The new plan foresees strict regulations of the pharmaceutical industry, going well beyond suggestions made recently by Health Minister Philipp Rösler, who has already threatened the pharmaceutical industry with mandatory price cuts for common medications. The minister’s pro-business Free Democrats (FDP) are junior coalition partner to Chancellor Angela Merkel’s conservatives.

“Our recommendations are a good basis for discussion with our coalition partner,” said CDU parliamentarian Jens Spahn.

Under the proposal developed by the CDU and its Bavarian sister party the CSU, medication costs that are well above the international average price would be capped. Drugs still under patent would be subject to high mandatory discounts, which must be guaranteed by health insurers.

The plan would also call for the pharmaceutical industry to refund money earned through the sale of overpriced drugs.

As public health insurers tackle rising expenses, the CDU hopes the new plan will ease insurers’ financial problems, including ballooning debt levels. According to the German Federal Insurance Office, public insurers face a deficit of up to €15 billion in 2011.

The CDU also hopes drug companies will opt for negotiations with the GKV National Association of Statutory Health Insurers. Health Minister Rösler prefers that discussions take place with individual insurers.

In an interview with daily Bild last Wednesday, the 37-year-old trained physician said he would require drug firms to negotiate with public health insurers “as soon as possible” to lower prices for medicines.

“I always said that I would take a hard approach to the pharmaceutical industry and their prices,” he told the paper.

The CDU will meet with the FDP to discuss the proposal next week.

“Our goal is to get to the key points as quickly as possible,” said CDU politician Johannes Singhammer. But slashing medication prices should not come at the expense of quality care, he said.

The price freeze on drugs would be put in force quickly, according to the Süddeutsche Zeitung report. Mandatory discounts and a broad comparison of German medication prices with the international standard would begin next year.

The 10-percent increase in mandatory discounts on drugs, from 6 to 16 percent, could potentially save €1.1 billion.