Germany has embraced a new comparative effectiveness pricing scheme that allows companies to set drug prices at launch, but then requires them to submit additional evidence to support that price to the German Federal Joint Committee (G-BA).
Within six months, the G-BA and the office for health technology assessment (IQWig) conduct a cost-benefit assessment to a comparative therapy that the office chooses. If the new product doesn't outperform the "comparator" it will be "reference priced", means it will have the same priace as all comparable drugs in the therapeutic class.
This is a bad idea, and it will hamstring patient access to new medicines in Germany - the birthplace of the global pharmaceutical industry.
The new pricing scheme forces companies to go through two separate processes, one for drug approval (to the EMA), and a second for market access, to the G-BA and IQWiG. And because it can take years for companies to develop comparative effectiveness data, it will delay patient access to new therapies.
It also raises a myriad of other questions: What's the right comparator drug? What happens if a new drug comes on the market just before a new product launches, but is then held to be the new "standard of care" that new products must compare themselves to?
Already two companies, Eli Lilly and Novartis, have pulled drugs from the German market rather than risk reference pricing to generic levels that would have been used as a benchmark for other national price control schemes.
Less innovation, and less patient access to new therapies. Hardly a recipe for improved health in Germany or any other country.