricing seem to indicate. Given that Germany is the largest market within the EU, it will be very interesting to watch whether other EU members follow suit in creating a pricing scheme based on benefit. It will not happen in the US any time soon, because the market, not the government controls pricing in the US marketplace.
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