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Medicine price cap slows innovation, warns industry

A price cap on medicines developed in Germany is putting a brake on pharmaceutical innovation in the country, warns the European Federation of Pharmaceutical Industries and Associations.

During a meeting in Berlin on 8 June an EFPIA representative said the cap, part of a government-initiated price linking system, amounts to a “punitive measure”.

He said the pricing system prevents money from flowing into innovation, reducing German citizens’ access to new medicines.

Medicine prices in Germany are linked to prices in a number of specified countries, to prevent overpricing. Those countries include places, such as Greece, where medicines are much cheaper than in Germany. This means that new German medicines are priced alongside older products in poorer countries, so companies make less money and are less willing to fund medicine innovation.

“The problems lie with a law that is flawed in parts, inflexible interpretation, and an unwillingness to consider creative solutions,” said Richard Bergström, the director general of the EFPIA, a Brussels-based lobby group. “[Germany’s leadership] position is now under serious threat.”

The Arzneimittlelmarkt-Neuordnungsgesetz (AMNOG) law, which sets medicine prices, was introduced by the German government in 2011 to create a balance between healthcare innovation funding and medicine prices. The government at the time said it was worried that the high cost of innovation was translated into high prices, making medicines increasingly unaffordable for citizens.

EFPIA said that the AMNOG concept is good, but that better comparators and price calculation systems are needed to encourage companies to innovate.

“Price comparisons should be made with patented products, not generics, and there should be more meaningful consultation and discussion,” said EFPIA in a statement.

According to EFPIA, Germany’s pharma industry spent €5.3 billion on research in 2010.