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The German Government Hopes That New Reference Pricing Groups Will Save the Country's Health Care System Approximately Eur 1 Billion ($1.2 Billion) Per Year

Posted on: Wednesday, 8 February 2006, 12:01 CST

Research and Markets (http://www.researchandmarkets.com/reports/c32102) has announced the addition of The Impact of Reference Pricing in Europe to their offering.

In an effort to control pharmaceutical spending, European governments have long utilized reference pricing-the practice of setting a maximum reimbursement price and requiring patients to pay any excess if the manufacturer sets the retail price above the reference price. This measure may appear to target consumers, but its real objective is to force manufacturers to reduce their prices. The apparent success of reference pricing in curbing pharmaceutical costs has prompted an increasing number of European countries to adopt this practice or, in those countries already using this cost-containment measure, to expand or more aggressively implement their reference pricing systems. The practice, however, may pose hidden costs for patients and pharma companies alike.

In this report, Decision Resources review the use of reference pricing in four major European markets: Germany, Spain, Italy, and France. The report concludes with an assessment of the outlook and implications for the pharmaceutical industry.

Business Implications

-- Recent health care reforms in Germany have led to the

extension of reference pricing to certain patent-protected

drugs, with the prospect of further expansion of the reference

pricing system in January and July 2006 and January 2007. In

the future, the only medicines that will be safe from the

threat of reference pricing will be drugs that are deemed to

be therapeutically superior to established therapies. The

pharmaceutical industry is particularly critical of what it

considers to be an unduly narrow definition of "therapeutic

improvement" and a policy of combining patent-protected and

off-patent medicines in "jumbo" reference pricing groups. The

German government hopes that new reference pricing groups will

save the country's health care system approximately EUR 1

billion ($1.2 billion) per year.

-- In Spain, the government has temporarily suspended the

country's reference pricing system but hopes to introduce a

new system in 2006 or 2007. The Ministry of Health states that

this new reference pricing system will "generate greater

savings for the National Health System; will be predictable,

objective, and stable; will have a gradual impact on the

pharmaceutical industry; will make it possible to keep

generics as the most economical option; and will affect all

drugs that are in a mature stage of market development." Among

other reforms, the new system will require pharmacists to

substitute the lowest-priced generic version of a drug if a

physician prescribes a drug that exceeds its reference price.

-- In Italy, if a prescribed drug appears on the reference list,

pharmacists are authorized to substitute the least expensive

generic equivalent unless the prescribing physician explicitly

forbids substitution. Furthermore, physicians who prescribe

products that exceed reference prices must inform their

patients about the excess they would have to pay and to advise

them if less expensive options are available. As of May 2005,

138 compounds are included in the Italian reference pricing

list. Regional governments have some discretion in deciding

reimbursement terms in their territories for reference-priced

medicines.

-- Recent legislation has made the French reference pricing

system more aggressive. The Generics Monitoring Committee will

meet monthly to review the generics dispensing rates of drugs

that have been off patent for a year or longer. Reference

prices will be imposed if a drug's generics dispensing rate

does not reach 50% (60% in the case of drugs with substantial

sales) within one year of patent expiration and 70% (80% in

the case of drugs with substantial sales) within two years of

patent expiration. These conditions may be relaxed if generics

dispensing is growing strongly but has not reached the

targeted rates, or if the range of generics on the market is

limited. However, the proposed social security budget for 2006

would overturn these changes by automatically imposing

reference prices two years after the patent on a compound

expires.

Contents Include:

- Overview - Germany - Spain - Italy - France - Outlook and Implications for the Pharmaceutical Industry Companies mentioned in this report include: - Abbott - Alcon - AstraZeneca France - Axcan Pharma - Dexo - Dohme Chibret - Fournier - McNeil - Merck Sharp - Pfizer - Sankyo Pharma - Sanofi-Aventis - Servier - Solvay - Wyeth Lederle

For more information visit http://www.researchandmarkets.com/reports/c32102 Decision Resources

Source: Business Wire

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