Germany adopted its Medical Research Act on Thursday, July 4; the new law will allow pharmaceutical companies to privately negotiate the price of patent-protected medicines.
The Bundestag Health Committee amended and approved the actOn Wednesday 3 July, a new regulation was approved that includes important new features, such as the simplification of cooperation between the different regulatory authorities, standard contractual clauses for clinical trials and an independent ethics committee for special procedures.
Until now, price negotiations with statutory health insurance funds were public. The new law will allow pharmaceutical companies to negotiate behind closed doors the reimbursement amounts of new patent-protected medicines.
An initial negotiation on the price will take place, and then pharmaceutical companies will have a five-day period to choose whether they want to keep their price private or make it public. If pharmaceutical companies choose the confidential option, insurers will receive a 9% discount on the negotiated amount.
Germany’s open system has made it a reference source for other health systems. If prices are confidential, it is hoped that this could lead to higher discounts in the negotiation process.
This option could be considered a win-win situation, as buyers could benefit from a price discount while pharmaceutical companies have more room to negotiate with other potential buyers.
Lawmakers have insisted on an evaluation of the new mechanism by the end of 2026, but there is a sunset clause at the end of June 2028 if the evaluation is negative.
Paula Piechotta, the rapporteur for medicines and medical devices in the Greens’ parliamentary group in the Bundestag, wanted to remove the provisions on confidential reimbursement, but says that the amendments have made the law more balanced: “As members of parliament, we had to protect the interests of insured people in the country and we did that.”
Only pharmaceutical companies with a research department and relevant projects in Germany can keep prices confidential.
The law is an important part of a broader strategy proposed in 2023 to improve investment and production of pharmaceuticals and medical devices.
The strategy already appears to be bearing fruit, as Germany is becoming an increasingly attractive destination for the pharmaceutical industry, as evidenced by the investment of one billion euros by French pharmaceutical giant Sanofi. Eli Lilly from the US and Daiichi-Sankyo of Japan, also announced similar plans.
(Editing by Catherine Feore/Rajnish Singh)
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