Pharmaceutical Pricing and Reimbursement Policies in Germany. OECD Health Working Papers, No. 39, 2008. OECD Publishing
(2008; 66 pages)

Abstract

This paper describes pharmaceutical pricing and reimbursement policies in Germany, considering them in the broader environment in which they operate, and assesses their impact on the achievement of a number of policy goals. Pharmaceutical coverage is comprehensive, with a high level of public funding, and ensures access to treatments. However, recent increases in out-of-pocket payments may impair affordability for the poorest part of the population. Germany does not regulate ex-manufacturer prices of pharmaceuticals at market entry (though distribution margins are regulated for reimbursed drugs). On the other hand, maximum reimbursement amounts (known as reference prices) are set for products which can be clustered in groups of equivalent (generic) or comparable products. Maximum reimbursement amounts are in effect for a large part of the pharmaceutical market covered by statutory health insurance funds (representing 44% of value and 70% of volume in 2006), putting pressure on prices of clustered products. In addition, across-the board price reductions or freezes have occurred on several occasions, and rebates have been regularly imposed on manufacturers. These measures, along with incentives influencing physicians’ prescriptions, have helped Germany to contain the growth of pharmaceutical expenditures. All the same, German pharmaceutical prices have been found to be among the highest in OECD, both for patented and generic drugs, when considered at either the ex-manufacturer or the retail level. The 2007 reform introduced two important changes with the aim of ensuring value for money in pharmaceutical expenditures. First, statutory health funds are allowed and encouraged to contract with manufacturers to obtain lower prices in exchange for a "preferred status" for their drug on their formulary. Second, the Institute for Quality and Efficiency in Health Care will assess the benefits and costs of new drugs with the aim of capping reimbursement prices of new entrants if necessary to ensure that their use is not less efficient than existing therapies. Though these reforms may encourage price erosion in some market segments, they will not address all issues: health insurance funds will remain price takers for new drugs without therapeutic alternatives and losses in transparency will be significant.

 
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