Health care reform and pharmaceutical policies in Germany Prof. Dr. med. Reinhard Busse, MPH
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1 Health care reform and pharmaceutical policies in Germany Prof. Dr. med. Reinhard Busse, MPH Department of Health Care Management/ WHO Collaborating Centre for Health Systems, Research and Management, Berlin University of Technology & European Observatory on Health Systems and Policies
2 Decision making in German SHI Legislation Parliament Federal Ministry of Health Supervision Patient 150,000 ambulatory care physicians and psychotherapists Federal Association of SHI Physicians (KBV) 132 sickness funds German Hospital Federation (DKG) 2,000 hospitals Federal Association of fsickness Funds Federal Joint Commitee (G-BA) Members: 13 voting 3 neutral + 5 sickness funds + 5 providers (+ up to 5 patient representatives) Statutory Health Insurance (insures 85% of population)
3 Objectives of Federal Joint Committee Main functions: to regulate SHI wide issues of access, benefits and quality (and not primarily of costs or expenditure) e) Normative function of the G BA by legally binding directives ( sub law ) to guarantee equal excess to necessary and appropriate services for all SHI insured Benefit package decisions must be justified by an evidence based process to determine whether services, pharmaceuticals or technologies are medically effective in terms of morbidity, mortality and quality of life By law, evidence based assessments can only be used to select the most appropriate (efficient) service etc. from others not to prioritize among service areas: if a costly innovation has a significantadditional additional benefit, the sickness funds must pay for it
4 G BA: support through institutes Legislation Parliament Federal Ministry of Health Supervision Patient 150,000 ambulatory care physicians and psychotherapists Federal Association of SHI Physicians (KBV) 132 sickness funds German Hospital Federation (DKG) 2,000 hospitals Federal Association of fsickness Funds Federal Joint Commitee (G-BA) Institute for Quality and Efficiency in AQUA Institute for Quality Healthcare (IQWiG) technologies focused on providers Statutory Health Insurance
5 (Almost) all licenced drugs are reimbursable in Germany s statutory health insurance (SHI) directly after market authorization No positive list but totc and life style tl drugs excluded by law since 2004 (G BA decides exceptions and details) Steering of usage through supply and demand oriented measures, partly legally demanded, partly decided by G BA (e.g. Prescription directive, grouping of drugs)
6 Pharmaceutical policies until 2006 Patient co payment, differing by pack size ( 2003) and price (2004 ) National SHI wide reference prices for (i) drugs with same compound (i.e. original plus generics) and (ii) drugs with comparable effectiveness Hard budgets (actually prescription caps) for physicians associations ( but not thereafter) and softer targets for individual practices since 2002 ( incentivize i generic substitution) btit Substitution rights for pharmacists ( generics) Parallel l imports ( price pressure on German prices) Mandatory rebates for sickness funds ( lower total t pharmaceutical expenditure)
7 Distribution channels in German pharmaceutical market Ex factory price Wholesale max. price Pharmacy price Community pharmacy Manufact turer Wholesaler Mail order pharmacies Patien nt Hospital Originally: i manufacturer set ex factory price but regulated mark ups and requirement for uniform pharmacy price Now: indirect regulation of prices (reference price/ reimbursement amounts) plus ability of sickness funds to get discounts
8 Distribution channels in German pharmaceutical market Ex factory price Wholesale max. price Pharmacy price Community pharmacy Manufact turer Wholesaler Mail order pharmacies Patien nt Hospital Originally: i manufacturer set ex factory price but regulated mark ups and requirement for uniform pharmacy price Now: indirect regulation of prices (reference price/ reimbursement amounts) plus ability of sickness funds to get discounts
9 Pharmacy mark up reform 2004: from decreasing percentage to fixed amount (+ 3%) mark up [ ] Pharmacy Pharmacy mark up Ex factory price (without wholesaler mark up and VAT) [ ] Until 2003 Since 2004
10 100% 90% 80% 70% 60% Distribution of final pharmacy price (2010) VAT Umsatzsteuer Rebate pharmac. SHI GKV-Rabatt Apotheke Pharmacies Apothekenanteil Wholesalers Großhandelsanteil Rebate manuf. SHI GKV-Rabatt Hersteller 50% Herstellerpreisanteil Manufacturer 40% 30% 20% 10% 0% Apothekenverkaufspreis in Euro Pharmacy price [ ]
11 Reference prices = limits of SHI reimbursement At least 30% Surcharge (100% of price above RP) Reference price (RP) Co payment (10% up to RP, min. 5, max. 10) SHI reimbursement Patients co payment Patients surcharge
12 The most famous exampleof a drug for which hthe manufacturer did not decrease the price to below the RP
13 High percentage of generics (in eligible market)
14 as well as in total market (2011)
15 Prices came down
16 but total pharmaceutical expenditure continued to increase (by around 7%/ year) Prescription caps Turnover Co payment by pack size OTC exclusion Prescriptions
17 Pharmaceutical policies since 2007 Pharmaceutical policies until 2006 Public procurement discount contracts between (individual) sickness funds and manufacturers Cost benefit evaluation ofdrugs ( ; intended to determine reimbursement ceilings for new drugs) IQWiG s efficiency frontier Mandatory assessment of additional benefit over comparators for all new drugs (except orphans) since 2011
18 Public procurement discount contracts Individual sickness fund (or group of sickness funds) announces that it seeks a manufacturer to supply a certain substance to its insured Winning manufacturer gets monopoly for that substance, i.e. no choice for patient t or pharmacist; prescribing physician may rule out discounted drug Discounts remain undisclosed (not visible to pharmacist, competing sickness funds/ manufacturers orpublic) Firstrounds rounds ofprocurements wereignored by large manufacturers turn over by small Indian/ Israeli... manufactures increased drastically
19
20
21
22 The contents of the Pharmaceutical Market Restructuring Act (2011) I All new drugs (incl. extended indications) are assessed in regard to their additional benefit directly after launch (comparator[s] given by G BA) Drug is immediately reimbursable (at price set by manufacturer) actu Latest upon licencing, manufacturer has to submit dossier which is used by G BA (which usually commissions IQWiG) for assessment within 3 months; assessment report is published
23 Licenced indications Medical/ therapeutic benefit Additional medical/ therapeutic benefit compared to a appropriate comparator, possibly for different sub groups Number of patient groups and patients for which an additional benefit (or no alternative) exists Costs to SHI (per year and patient) Requirements for high quality usage
24 The contents of the Act II G BA decides on benefit and its classification i within ihi another 3 months (manufacturer may challenge after 1 yr) If no additional benefit immediate inclusion into reference price scheme (if possible) If additional benefit Federal Association of SHI Funds and manufacturer negotiate reimbursement amount within 6 months of G BA decision (officially rebate on manufacturer s price which may remain unchanged important for international comparisons)
25 Major additional benefit Important additional benefit Minor/ moderate additional benefit Possible additional benefit, but not quantifiable from available evidence No additional benefit Additional harm > benefit
26 The contents of the Act III If no agreement, arbitration body sets price (valid from month 13) Both sides may challenge this price and demand formal cost benefit analysis through G BA G BA needs to do scoping workshop before determiningbenefitdimensions dimensions, comparatoretc. G BA may agree with manufacturer on additional studies in real life settings (preferably within ihi Germany) to be conducted within 3 years
27 I II III Source: Henschke/ Sundmacher/ Busse, Health Policy 2013
28 Classification of additional benefit (first 27 substances; best subgroup if several) Dossier incomplete 7 Major 0 Important 5 No ( RP) 2 Harm > benefit 0 Not quantifiable 3 No 1 Minor 9
29 Unsurprisingly, ii manufacturers disagree (classification manufacturer vs. G BA; all sub groups) 83% 60% 27% 0% Major Important Minor Not quantifiable No Harm > benefit Not assessed
30 Overall groupingalgorithm since 2011 (with many drugs still on patent, t but licenced before 2011, still excluded) p Drug is included in benefit basket (reimbursable by SHI) Under patent protection Off patent Additional benefit? generally Yes No Can be RP grouped? Noreference pricegrouping i Negotiated/ set reimbursement sums (rebate on manufacturer s price) No Price setting without additional cost to comparator Yes Rf Reference pricegrouping i
31 Pharmaceutical policies: evaluation and reimbursement Source: Henschke/ Sundmacher/ Busse, Health Policy 2013
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