German generics firms and pharmacies clash

The German generics sector organization Pro Generika reports that the combined effect of legislation which was designed to ensure cost-effective drug prescribing and distribution, as well as to increase competition in the public-sector health funds (Krankenkassen), has sharply affected generics companies' revenue. Among the measures included in the government program was compulsory discounting to the Krankenkassen. However, the national pharmacy federation, the ABDA, argues that the discounting scheme has improved the financial position of the funds.

Pro Generika says the very marked change in the generics industry's financial position is reflected in first-half 2007 figures. While volume rose 8.1% to 183 million packs in the first six months, sales fell 5.4% in value terms for the period. The organization says the downturn is a consequence of compulsory discount agreements which, it claims, "threaten" the generics sector.

The ABDA response is to note that, apart from the supply of generics to the market, the pharmacies are making a "considerable contribution" to reducing drug spending. The federation estimates that the compulsory discounting regime has already saved the health funds some 600.0 million euros ($845.5 million). The ABDA adds that the discounts were increased from April 1 this year from two euros to 2.30 euros per pack and had eased the pressure on the funds on a continuing basis. The additional saving from this year's increase is estimated at 100.0 million euros.