German VFA Applauds Drug Price Move

4 March 1996

Plans to exempt patented drugs approved for marketing after December 31, 1995 from Germany's reference price system have been welcomed by the association of research-based companies, the VFA. At a hearing on the draft by the Bundestag (parliament) health policy committee, the VFA's director of politics, Edwin Smigielski, said this represents an important signal for Germany as a location for the pharmaceutical industry.

The plan to exempt patented groups II and III drugs from the regime means "patents have a meaning in Germany again," he said, adding: "even partial innovations are rewarded," which is not the case under the current system. Since the system was introduced, many groups had been set up which combine older drugs with new innovations for reference prices.

Dr Smigielski dismissed claims that this would lead to increased production of me-too drugs, saying that for the producer this would make no sense as the development costs for the first and subsequent compounds in a group are the same. But, he added, parallel developments are "therapeutically indispensable and economically useful." Patent competition between them promotes therapeutic progress which benefits patients, and examples show that parallel development improves efficacy, reduces dosages and side effects and often leads to new therapeutic applications.

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