German spending on drugs hits record

Spending on drug products by the German public-sector health funds has reached record levels this year. Expenditure went up 14.5% in October 2007 alone to 2.4 billion euros ($3.52 billion) and increased 8.5% during the first 10 months of this year to 21.2 billion euros.

Florian Lanz, spokesman for the industrial health funds' federation (BKK), said the trend showed that all the recent cost-control measures were unable to slow spending down for any length of time. The sharp increase in value-added tax at the start of the year had helped drive drug costs upwards. The health funds have already held talks with other health care organizations and have called for a considerable reduction in VAT rates. Mr Lanz said that, if cut flowers attracted a VAT rate of 7% why were life-saving drugs burdened with a rate of 19%?

Argument for VAT cut