German Health Funds, Retailers Strike Accord

Representatives of Germany's health funds and pharmacy groups have resolved a dispute over compensatory payments. Retailers note that prescription drug sales rose just 4% in 2004, and recently began a court action seeking to offset losses under a law guaranteeing annual earnings equivalent to 2002 levels.

Under the agreement, brokered by Health Minister Ulla Schmidt, retailers on Germany's US$25.5bn drug market will receive no compensatory payment in future. However, health funds will reduce their discount on prescription drugs from EUR2.00 to EUR1.85. This is expected to secure retailers extra income of EUR40mn (US$49.25mn) in the six months from its introduction in the second half.

Further, the funds have also agreed to freeze the discount at EUR2.00 between 2005 and 2008. Schmidt also pledged to clarify sector regulation and remove the clause of the Health Modernisation Law which guarantees pharmacies retrospective compensatory payments for loss of income.