A German court has ruled that a government-mandated price cap for Pfizer’s cholesterol-lowering drug Sortis (atorvastatin), marketed as Lipitor in other countries, is legally binding.

The world’s biggest drugmaker tried and failed to force the German Government to back down from the price capping for Sortis, which set the maximum amount Germany’s state health insurance systems were prepared to pay for the drug. Pfizer said it would take the case to the appeals court.

Pfizer has resisted the price cap, forcing patients who wish to receive Sortis to fund the difference between the company’s price and the insurance companies’ provision out of their own pockets. But the result has been a dramatic reduction in prescribing levels for the drug among patients relying on state insurance, down to 250,000 from 1.5 million prescriptions at the end of 2004.

This tallies with data from IMS Health which suggests that Pfizer Germany’s pharmacy sales fell by around a fifth in the first half of this year. Declining prescriptions for Sortis are thought to be a key factor, although Pfizer’s business in Germany would also have been affected by the patent expiry on blood pressure drug Norvasc (amlodipine) and the impact of safety concerns on anti-inflammatory Celebrex (celecoxib).

Pfizer said the price-capping ignored the fact that Sortis is a superior product offering therapeutic benefits over other cholesterol-lowering medicines.

The price-capping strategy employed by Germany’s government has angered many pharmaceutical companies, which claim it undermines the research-based Industry. In September, the body representing Germany's pharmaceutical Industry, the BPI, said government policies had led to almost 5,000 jobs in the previous 12 months, although the sector also reported a 10.5% increase in sales for first-half 2005.

BPI president Bernd Wegener said the industry could create more jobs if there was less state intervention. Last year, the sector employed 113,989 people, or 4% fewer than in 2003.

Pharmaceutical industry sales totaled 10.60 billion euros in the first six months of 2005, with volume sales up 6.3% to 786 million packs. The industry reported 2004 sales of 20.50 billion euros in the German pharmacy market, which was below 2003's levels, while volume sales last year dropped 12.5% to 1.20 billion packs as pharmacy-only sales fell 13%.

Pfizer Germany president Walter Koebele said recently he expected the company to emerge from the downturn by the end of first-half 2006. Sales would grow in 2006 overall, and in 2007 the company would feel the benefit of new product launches and a revised company structure, to be announced in early 2006.

New drugs being readied for debut in Germany include the insulin inhaler Exubera and cancer treatment Sutent (sunitinib). Meanwhile, marketing and distribution is expected to be revamped in Germany, as the productivity of its medical representatives has been falling.

The product range will also be changed, and more focused teams set up to advise specialist doctors on new drugs.