|Implemented in this survey?|
The German government has presented a draft bill designed to reorganize the regulatory framework for pharmaceuticals and cut growing expenditure on drugs. The reform targets both generic and patented drugs by reinforcing rebate contracts and imposing price negotiations for patented drugs manufacturers. In addition, the roles of the Federal Joint Committee and of the Institute for Quality and Efficiency in Health Care will be strengthened to include the benefit assessment of new drugs.
Germany is one of the few EU countries where pharmaceutical companies are largely free to set their own prices for drugs. While the price-setting of older drugs, especially those subject to generic competition (but since 2004 in principle also patented ones without added benefit), is managed relatively successfully through the reference price system (see below), the system of free pricing for innovative pharmaceuticals has been increasingly seen as a major obstacle to reducing pharmaceutical expenditure in Germany, where average prices are higher than in most other European countries. In 2009, Statutory Health Insurance (SHI) spending on pharmaceuticals reached 32.4 billion euros or 18% of total SHI expenditure.
Patented drugs which have not been assessed with regard to their added benefit - and therefore not subject to reference-pricing - are main cost drivers. While SHI expenditure on drugs excluded from the reference pricing system rose by 8.9% in 2009, expenditure on pharmaceuticals within the reference pricing system decreased by 2% compared to the previous year. Expensive branded pharmaceuticals for special treatments accounted for 26% of sickness funds' expenditure, while their share in the total number of prescriptions was only 2.5%.
To curb prices, in June 2010 Parliament passed the first batch of the government's pharmaceutical cost control measures as part of the Act to Amend SHI Relevant and Other Regulations. This comprised a three-year freeze on pharmaceutical prices (technically only for the SHI, i.e. not affecting private health insurance) and an increase from 6% to 16% in the mandatory rebate SHI imposes on manufacturers of pharmaceuticals outside of the reference pricing system. These measures apply during the period from 01.08.2010 to 31.12.2013. The resulting savings for the SHI are expected to reach € 1.15 billion annually.
The additional reform proposal (Act to Reorganize the Pharmaceutical Market in the SHI), presented by the governing coalition in June 2010, includes further steps. Whenever a new pharmaceutical is launched on the market, pharmaceutical companies would be obliged to produce a scientific dossier demonstrating its therapeutic benefit and especially its added benefit compared to treatment alternatives. Taking into consideration the dossier submitted by the pharmaceutical company, the Federal Joint Committee then evaluates the benefits and added benefits of the new pharmaceutical. In this context, the Federal Joint Committee may commission the Institute for Quality and Efficiency in Health Care (IQWiG) to review the dossier and the claims made. The assessors shall be legally entitled to receive and review the licensing documents as well. Within three months the Federal Joint Committee publishes its assessment report on the internet.
Following hearings with experts and the drug manufacturer, the Federal Joint Committee takes a decision within three months of the publication of the assessment report. Based on that decision, one of two courses of action will follow:
Pharmaceutical companies, Sickness funds, The insured
|Degree of Innovation||traditional||innovative|
|Degree of Controversy||consensual||highly controversial|
|Structural or Systemic Impact||marginal||fundamental|
|Public Visibility||very low||very high|
In October 2009 a new coalition government between the Christian Democratic Union/Christian Social Union (CDU/CSU) and the Free Democratic Party (FDP) came into power. The reorganization of the pharmaceutical market was not the top priority of the new health minister, who pledged to fundamentally reform the health financing system (see "Health Policy in Germany after the Election"). While a reform of the health financing system is disputed not only by the opposition, but more importantly within the Coalition - and which therefore will be much less structural than proposed by Minister Rösler - , the minister somewhat surprisingly turned his attention to the issue of rising pharmaceutical prices which allegedly undermine the financial sustainability of the SHI. Even though pharmaceutical expenditure is not the only cost driver, drugs were apparently an easier target than payments to physicians which increased considerably as a result of the previous reform. A number of sickness funds, which were not able to cover their costs with the funds allocated to them, are already forced to levy surcharges - and three sickness funds have already notified the Federal Insurance Authority of a threatening insolvency.
Germany is the third largest pharmaceutical market in the world and the largest in Europe. The SHI spends roughly a fifth of its budget on pharmaceuticals. In 2009, pharmaceutical spending rose by 5.3%, a 1.5 billion euro increase compared to 2008. With patented pharmaceuticals being identified as the main growth driver for this, the reform not surprisingly focuses on producers of patented drugs.
|Implemented in this survey?|
The regulatory framework for pharmaceuticals in many countries includes a post-licensing benefit assessment and a governmental decision making on pricing and reimbursement - or at least negotiations based on the assessment. Germany is one of the few EU countries (along with Malta and Denmark), where the pharmaceutical companies can freely set the prices of pharmaceuticals. The growing expenditure on pharmaceuticals has been a major concern for policy makers in Germany over the recent years. Hence, the pharmaceutical market has been increasingly targeted by various regulations, focusing on both the supply and the demand side, using price, volume and spending controls.
Specific regulations include price reductions, reference pricing, pharmacy and industry rebates for sickness funds, increasing co-payments, an 'autidem' substitution, parallel imports, a negative list, guidelines, and spending caps for pharmaceutical expenditure per physician/physicians' association (Busse at al., 2005). The obligation for manufacturers to negotiate the price of a pharmaceutical product with the sickness funds is a new measure to contain costs.
As currently licensing agencies (national institutions and the European Medicines Agency EMA) do not systematically assess a new pharmaceutical's therapeutic added value, many countries make post-licensing evaluation of pharmaceuticals a prerequisite for reimbursement or pricing decisions. Usually an explicitly designated pharmaceutical review body is involved in the assessment, either as an adviser who makes recommendations to a national or regional government, a ministerial department or a self-governance body or as a decision-maker responsible for the listing or pricing of pharmaceuticals.
The information required on pharmaceutical evaluation procedures and methods varies among the countries. Most often, a pharmaceutical's therapeutic benefit compared with treatment alternatives determines the evaluation. A pharmaceutical is classified as offering a therapeutic improvement if it demonstrates an improved benefit- / risk-profile compared to treatment alternatives.
Most countries perform a comparative pharmacoeconomic evaluation to analyse costs caused by a pharmaceutical intervention in relation to its benefit. In the case of therapeutic equivalence the pharmaceutical is either not accepted for public reimbursement or it is subject to a reference pricing system (or even reduced prices compared to competitors). However, there is international consensus that a pharmaceutical therapy with a benefit-/ risk-profile worse than other therapies should not be reimbursed, even if the costs are lower.
In some countries, evaluation is based on submissions by manufacturers, which include literature reviews and analyses of clinical and economic studies. Responsible institutions have published guidelines to outline the methodological requirements for manufacturers and reviewers which vary in level of detail. In other countries, review bodies perform a systematic and comprehensive literature synthesis themselves and independently from manufacturers (Zentner at al. 2005).
Government: The new coalition government agreed on the reform measures, hoping to achieve savings and strengthen the financial basis of the SHI. In June 2010 Parliament adopted the Act to Amend SHI Relevant and Other Regulations and the government presented a draft law aiming to reorganize the regulatory framework for pharmaceuticals in the country (Act to Reorganize the Pharmaceutical Market in SHI).
Pharmaceutical industry: Representatives of the pharmaceutical industry criticize the reform measures on the grounds that they are harmful to innovation and employment, and point to the huge investment in research and development that each new pharmaceutical requires. They complain that the legislation would give the Federal Association of Sickness Funds too much power in negotiations. This, according to the German Association of Research-oriented Pharmaceutical Companies (VFA), creates a "demand monopoly," and is hence "the opposite of competition." The VFA prefers measures that would allow pharmaceutical companies to deal with individual sickness funds. Pro Generika, which represents the interest of generic pharmaceutical makers, has complained that the new policies are the direct opposite of the deregulation advocated by the government.
Payers: The German sickness funds are in favour of the cost-control measures but they are concerned that pharmaceutical companies could enter into negotiations proposing excessively high prices in order to achieve the price they had in mind post-discount.
Scientific body: Some experts from the opposition parties would like to see cost-effectiveness assessments carried out before the pharmaceutical is even put on the market and avoid negotiations altogether. They do not expect price negotiations to reduce costs significantly.
Consumer organizations: The Federation of German Consumer Organizations prefers patients to get new treatments as fast as possible and believes assessments prior to the launch of a pharmaceutical could be counter-productive. They want the assessment of a new pharmaceutical to happen as soon as possible after it has been released.
|Ministry of Health||very supportive||strongly opposed|
|Parliament||very supportive||strongly opposed|
|Sickness funds||very supportive||strongly opposed|
|Patients, Consumers||very supportive||strongly opposed|
|Private Sector or Industry|
|Pharmaceutical Companies||very supportive||strongly opposed|
|Ministry of Health||very strong||none|
|Sickness funds||very strong||none|
|Patients, Consumers||very strong||none|
|Private Sector or Industry|
|Pharmaceutical Companies||very strong||none|
The government expects that the measures will save the SHI € 1.7 billion in 2011 and up to € 2 billion in subsequent years. However, some experts do not believe that price negotiations will reduce costs considerably. They predict that the pharmaceutical firms will simply start negotiations with a price already in mind, prices that already have a discount factored in. That is why some experts would like to see assessments carried out before the pharmaceutical is even put on the market and avoid negotiations altogether. That the concerns of critics are indeed well-founded is underlined by the experience that some pharmaceutical companies raised prices by exactly the amount of the increased mandatory rebate just two weeks before the latter came into effect on August 1, thereby effectively circumventing any price reduction.
Other experts warn that the legislation might shatter one of the most profitable pharmaceutical markets in the world. They warn that pharmaceutical companies can expect a significant drop in prices, and this will affect revenues both in Germany and elsewhere, as Germany is a reference country for most European states.
International reference pricing is expected to play an important role in price negotiations. From 2011 onwards, prices in the United Kingdom and in France are most likely to be the basis for the determination of price levels in Germany. Germany, in turn, is a reference for many European countries. The reform will therefore not only have a significant impact in the country but also in Europe where Germany, along with France and the United Kingdom, is considered one of the most influential reference countries in terms of pricing.
|Quality of Health Care Services||marginal||fundamental|
|Level of Equity||system less equitable||system more equitable|
|Cost Efficiency||very low||very high|
Busse R, Schreyögg J, Henke KD (2005): Pharmaceutical regulation in Germany: improving efficiency and controlling expenditures? International Journal of Health Planning and Management 20(4): 329-49
Federal Ministry of Health (2010): Entwurf eines Gesetzes zur Neuordnung des Arzneimittelmarktes in der gesetzlichen Krankenversicherung.
OECD (2008): Pharmaceutical pricing and reimbursement policies in Germany. OECD health working papers No. 39. Schwabe U, Paffrath D (2009): Arzneiverordnungsreport 2009. Springer Medizin Verlag, Heidelberg.
Stargardt T, Busse R, Dauben H-P (2008): Pharmaceutical Pricing and Reimbursement Information Project. Germany 2008. Commissioned by European Commission, Health and Consumer Protection Directorate-General and Austrian Ministry of Health, Family and Youth.
Zentner A, Valesco-Garrido M, Busse R (2005): Methoden zur vergleichenden Bewertung pharmazeutischer Produkte. Deutsches Institut für Medizinische Dokumentation und Information, Köln. Executive summary in English at: http://portal.dimdi.de/de/hta/hta_berichte/hta122_summary_en.pdf
Ognyanova, Diana; Busse, Reinhard