The US isn’t the only country struggling with the high price of prescription drugs. A decade ago, Germany was facing rapidly rising medication prices. In 2011, it struck back, with a law regulating the price of new medications. Here’s how that law works, and what it has meant for whether Germans have access to new medications.
The law set up an independent, nonprofit institution known as IQWiG (which I pronounce ICK-wig) tasked with determining whether new drugs are priced to reflect value. The folks at IQWiG study the evidence of a new drug’s effectiveness, present the results of their analysis publically, and then review public comments on their analysis. After determining how much benefit a drug produces, the drug company now negotiates prices with the umbrella organization overseeing the nation’s private insurance system. A drug company whose product yields modest benefits is going to have a hard time negotiating a high price.
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