Healthcare reform in Germany has had pharma companies grumbling for months. Among other things, the new system limits the amount that pharma companies can charge for prescription drugs; a law known as AMNOG demands that companies submit a cost–benefit dossier for new drugs, with the outcome being used to set the price, which is a bit of a thorn in pharma’s side.

Yesterday, Eli Lilly, which has a strong presence in Germany, decided that enough was enough. Addressing the Federation of German Industries Conference, John C. Lechleiter, Eli Lilly chairman, president and CEO, called for action amid a warning that the country’s healthcare reform is “jeopardizing the country’s legacy of pharmaceutical innovation”.

“In no other place in the world has the environment for innovative pharmaceuticals changed more in the last 12 months than it has in Germany,” said Lechleiter, according to a press statement.

A lot has certainly happened in the last year. Lechleiter explained that there have been price freezes for pharmaceuticals already on the market and significant increases in the rebates that the pharma industry must pay to the health system upon sales of its products.

And then there’s AMNOG.

“No other country in the world has a set of requirements quite like those imposed by AMNOG,” said Lechleiter. “The potential effects are serious: launches of new medicines that can benefit patients delayed or withdrawn, erosion of Germany’s strength in pharmaceutical innovation, and the loss of high-paying jobs in research and development.”

Lechleiter’s main gripe with AMNOG is that it places too much short-term emphasis on reining in costs and determines the value of a medicine before any real-world experience with the new product is available. He added that AMNOG imposes “impossible standards on new treatments that some of the most effective medicines of the past never would have met”.

And, of course, there’s always the danger that a pharma company may not like the price tag that AMNOG chooses. This could lead to delayed product launches or, worse, the company may choose not to launch the product at all.

The German system, like all healthcare systems, can be quite complex, but there’s a good overview of AMNOG in English on the news site akampion. It’s a difficult situation to take sides in. On one hand, many governments need to cut costs, particularly in the expensive area of healthcare, but pharma companies need good returns on productive development in order to carry on making innovative medicines.

AMNOG isn’t going to disappear, particularly as it only came into force at the beginning of this year. Lechleiter, however, offered a few suggestions of how the system could better benefit pharma companies. “The ‘Early Assessment’ could be used not to define the potential of a new medicine as low as possible to save money, but rather to take a comprehensive view of its potential value for patients,” he said.

Lechleiter has also called for the industry and the German government to develop more constructive and collaborative relationships that enable pharmaceutical innovation to flourish.

What do you think of the situation in Germany?