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Reform of Prescription Drug Reimbursement and Pricing in the German Social Health Insurance Market

A Comparison of Three Scenarios

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Abstract

We review regulation of two important parameters for third-party payers and manufacturers of prescription drugs: regulation of reimbursement and pricing. We find that centralised regulation of reimbursement and pricing prevails in the 15 original EU member countries (EU-15) and in European Free Trade Association (EFTA) countries.

Compared with countries such as Switzerland, The Netherlands, France and England, regulation in the German social health insurance system is rather unique. First, market approval is nearly always equivalent to reimbursement. Second, manufacturers are free to determine prices but internal reference prices restrict them from actually doing so for generics and therapeutic substitutes. In order to contain rising expenditures for prescription drugs in Germany, and to set incentives for physicians to consider the costs as well as the benefits of prescriptions, three reform scenarios are feasible.

The first scenario maintains centralised reimbursement and centralised pricing; the second maintains centralised reimbursement but switches to decentralised pricing (similar to social health insurance in Israel and Medicare in the US). Third-party payers would be able to negotiate with manufacturers about discounts and market shares for genetic and therapeutic substitutes. In the third scenario, pricing and reimbursement would be decentralised (similar to private health insurance in the US).

We suggest that the second scenario is a viable compromise between consumer protection and a more competitive and cost-effective market for prescription drugs in German social health insurance and other similar markets for prescription drugs.

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Acknowledgements

This article is based on the results of a research project that was financed by a grant from the German Medicines Manufacturers Association (Bundesverband der Arzneimittelhersteller BAH). The views expressed in this article are solely those of the authors and not the views of the German Medicines Manufacturers Association. The authors have no conflicts of interest to declare relevant to the contents of this paper

The authors would like to thank three anonymous referees for very helpful comments. The authors would also like to thank Amir Shmueli for valuable information on the healthcare system in Israel.

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Authors and Affiliations

  1. Health Services Research and Health Economics, University of Applied Sciences, Marquardstr. 35, 36039, Fulda, Germany

    Stefan Greß

  2. Institute for Health Care Management, University of Duisburg-Essen, Essen, Germany

    Dea Niebuhr & Jürgen Wasem

  3. German Medicines Manufacturers Association (Bundesverband der Arzneimittelhersteller BAH), Bonn, Germany

    Uwe May

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  1. Stefan Greß
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  2. Dea Niebuhr
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  3. Uwe May
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  4. Jürgen Wasem
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Correspondence to Stefan Greß.

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Greß, S., Niebuhr, D., May, U. et al. Reform of Prescription Drug Reimbursement and Pricing in the German Social Health Insurance Market. Pharmacoeconomics 25, 443–454 (2007). https://doi.org/10.2165/00019053-200725060-00001

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