IHS Global Insight Perspective | |
Significance | The DAK health insurer has said that Germany's public health insurance deficit could reach 11 billion euro in 2009 as the effects of recession and unemployment take hold. |
Implications | The Health Ministry remains sceptical of these warnings, but tighter control of spending on medicines is a priority to begin with this year. Reports of doctors being bribed to prescribe more costly medications may prompt tougher legislation on the issue. |
Outlook | The GKV health insurance funds are very likely to see a reduction in surplus and possibly a swing into the red in 2009, although 11 billion euro seems a worst-case scenario. |
Health insurer DAK has warned that Germany's public health insurance funds (the GKV) could end 2009 with a collective deficit of up to 11 billion euro (US$15.6 billion) if the current economic downturn continues as expected. Speaking to the Rheinische Post, DAK's Chief Executive Officer Herbert Rebscher said that the GKV funds were already anticipating a year-end shortfall of 3 billion euro, brought on in part through fewer salary-based contributions; he also said that this could rise nearly fourfold by the start of 2010 if unemployment continued to rise. Rebscher warned that imposing additional contributions on GKV patients would be likely in order to contain the losses. GKV healthcare funds currently charge their subscribers a rate of 14.9% per month.
Earlier this year, it was reported that the GKV had made a profit of 1 billion euro during the first quarter, which made their full-year deficit warnings seem like an overreaction (see Germany: 12 June 2009: GKV Health Insurers Record Surprise US$1.4-bil. Surplus in Q1). More recently as well, the DAK's assertions have prompted little sympathy from the Health Ministry, which insists the GKV is well placed to ride out the financial crisis.
The DAK's warning has come as Germany has been rocked by a crisis of confidence in the pharmaceutical sector, after local drug maker Trommsdorff was accused by Der Spiegel of bribing doctors to prescribe its medicines. An ongoing court case against the company has found that at least 480 doctors were bribed with gifts including laptops, televisions, and mp3 players, and more cases are expected to emerge. Trommsdorff's fall from grace has reflected badly on all pharmaceutical companies in Germany, with politicians calling for punitive measures against all drug makers found guilty of similar offences.
Meanwhile, a regional court ruling could have wider implications for one of the government's most important policies aimed at reducing the GKV's drug spending: that of generic substitution. According to Apotheke Adhoc, the ruling states that pharmacists must confirm with the prescribing doctor in cases where the interchangeability of medicines on a prescription sheet is not confirmed. The court in question found that Germany's Social Code was unclear on whether a generic or off-patent drug used as a substitute for a brand-name treatment needs to be interchangeable for all approved indications of the original, or only for the one in which it is been prescribed. The difference is considerable, as the former would mean that only the generic version of the branded drug prescribed could be used to substitute it, rather than a different generic within the same therapeutic class.
Outlook and Implications
The GKV's annual surplus in 2008 had already been more than halved to less than 1 billion euro, and although it remains too soon to tell whether the DAK's 11-billion-euro deficit forecast for 2009 is accurate, it would be unrealistic in the present economic climate to assume that the GKV will retain this level of profit. Neighbouring countries with salary-based funding for healthcare have also begun warning of a sharp increase in deficit this year, with France in particular facing challenging times ahead (see France: 17 June 2009: Healthcare Deficit to Double as Recession Slashes French Insurance Funding).
At a time when there is less money available for reimbursing medical treatment, the Trommsdorff case will heap more pressure on the pharma industry to be more transparent about its marketing and pricing tactics, and could also undermine the patient-doctor relationship. A tightening of state policy on pharmaceutical sales representatives and communications between drug makers and physicians is also likely.
With regards to generic substitution, the regional ruling could potentially work to the brand-name industry's advantage, as confusion over the issue of what constitutes a legally acceptable drug for substituting could help slow the progress of generic substitution. Germany's leading pharma industry associations have been calling the government's attention to this point in recent days, and have spoken of potential safety risks to patients if a better definition of substitutable drugs is not developed.