CONTROVERSIAL END TO GERMAN DRUG REIMBURSEMENT PRICE FREEZE

Studies conducted by Germany's research-based pharmaceuticals association, the VFA, indicate that average prescription drug prices have remained largely stable in 2004, rising by an average of between 5% and 10%. Nevertheless, increases on some products of up to 40% have been greeted angrily by patients' groups, many of which have argued that the termination of the country's two-year price freeze will lead to rising costs in future. The VFA estimates that, while prices on a minority of the 50,000 prescription drugs currently marketed in Germany have fallen, increases so far this year could earn drug companies additional revenue totalling some EUR200mn (US$269.3mn) in 2005.

Reforms to Germany's state reimbursement framework have long been controversial. Last year, reimbursement was abolished on OTC medicines, and a 10% charge was introduced on prescription products. However, proposals for future methods to contain rising costs to industrial health funds have stirred debate, with costs rising to a record EUR22.8bn (US$30.07bn) in 2003, before falling slightly last year. Future moves are likely to be as sweeping as last year's, although significant change is not expected before national elections in 2006. Nevertheless, the government and the opposition are already evaluating whether contributions to a putative form of social health insurance will take account of contributors' income levels, or oblige payment of a flat fee.