Shame on Germany. That's the message Eli Lilly (NYSE: LLY) CEO John Lechleiter took to that country yesterday. Speaking at the Federation of German Industries Conference, Lechleiter made clear that pharma isn't happy with the German government's new austerity tack.

Of course, it's not surprising that drugmakers would be disgruntled with Germany's new prescription price controls. The country is aiming to cut drug spending -- partly through price freezes and mandatory rebates, partly via a new price-negotiation law that allows the Health Ministry to set prices for new meds if pharma and insurers can't come up with their own mutually-agreed-upon numbers.

In criticizing the health reforms, Lechleiter held up that perennial sacred cow: innovation. Whenever drugmakers are unhappy with spending cuts, you can be sure they'll mention it. "In no other place in the world has the environment for innovative pharmaceuticals changed more in the last 12 months than it has in Germany," Lechleiter said, going on to add that the cuts are "jeopardizing the country's legacy of pharmaceutical innovation."

That may be true. But what Lechleiter is really getting at is compromise. As the incoming chairman of PhRMA, Lechleiter will be meeting with German officials over the next week to propose some ways the new pharma-payment rules might be tweaked to be more industry-friendly. "[I]t's vitally important to find ways within that framework to allow patients and the [healthcare] system to benefit from pharmaceutical innovation," he said.

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