Merkel Coalition Delay May Hold $686 Million Gift for Drugmakers

The timing of German Chancellor Angela Merkel’s appointment for a third term next week, if her prospective Social Democrat partners approve a Nov. 27 coalition agreement, may present a windfall for drugmakers.

The five weeks it took Merkel to negotiate a coalition agreement between her Christian Democratic bloc and opposition Social Democrats leave little time to enact a new freeze on pharmaceutical prices before a moratorium introduced in 2010 expires on Dec. 31. The clock is also ticking on policy that increased the mandatory rebate drugmakers must pass on to health insurers on certain medicines to 16 percent.

The delay may offer pharmaceutical companies a windfall of more than 500 million euros ($686 million) next year, according to health ministry estimates. Without new legislation, drugmakers will be free to raise prices on some medicines for the first time since 2009, said Ina Klaus, a spokeswoman for the health ministry in Berlin. Rebates will also drop to 6 percent.

“What’s clear is that we will not have a new price moratorium in law on Jan. 1,” Klaus said. “That’s a fact.”

The potential savings were first reported by Frankfurter Allgemeine Zeitung earlier today.

In 2010, companies had the mandatory rebate for patent-protected drugs not already covered by a reference price increased to as much as 16 percent from 6 percent as part of Germany’s last drug-price overhaul, passed under former health minister Philipp Roesler.

Justify Cost

The policy forced drugmakers to justify the cost of new medicines by proving they help patients more than older, cheaper treatments. Also part of the clamp-down was a price freeze for some drugs, based on Aug. 1, 2009 levels, that would remain in place until Dec. 31 this year.

The best-selling medicines in Germany include immunosuppressants, blood pressure drugs, diabetes therapies and analgesics, according to VFA, the association of research-based pharmaceutical companies.

Under new terms negotiated in the coalition agreement, signed by party leaders on Nov. 27, the discount will be reduced to 7 percent while the moratorium on price increases will remain in place.

“Industry is hoping for clarity as soon as possible,” in order to be able to plan,’’ Jochen Stemmler, a spokesman for VFA said in an e-mailed statement. “The challenge for the new government will be to find a viable path through parliament to give all sides legal certainty and planning security.”

Enacting a moratorium amendment may take as long as until next summer, Klaus said. “We must wait to see what the new health minister plans,” she said.

Party Ballot

More than two weeks after Merkel and senior officials from her Christian Democratic bloc and the SPD agreed on a joint platform for government, her chosen coalition’s fate lies in the hands of the SPD’s 475,000 members, who were invited to approve the coalition agreement in a party referendum that closed at midnight.

The postal ballots were due to be transferred today under high security from a collection center in Leipzig to a warehouse in Berlin’s Kreuzberg district, where they will be counted tomorrow. The result will be announced at about 6 p.m. Berlin time.

A new health minister will be named when Merkel announces her new cabinet on Dec. 15. Legislation to introduce new caps on the prices health programs pay for drugs will be introduced as soon as possible after that, government spokesman Steffen Seibert said at a regular press conference in Berlin today.

To contact the reporters on this story: Naomi Kresge in Berlin at nkresge@bloomberg.net; Brian Parkin in Berlin at bparkin@bloomberg.net

To contact the editors responsible for this story: Phil Serafino at pserafino@bloomberg.net; James Hertling at jhertling@bloomberg.net

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