German woes over AOK's economy plan

The German self-medication drug sector federation, the BAH, is concerned over a plan by the local health fund organization, the AOK, in cooperation with pharmacies for agreed drug spending targets in order to save up to 400.0 million euros ($607.5 million) a year. BAH president Hans-Georg Hoffmann said that, if the plan went ahead, contracts would to be drawn up at the expense of the pharmaceutical companies which would lead to damaging price competition in the non-patented generics segment of the country's market.

The AOK's reported aim is to use the target regimen to replace a tottering system of drug discounts between itself and certain drugmakers. All 16 state-based local health funds would agree target prices with the Lander pharmacy associations affecting best-selling drugs defined by groups of active principles.

The aim is to achieve target prices below those of the current fixed-level price support regime. Pharmacies would supply value-for-money drugs as available and receive a bonus from the AOK. Mr Hoffmann said the system meant that pharmacies would get this bonus in addition to their existing fixed margin of 8.10 euros per item. The industry would have no influence on the target price - in contrast to the current discount system. Drugmakers would be "forced to do everything to keep their price below the target price" in order to avoid being pushed out of the market, he warned.