Health Care Savings in Our Time

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  • 08/27/2007
Info via the Pink Sheet (in plain text) with comments (in bold) courtesy of

German Health Reform Law Could Shake Up Pharmaceutical Market

Drug companies in the United States and Europe are warily watching a new law in Germany that could change the competitive landscape.

Sure it'll hit their pocketbooks -- but the folks who will really get screwed are patients and physicians.

The legislation - The Act for the Enhancement of Competition in Statutory Health Insurance - includes several provisions aimed at reducing drug costs. Most significantly, the measure requires that cost-benefit analyses be performed on certain drugs, the results of which will be used to set reimbursement ceilings. Drug companies are mainly worried about how these analyses will be conducted.

Worried, but not wondering, because the studies that will be used are the studies that are already being used -- RCTs that were neither designed nor intended to be used for comparative effectiveness purposes.

Other provisions also could change the market. The law, which came into effect in April, requires consumers to obtain a second opinion from a physician to receive prescriptions for drugs that are expensive or have significant risks, and it allows health insurance funds to set up biddings between drug manufacturers with the aim of establishing rebate contracts.

Does this mean a second opinion from the first doc, or does the patient have to seek out and consult with an additional physician? If the former, where's the hammer, if the latter, it's just the latest move to disempower physicians from the appropriate practice of medicine as they see fit.

The GBA (or Joint Federal Committee of Physicians, Dentists, Hospitals and Health Insurance Funds) is responsible for determining which drugs will be subject to reimbursement. Since 2004, it has directed the Institute for Quality and Economy in the Health Care System (IQWiG) to conduct drug benefit analyses. Under the new law, it now will ask the institute to perform cost-benefit analyses for certain drugs. If the IQWiG finds there is an advantage for patients to use a drug, the GBA will allow its reimbursement.

But "advantage" is in the eye of the government, aka "the payor." So, just whose "advantage" do you think takes precedence?

"The idea is to ban all drugs from reimbursement which are more expensive than others but do not have a therapeutic advance," said Ralf-Thomas Hillebrand, a spokesperson for the German Association of Research-Based Pharmaceutical Companies (VFA).

How do you say "incremental innovation" in German?

Drugs that are therapeutically superior to other medicines are not subject to reference pricing.

I'm sure that looks terrific on paper -- as did Mr. Chamberlain's infamous "piece of paper" -- but what percent of medicines do you think are subject to reference pricing in Germany? This is nothing more than health care appeasement -- "health care savings in our time."

The legislation is the latest in a string of German reforms intended to rein in drug costs and bolster the country's public statutory health insurance system - the SHI - which covers about 90 percent of the population. The system is funded through wage deductions.

You mean it's not ... free?

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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