At Black Swan Analysis we offer you with a robust, transparent and easy-to-use pricing database to help you understand the pricing landscape by seamlessly searching for and comparing pharmaceutical products across European, American and Japanese markets. Our pricing database ‘RxPriceIndex™’ for listing pharmaceutical product prices has recently added German reimbursement prices to deliver powerful insights and up-to-date pricing data to suit your needs. In light with this new development, here is a general overview of the German healthcare system.

A General overview

German citizens have access to free healthcare services provided through around 110 Statutory Health Insurance funds (SHIs).  These provide health insurance without charge to about 90% of the population with the other 10% having private health insurance (Anke-Peggy Holtorf, 2009).  The premiums for the statutory health insurance (GKV) are taken as a percentage from and depending on a person’s wages up to a maximum cap. The SHI system is set up to follow the principle of solidarity, meaning that all members jointly carry the individual risk of the costs of treatments in case of illness. Every member of the SHI, regardless of their income level, has an equal right to medical treatment and continued payment of wages in case of illness.

This system means that Germany features multiple non-governmental insurers rather than a single governmental payer like many other countries. This system favours negation over reimbursement prices rather than the regulation of them. This tends to result in stable or decreasing prices for traditional drugs and increasing prices for new drugs in emerging classes.

Reimbursement

The highest decision-making body in Germany is the Federal Joint Committee (G-BA). It is made up of physicians, health insurance funds and patient advocates. G-BA decides which medicines and services are reimbursed under statutory health insurance (GKV). All new medicines upon achieving market authorisation are initially reimbursed under statutory healthcare. Legislation was passed in 2011 requiring G-BA to regulate reimbursement prices (by GKV) for new active substances when they enter the market (Ulrich Reese, 2018).  

Because manufacturers are free to set market prices at the launch, the healthcare system has implemented several regulations to save costs:

  • General rebate of 7% of the manufacturer’s price to be paid by the pharmaceutical companies to the SHIs for all pharmaceuticals which are not subject to a more specific price regulation.
  • Special rebate of 10% of the manufacturer’s price to be paid by the pharmaceutical companies to the SHIs for generic drugs.
  • Special rebates for vaccines to be paid by the pharmaceutical companies to the SHIs which are calculated based on average prices in the four Member States of the EU with gross national incomes coming closest to Germany’s.
  • Price-freezing until end of 2022 for all pharmaceuticals which have been launched before 1st August 2009 (Martin Wenzl, 2018).

After a drug has had market approval for 3 months, G-BA requires the manufacturers to produce a dossier explaining any benefits of the new drug over a chosen competitor. After 6 months G-BA employs IQwiG (Quality and Efficiency institute) to review this dossier and they make a recommendation on the pricing procedure for that drug (Martin Wenzl, 2018). If the new product shows a marked benefit over a competitor, G-BA will negotiate a reimbursed price for the drug under statutory health insurance. This reimbursement is given in the form of a rebate to the pharmacy by the SHI on the pharmacy price. The price of the drug is set using a ‘Price reference group’ of drugs. This reference group is decided based on:

  •  Products having the same active ingredient
  • Products having pharmacological or therapeutically comparable active ingredient
  • Products having comparable therapeutic effects, including combination products with multiple active ingredients (Ulrich Reese, 2018).

After G-BA has negotiated the reimbursement price, it applies that price as of the 13th month after the initial product launch of the new pharmaceutical in Germany (Martin Wenzl, 2018).

Patent protected products can only be excluded from this reference price system if the manufacturer can prove they have a therapeutic benefit over the other drugs in its group. Orphan Drugs (drugs to treat extremely rare conditions) are assumed beneficial by achieving market authorisation. Drugs without a suitable reference group are priced against the most suitable competitor and if this is not possible, the therapeutic benefit assessments are undertaken when:

  • The drug contains a new active ingredient
  • An existing active ingredient is presented for new indications
  • G-BA requires an updated assessment following new scientific findings about a drug
  • Medicines which have only received a temporary decision and require a permanent one
  • A new combination of existing active ingredients is presented

However, full therapeutic benefit analysis of a drug is only undertaken when its sales are expected to exceed 50 Million EUR (Ulrich Reese, 2018).

How does it work?

All Patients covered with GKV are entitled to the treatment of diseases including any drugs that they require. The patient receives the required treatment and then the SHI fully reimburses the pharmacists. The patient would only need to pay a statutorily regulated co-payment as an out of pocket expense. This right to pharmaceuticals covers all products with a valid market authorisation, and unlike many other countries, the patient’s access to treatment with a pharmaceutical is not dependent on any further approval of pricing and reimbursement.

There are however some restrictions to this rule. Over the counter medicines are generally excluded from reimbursement so must be purchased by the patient. Other pharmaceutical products that are excluded are medicines for minor diseases which are referred to as “trifle pharmaceuticals”, and lifestyle pharmaceuticals which are not designed to treat a condition but to improve quality of life.

The G-BA also has the power to exclude a pharmaceutical from reimbursement or restrict it to specific therapeutic recommendations on the grounds that the therapeutic benefit, medical necessity, cost effectiveness cannot be established or a more cost-effective treatment with equivalent benefit is available. If a pharmaceutical has been removed from the reimbursement scheme it can still be prescribed and therefore reimbursed by the SHI on an individual basis by doctors, if there is a specific medical reason to do so. If not, then the patient must purchase the drug at their own expense. Prescription drugs are reimbursed by health insurance unless included in a negative list.

In Germany all hospital care is fully reimbursed however, in the case of expensive treatments and procedures; for example, use of devices, oncologic therapies or orphan drugs, there exists the possibility that the patient may pay an extra out of pocket expense  in excess of the diagnosis group tariff.

How can we help?

With RxPriceIndex™ we aim to help you make your business decisions clear by offering:

  • International pharmaceutical market overview
  • An intuitive user interface
  • Longitudinal data
  • Robust and transparent data
  • Price types including Ex-factory, wholesaler, pharmacy and retailer prices
  • Monthly updates and continuous analyst support.

The RxPriceIndex™ covers 32 EU markets along with USA, Australia and Japan with plans for further developments.  To request a customised report or a bespoke service, please get in touch with our team of expert analysts at sales@blackswan-analysis.co.uk.

Written by - Edward Capper, Healthcare Analyst, RxPriceIndex™

References

Anke-Peggy Holtorf, K. M. M. N. V., 2009. ISPOR. [Online]
Available at: https://tools.ispor.org/htaroadmaps/Germany.asp#10
[Accessed 08 04 2020].

Martin Wenzl, V. P., 2018. Pharmacautical Reimbursement and Pricing in Germany, s.l.: OECD.

Ulrich Reese, C. K., 2018. Germany. In: E. J. Dougherty, ed. Global Legal Insights - Pricing And Reimbursemt. London: Global Legal Group, pp. 100-111.