Germany's AOK tenders for more drug discounts

Germany's largest state health insurer, Allgemeine Ortskrankenkasse (AOK), has pressed ahead with its efforts to intensify price competition between generic drugmakers by making bulk purchases from the entire European Union. Previously, the scheme has been hampered by law suits from copy drug firms (Marketletter November 19, 2007).

AOK has placed an advertisement in the European Union's Official Journal, inviting firms throughout the region to tender for orders covering the fiscal years 2009 and 2010. In all, 64 active ingredients are affected with a market value of about 2.3 billion euros ($3.45 billion), including ibuprofen and simvastatin, the health fund (krankenkasse) stated. A spokesman for German Health Minister Ulla Schmidt (Social Democrat, SPD) described the new competitive pricing pressure led by AOK as "welcome in the interest of patients."

Five regions covering Germany will be created, each with about 4.5 million fund patients, to negotiate deals with pharmaceutical firms. As a result, the same firm may not win exclusive supply for all AOK customers, which, the fund argues, encourages competition. Smaller drug companies covering a limited area may benefit from this too, ensuring a diversity of supply.