Olga Khazan explains how Germany’s healthcare system has kept drug costs in check by refusing to pay extra for new medicines that don’t actually work any better than the old ones:
Almost every German belongs to one of some 160 nonprofit “sickness funds,” or nonprofit insurance collectives. The sickness funds cover both medical visits and prescription drugs. Drug prices there are already lower than in the U.S. because sickness funds negotiate with both physician groups and drug manufacturers to set costs of all treatments across the board. In the U.S., Medicare isn’t even allowed to negotiate lower drug prices. …
Enter 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.”
Under AMNOG, as 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.
The Dish 