Germany's prospective three-party government plans to cut prices retroactively for recently-launched prescription drugs to keep healthcare expenses under control, the coalition agreement showed on Wednesday 24 November.

Pharmaceutical companies have only been free to set prescription drug prices in Germany, Europe's largest pharma market, for the first 12 months following approval by the European Commission.

This respite allows for an elaborate benefit assessment and price setting procedure that was introduced in 2011 and which typically results in a discount.

Instead of taking effect after negotiations are wrapped up, the new price will be enforced with a retroactive reimbursement from the seventh month after market launch, if the coalition plan is passed into law during the four-year parliamentary session.

The agreement will install Germany's first federal coalition between Social Democrats (SPD), libertarian Free Democrats (FDP) and Greens, and bring the curtain down on the era of Chancellor Angela Merkel.

"The negotiated reimbursement price is to take effect from the seventh month after market entry," said the coalition document.

Pharmaceutical sales in Germany rose almost 7% to 49.5 billion euros ($55.4 billion) last year, according to market researcher IQVIA.

Novartis, Johnson & Johnson, Merck & Co and Bristol-Myers Squibb are among those with the largest market presence in the country, while Bayer, Merck KGaA and unlisted Boehringer Ingelheim are the biggest Germany-based drugmakers.

The German association of research-based pharma companies VFA said the plan may discourage drugmakers from seeking an immediate launch because backdated rebates posed an "incalculable risk".

"The traditional strength of the German system, the fast availability of new medicines, is needlessly put at risk," it added.

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