New German Regulation Could Harm Pharmaceutical Companies

Germany is planning new regulation that could have a negative effect on pharmaceutical companies. The nation has plans to make public price discounts that drug companies agreed on with the German government. Drug companies have already complained that such a move could affect their profits across the globe and depress prices in other markets. The ultimate fear of drug companies is that other countries would use Germany’s discount prices for particular drugs as a new baseline for their own discounts.

Germany has stated that the move is intended to slow rising healthcare costs. It would force pharmacies and other drug wholesalers to stop basing drug sales on the list price. Instead, they would be compelled to use the drug’s discount price. Some health industry experts believe that the German discounts on drug products could be as high as 20%. Industry experts believe that the new law could have negative effects for the German people. Hagen Pfundner, the chairman of the country’s pharmaceutical lobby, believes it could cause drug companies to skip out on Germany altogether.

Industry analyst Ulrich Huwald believes that drug companies are being unfairly targeted. “Right now, the negotiated (discounted) price is not readily available information. I think pharma companies have a point in demanding that it stays that way. They have a right to confidentiality and more disclosure would hurt their.”

Financial analysts believe that the new regulation and uncertainty on product pricing makes it difficult to predict the country’s pharmaceutical outlook for the upcoming year.

Source: http://www.reuters.com/article/2014/02/18/us-germany-drugs-analysis-idUSBREA1H09E20140218