Recent healthcare reforms in Germany "are jeopardising the country's legacy of pharmaceutical innovation" and focusing too much on simply cutting costs in the short term.

That is the view of Eli Lilly chief executive John Lechleiter who was speaking to the Federation of German Industries Conference in Berlin. Noting his "enormous respect for this country's legacy as a pharmaceutical powerhouse," he claimed that "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".

Dr Lechleiter  expressed concern over the German government's decision last year to freeze prices for drugs already in the market and to increase significantly mandatory rebates that industry must pay to the health system on sales of its products.  In particular, he attacked the Act for the Restructuring of the Pharmaceutical Market in Statutory Health Insurance (AMNOG).

With AMNOG, Dr Lechleiter says that parliament imposed "a complex new regulatory mechanism" to assess the added benefit of new pharmaceuticals entering the German market, linking future net prices to the outcomes of this assessment. "No other country in the world has a set of requirements quite like those imposed by AMNOG", he added, saying that "the potential effects are serious: launches of new medicines that can benefit patients delayed or withdrawn, erosion of Germany's strength in pharmaceutical innovation and the loss of high-paying jobs in R&D".

AMNOG works in 'wholly unnatural way'

He said that AMNOG determines the value of a medicine in "a wholly unnatural way: at the time it is launched in the market, before any real-world experience with the new product is available." In addition, he said it puts too much short-term focus on holding down costs "by imposing impossible standards on new treatments that some of the most effective medicines of the past never would have met".

Given this scenario, Dr Lechleiter suggested that "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."

Aside from these problems, the Lilly boss said that "at the same time, I see Germany as a place where the pharmaceutical industry can achieve a breakthrough – a fresh start if you will – to develop more constructive and collaborative relationships". Talking about the relationship between government and industry, he said "we are collaborators, not competitors. We need to work together in a spirit of openness and trust, and our industry bears responsibility for helping to build – or rebuild – that trust."

Dr Lechleiter, who will take over as chairman of the Pharmaceutical Research and Manufacturers of America (PhRMA) next year, is in Germany for a week and is not doing much sightseeing. He also participated in the American Council on Germany's conference on 'The Transatlantic Partnership in the 21st Century'.

Biopharma should form part of transatlantic trade talks

There he said that biopharmaceuticals should be included in transatlantic trade and economic discussions. He called for consistent regulatory policies, intellectual property protection and harmonised systems to deal with matters such as counterfeiting.

Dr Lechleiter also spoke about the Transatlantic Economic Council, initially proposed by Chancellor Angela Merkel in 2007 to strengthen cooperation between the USA and the EU. He said other industries - such as auto and green energy - are already working closely with the US and European governments to advance discussions through the TEC, concluding that such cooperation in biopharma would lead to "technological advancement and job growth on both sides of the Atlantic" and speed up access to new therapies.