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In Germany, for patients, new drugs cost the same as older drugs

Written by Diane Archer

Noam Levey reports for the LA Times that, in Germany, people can get the newest cancer treatments for as little as $11. Patients don’t have to think about costs. For patients, new drugs cost the same as older drugs. And, insurers only pay higher prices for drugs proven to improve long-term health outcomes.

In the US, almost everything having to do with a new drug’s value is cloaked in secrecy. In Germany, pharmaceutical companies are not able to charge high prices for their new drugs unless they can demonstrate to an independent non-governmental agency that the new drugs deliver better long-term outcomes than drugs already on the market. And, the process for determining whether a new drug delivers a better outcome is fully transparent, with everyone–doctors, hospitals and patients alike–getting access to the clinical trial data and other independent assessments of the new drug.

The evaluation takes three months and ends with a public report. Anyone is free to comment on the report’s findings. More than 40 percent of the time, the evaluators find the drug offers no significant additional value over drugs already on the market.

Regardless of the findings, the patient’s cost for a drug does not increase. Non-profit insurers, called “sickness funds,” cannot charge a deductible and cannot impose a copay for a drug higher than 10 euros or $11.

If a new drug is determined to deliver a better outcome than drugs already on the market, pharmaceutical companies negotiate a price with the sickness funds. The sickness funds have leverage both because drugmakers want their drugs on the market in Germany and because they negotiate collectively for the drug’s price. When they fail to reach agreement, about one in five times, the matter goes to arbitration.

The German government requires sickness funds to pay the list price for a new drug, found to deliver a better health outcome, in its first year. As a result, prescription drug costs in Germany are still higher than in many other wealthy countries, with 2016 per person spending averaging $777 as compared to $1,200 in the US.

The German government does not regulate prices, but it does limit patient out-of-pocket costs, and it does require the sickness funds to cover all new drugs as they enter the market. An international survey finds that only one in 14 Germans struggle to afford health care as compared to one in three Americans.

Here’s more from Just Care:

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