Summary:
Germany came into an agreement with drug makers to for discounted prices on medicine. However, making the discount prices public could affect pharmaceutical companies everywhere and risk the industry’s profits. Germany is trying to stop wholesalers and pharmacies basing margins on list prices rather than discount. Germany is known to be tough on pharmaceutical companies because they try to bargain and negotiate prices. However, pharmaceutical companies don’t want to do that because giving discount means price falling in other places, because other countries use Germany as a reference. This matter of price negotiation is so serious that Germany patients may not get access to new medicine in the future, because companies would be facing the risk of lowering prices in other places as well.
Analysis:
This matter of price negotiation in Germany seemed like a minor problem at first, but I quickly realized that it is a Global issue. Because many countries around the world base their drug and medicine prices using Germany as a reference, if they find out that Germany is receiving drugs at a discount, those countries will in turn want to purchase them at a discount as well. However, this will pose a problem for pharmaceutical companies because they will lose profit in the industry, which could mean that they will no longer be able to produce medicine. The fact that Germany demands discounted prices may drive pharmaceutical companies to avoid selling them new medicine, which will then affect the people there because they will not have any effective drugs to treat their patients. It seems to me that Germany’s attempt to get a discount will end up hurting someone whether that be themselves, other nations, or the pharmaceutical companies.
Link:
http://news.yahoo.com/germanys-stance-pricing-threatens-drug-070456398.html
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