Germany's Federal Ministry of Health has announced its decision to maintain the existing price moratorium on reimbursed medicines not included in reference-pricing groups, as well as the existing mandatory discounts on reimbursed medicines. The German Pharmacists' Association has estimated that statutory health insurance funds increased drug reimbursement spending by 5% year on year in 2015.
IHS Life Sciences perspective | |
Implications | The government has to consider the appropriateness of maintaining the price freeze and discounts each year. It justified its decision to maintain them on the argument that to lift them would result in a considerable increase in spending, an increase well above the 5% y/y increase estimated by the German Pharmacists' Association. |
Outlook | With other areas of pharmaceutical pricing and reimbursement regulations also under scrutiny, the government is unlikely to change the mandatory discounts and price freeze if it decides not to implement major changes elsewhere – that is, to the benefit assessment system. |
MoH decides to maintain existing discounts and price freeze
Germany's Federal Ministry of Health (MoH) has decided to maintain the price freeze on reimbursed medicines that are not included in reference-pricing groups, as well as to continue the existing mandatory discount of 7% on the ex-factory price of these treatments and that of 6% on the price of drugs within the groups. This applies to drugs reimbursed by statutory health insurance (GKV) funds, as well as private funds. According to Deutsche Apotheker Zeitung, the decision was announced in the German Federal Register (Bundesanzeiger) on 29 January. Under the applicable legislation, the government is required to assess the appropriateness of the price freeze and mandatory discounts every year. Therefore, the Federal MoH's decision follows its assessment of the various views on the subject from the GKV funds and the pharmaceutical industry, among others.
Lifting measures would mean a spending surge, says MoH
Deutsche Apotheker Zeitung reports that the main justifications provided by the Federal MoH for its decision were the fact that to abolish these measures would result in a considerable increase in spending, and a consequent increase in the additional contribution required from citizens for statutory health insurance, and that it was considered that pharmaceutical companies would not be disproportionately adversely affected by the measures being maintained.
BPI argues to the contrary
However, responding to the announcement of the measures being maintained, Henning Fahrenkamp, the managing director of the German Pharmaceutical Industry Association (BPI), is reported in a BPI press release as stating that a lifting of the measures would be more appropriate in the current situation. He pointed to the financial cushion of the GKV funds, which he estimated at EUR15 billion (USD16.4 billion), and argued that the pharmaceutical industry had contributed considerably to the stabilisation of the finances of GKV funds during the past few years. This includes savings due to the price moratorium of approximately EUR6.9 billion per year, according to Fahrenkamp, quoting figures from the German National Association of Statutory Health Insurance Funds.
Once again, the BPI argued that the price freeze was unfair considering that staff and raw material costs were rising while the prices of the products in Germany remained the same. In its press release, the BPI asked rhetorically whether there was another industry in which such a price freeze had lasted for six and a half years.
DAV estimates 5% y/y increase in reimbursement spending in 2015
Separately, the German Pharmacists' Association (DAV) has recently published data on pharmaceutical reimbursement spending by the GKV funds in 2015. This is not based on official data from the Federal MoH, but it provides a fairly accurate indication of those when they are released later in the year. The DAV estimates that the funds increased spending on drug reimbursement by 5.0% year on year (y/y) to EUR32.9 billion in 2015,. Furthermore, it estimates that the number of prescriptions issued to the account of GKV funds, including those for drugs, formulations, and medical devices, was 749 million, which was just 0.1% higher than in 2014.
According to the DAV data, one important factor in the growing cost of pharmaceutical reimbursement was a sharp increase in the amount spent on new medicines for the treatment of the hepatitis C virus (HCV). According to early DAV analyses, reimbursement of these drugs amounted to approximately EUR700 million more than in the previous year.
Outlook and implications
The price moratorium and elevated mandatory discount (previously at 6% for all medicines) were introduced in August 2010. Although there is no date envisaged for the removal of the mandatory discount, the price moratorium is due to expire at the end of 2017. Considering the recent conclusion of the 'Pharma Dialogue' between the government and the pharmaceutical industry, during which the GKV funds argued that the year of free pricing available to producers of innovative drugs under the current benefit assessment system should be abolished because of the excessive costs it incurred for the funds, it could be suggested that the ongoing mandatory discounts and price freeze are a "counterbalance" to this free-pricing period (see Germany: 1 February 2016: Germany's "Pharma Dialogue" reaches conclusion, regulatory changes likely to follow).
The DAV's estimate of the GKV funds' reimbursement spending is a reminder of the effectiveness of the mandatory discounts and price freeze. In 2014, GKV reimbursement spending increased by over 10% y/y, but half of this growth was due to the reduction in the mandatory discount from 16% to 7% from April of that year (following a short period at 6% between January and April). Therefore, if the mandatory discount and price freeze were to be lifted, growth in GKV drug spending could increase well into double figures.