Story

 - 

Europe's competition authority okays exemptions from Germany's drug pricing rebates

Country : Germany

Keywords :
by Peter O'Donnell
BRUSSELS, Mar 30 (APM) - Financially-challenged drug firms in Germany are entitled to benefit from easier treatment under national pricing rebate rules, despite this favourable treatment amounting to state aid, the European Commission has ruled.
The ruling from Europe's competition authority on Friday, comes in response to complaints from some drug firms about unfair application of the mandatory rebate rules in the country, which they said was giving competitors an unfair advantage.
German drug pricing rules impose an obligation on companies to provide a rebate on their sales to the public health system - frequently exacted via a price freeze.
But the scheme allows an exemption from this obligation for firms that are in a poor economic state.
The commission has conducted an in-depth investigation into the practice over the last year, and has come to the conclusion that exempting pharmaceutical companies from mandatory rebates can be permitted in certain circumstances, it said on March 27.

State aid and discriminatory

The commission's investigation proved that the scheme indeed involves state aid, since exemptions from the rebate increase the costs of public sickness funds.
It also acknowledged that the advantage conferred has an effect on competition and trade within Europe.
And by definition, the scheme is discriminatory, because only those companies that are able to prove that they are in financial difficulties due to a price freeze can benefit from the exemption and receive a higher price for their sales than that of their competitors.

Greater good

But despite these features of the scheme - of a sort which would usually lead to a negative judgement and a demand for restitution of illegal state aid - on this occasion the commission has found that other considerations weigh more heavily.
In particular, it says that the exemptions prevent genuinely hard-pressed drug suppliers going out of business. The principle of the scheme - which allows the costs of the public health system to be kept under control through price freezes on certain medicines - is acceptable, but so too are the derogations it permits.
EU pricing rules, contained in the 1989 transparency directive (which the commission has just decided against trying to update), say that member states are allowed to introduce price freezes on pharmaceutical products, but that companies can apply for a derogation from these price freezes in exceptional circumstances if justified for "particular reasons".
"The scheme pursues an objective of common interest", said the commission in justifying its ruling. Allowing Germany to implement price freezes can help keep the level of costs of the public health system under control.
But at the same time, where a company can demonstrate that the price freeze places it under an unacceptable financial burden, exemptions may be granted to avoid companies going out of business.
pod/hlc

[XX8NM11GC]

TRY APM Market Access AND GET ACCESS TO THE FULL CONTENT

Interviews with KOLs/senior executives amongst the Regulators, Payers, Health, Medical & Pharmaceutical organisations

Events coverage with a unique focus on Market Access & sustainability of healthcare systems

6 European bureaus : Berlin, Brussels, London, Madrid, Milan & Paris

Ask for a Free trial and get access to the latest stories

Our coverage includes:
  • Health Care
  • Market Access
  • HTA – policies & practices
  • European medicine regulations
  • Drug safety issues
  • Pricing & Reimbursement
  • International medicines agencies

If you are a Payer, Pharmaceutical or Consulting professional our premium data will keep you informed on the regulatory, pricing, market access and cost-effectiveness issues that impact all stakeholders.

REQUEST

an initial 10 day temporary access of APM Market Access.