Germany - rising costs
I recently came across a press release from WiDO (Wissenschaftlichen Institut der AOK) which translates as the AOK Scientific Institute. The AOK is the overall association of the German sick funds and it was announcing the publication of a report entitled “Arzneiverordnungs-Report 2006”.
This is an annual report that reviews pharmaceutical spending across Germany and, with typical German thoroughness, the editors did not rush their work since the publication announced at a press conference on 19th October related to expenditures during 2005.
In brief, the authors concluded that pharmaceutical expenditure in 2005 had grown by 17% to Euros 25.4 billion by contrast with the reduction in spending that had taken place in 2004. They attributed two-thirds of the increase to innovative and therapeutically significant medicines in the areas of Cytostatics, Hypotensives and Antibiotics with the remaining third being due to prescribing of expensive “me-too” type of products.
According to the report, German doctors could have saved Euros 1.6 billion by more scientific prescribing and substituting cheaper products for the “me-toos” without any loss of therapeutic quality. In addition, it was suggested that there were potential savings of Euros 1.3 billion from increased use of generics.
Interestingly, the report suggested that the pharmaceutical industry has an excessive influence on the prescribing behaviour of doctors. According to Dr. Dieter Paffrath, one of the authors, “only through independent information – as presented in the Arzneiverordnungs-Report – can a stop be put to the pharmaceutical industry with its army of representatives in the doctor’s surgery”.
Continuing his tirade against Big Pharma, he then went on to say “if it were possible to screw back the influence of the pharmaceutical industry on the prescribing and distribution of medicines, and strengthen the influence of patients on more cost-effective therapies on the other hand, it would be possible to better mobilise the large economic cost savings in the market for medicines”. He does not seem to be shy about indicating where his sympathies lie!
On a related note, he approvingly mentions Great Britain and Sweden where he views the more liberal markets as being conducive to the availability of generics at significantly more favourable prices.
Looking at some facts rather than just prejudices, the generic market in value terms was reported at Euros 11.926 billion representing a 50.6% share as against 48.9% in 2004. At the level of products, the most expensively prescribed product was Durogesic (=Fentanyl) at Euros 306.2 million followed by Pantozol (=Pantoprazole) at Euros 281.2 million. The leading generic product appears to be Omep, a branded version of Omeprazole, at Euros 114.0 million followed by SimvaHEXAL, the Hexal brand of Simvastatin at Euros 110.4 millions.
Continuing the political theme of excessive industry influence, the authors suggested a number of counter measures, amongst which were:
• Independent information about new medicines
• Advertising-free practice software for price comparisons
• Prohibition of sales related payments by pharmaceutical firms to doctors
• No transmission of prescription data from practices to companies
• Ban on handing out of samples to doctors
• Introduction of a positive list in Germany.
The report also looked at pharmaceutical prices in general and generic prices in particular, and concluded, not surprisingly in view of their earlier comments, that German generic prices are no great bargain! As evidence, they cited the example of the cholesterol inhibitor Simvastatin.
According to their research, a pack of 28 tablets of the 20mg strength would cost Euros 2.13 in Great Britain as against Euros 20.95 in Germany – i.e. ten times as dear. In addition, a pack of 100 x 20mg tablets in Sweden costs Euros 8.04 as compared to Euros 31.35 in Germany. They make the interesting and very relevant observation that German manufacturers of generic Simvastatin also offer their products in Sweden at Swedish market prices.
In view of the fact that Marion Caspers-Merk, the German Minister of Health, also attended the press conference to launch the report and spoke very favorably about it, we can reasonably assume that both she and the German government will be studying its conclusions with great interest. It is perhaps indicative that she described the increase in pharmaceutical expenditures as unacceptable.
It is thus also reasonable to assume that we can see additional price cutting measures applies to both the branded and generic industries in 2007 as the German government, like governments everywhere, tries to find more ways of cutting its healthcare costs.
If you have any questions or comments on this article, please do contact me.
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