Why Medicine Is Cheaper in Germany - Olga Khazan - The Atlantic - 0 views
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Germany's process has worked pretty well ever since Otto Von Bismarck set it in motion in 1889. But by 2009, the system started to break down. Drug manufacturers were introducing new drugs—knowing they'd be reimbursed by the sickness funds—but the new drugs weren't necessarily any better than the earlier ones. The result: Drug prices spiraled.
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nter 2010's Pharmaceutical Market Restructuring Act, or Arzneimittelmarkt-Neuordnungsgesetz, abbreviated in German as AMNOG. As in "AMNOGonna pay drug companies for new meds that are more expensive but not any better than the old ones."
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s soon as a new drug enters the market, manufacturers must submit a series of studies that prove it heals patients better than whatever was previously available. If the new drugs don't seem any better than their predecessors, the sickness funds will only pay for the price of the earlier version. Patients can still buy the newer medicine, but it's up to them to make up the price difference out of pocket.
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the new regulation so far hasn't had a chilling effect on medical innovation: "Even though the Federal Joint Committee ruled 27 prescription drugs to have no added benefit, only five of these drugs have left the German market as a result."
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Bahr's approach to pharmaceutical price regulation is market-driven, if you think about it. Why not force drug makers to compete with each other to prove they're providing added bang for patients' buck? Evzio, meet invisible hand.
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The American style of drug pricing, meanwhile, is like shopping for clothes with a blindfold on, as Princeton economics professor Uwe Reinhardt put it. "In a truly competitive market, both the prices and the inherent qualities of the goods or services being traded are known to all parties ahead of any trade," he wrote in the Times' Economix blog. "By contrast, in the American healthcare market, both the price and the quality of health care have been kept studiously hidden from patients."