Phoenix Group from Mannheim advocates for revised compensation regulations
Pharmaceutical Wholesaler Calls for Remuneration Rule Reform
Frankfurt — The Phoenix Group, a significant pharmaceutical wholesaler based in Mannheim, is advocating for the revision of the statutory remuneration regulations for wholesalers due to the persistent decline in margins on prescription medicines.
CEO Sven Seidel expressed concern over the outdated structures and the shrinking profit margin while costs continue to escalate. The CEO made these comments during the presentation of the company's financial results for the previous fiscal year.
Statutory remuneration rules in Germany mandate a fixed markup of 73 cents per package for pharmaceutical wholesalers, a critical factor in maintaining financial stability and service capacity. However, these rules face concerns and demands for reform due to the declining margins.
Recently, the wholesale margin has dipped to a historic low of 3.77%, a situation that could worsen with proposed legislative changes. Phagro, the German pharmaceutical wholesaler association, has voiced strong opposition to certain provisions in the coalition agreement, which could potentially strain wholesalers further by repealing the discount ban. This provision could bring undue financial strains by allowing optional discounts and rebates that may compromise the minimum remuneration for wholesalers.
A potential consequence of declining margins could be service limitations, which might impact the availability of medicines across the country. To prevent this, addressing these challenges and ensuring the continued financial stability of wholesalers to maintain their role in the pharmaceutical supply chain is urgent.
Separately, the German Federal Fiscal Court has issued a ruling on the tax implications of parallel imports in the pharmaceutical sector. This ruling underscores the importance of fairly compensating local distributors for marketing activities that benefit foreign parent companies, even if these activities are not directly managed by the local entities. While this ruling primarily addresses transfer pricing and tax implications, it indirectly highlights the need for fair compensation for local efforts that contribute to global benefits in the broader remuneration and profitability discussion within the sector.
- The CEO of the Phoenix Group, Sven Seidel, highlighted the need for reform in the health-and-wellness sector, specifically in the remuneration rules for pharmaceutical wholesalers, stating that the current outdated structures and shrinking profit margins could potentially impact the supply of prescription medicines.
- The finance sector also plays a role in this discussion, as the German Federal Fiscal Court's recent ruling on the tax implications of parallel imports in the pharmaceutical sector emphasizes the importance of fairly compensating local distributors for their marketing efforts. This ruling indirectly suggests that fair compensation is essential not only for financial stability but also for maintaining the business relationship between local entities and their foreign parent companies in the health-and-wellness industry.
