Dutch Drug Price Act: Nefarma Starts Court Proceedings

The Dutch drug industry association Nefarma has started legal action against the government's drug price control act (WGP; Marketletters passim), which took effect on June 1, 1996, and which Nefarma believes is "squeezing the lifeblood of our industry," says the association's newly-published report for 1995.

The WGP has reduced Dutch drug prices to the average in France, Germany, Belgium and the UK, in a move aimed at saving 700 million guilders ($412.6 million) a year. An alternative savings plan proposed by Nefarma centered on stimulating market forces and differentiated price cuts, permitting innovation because prices of patent-protected drugs would fall much less than off-patent drugs; "we take the view that savings on medicines must be made at the end of the life cycle of the product," it says. Its plan would also have produced a permanent change in the market structure and created a transparent system. However, following government doubts about the returns possible with the plan, despite guarantees given by market operators, it was thrown out.