Germany could save up to 9.4 billion euros annually if it set drug prices at the levels which are applied in Sweden, according to a new report.

German spending on reimbursable drugs reached 32.4 billion euros in 2009, which is an increase of 4.8% over the previous year and the highest level ever, even though year-on-year growth was less than the 5.3% reported for 2008, according to the study’s authors, Professor Ulrich Schwabe and Dr Dieter Paffrath. The major driver of this continued fast growth is the statutory health insurance system’s coverage of innovative new medicines, which totalled 7.8 billion euros last year, they note.

The authors also report that prices of the leading 50 branded prescription drugs in Germany are an average of 48% higher than their levels in Sweden, and that the average price of generic drugs in Germany is 98% higher. While branded medicines account for approximately 26% of German public spending, only around 2% of them are eligible for price regulation.

This week, German Chancellor Angela Merkel’s cabinet is due to discuss the health reform package which Health Minister Philipp Roesler introduced in March with the aim of closing the estimated 11-billion euro funding gap in next year’s health budget. The proposals include reforming the way drug prices are set -  through a range of mandatory price negotiations and discounts, plus price limits - which Mr Roesler says will save the national drugs budget around 2 billion euros a year. At the time, this target was widely criticised for being insufficiently ambitious, and observers who also wondered why the Minister had decided not to introduce the law establishing the new pricing measures until the end of this year now feel that their concerns have been vindicated, following reports that the state drugs bill grew a further 4.6% during the first half of 2010.

Last Wednesday (September 15), thousands of general practitioners (GPs) across Germany took to the streets or closed their practices for the day in protest against the proposal in the reform package to curb the system of additional compensation which they receive as part of their contract for acting as gatekeepers to other parts of the health care system. These fees increased 11% during 2007 and 2009, but GPs point out that they are still paid less than specialists, and that as a result as many as 4,000 GPs and medical students leave Germany every year in search of better-paid posts abroad.