The Association of Research-based Pharmaceutical Companies (VFA), a trade organization of 40 pharma companies in Germany, has warned that the industry would face losses of more than DM 4 billion ($1.9 billion) a year if programs designed to cut the cost of drugs are implemented, threatening investments in R&D and putting jobs at risk.

In late September, the federal health ministry (Bundesgesundheitsministerium BMG) and the umbrella associations of the statutory health insurances (SHI) agreed on three measures to reduce healthcare costs, effective Dec. 31. The impetus for the move was the 11% rise in spending on pharmaceuticals in the first half of 2001 - a rise the ministry said was out of proportion to other increases in the healthcare system.