Pharmaceutical Sector and
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2 Introduction to the Pharmaceutical Sector and Rebate Contracts in Germany Dr. Frank Verheyen, Director WINEG Tim Steimle, Head of Pharmacy Department Hamburg, May 2010
3 General Facts about the pharmaceutical sector in Germany There are ca retail pharmacies in Germany only pharmacist are permitted to run pharmacies (a maximum of 4 shops per pharmacist ) There are more than physicians non of which are federally employed 3
4 Further factual information Patients can select their own health care provider, health schemes and other services approximately 30 billion Euros provided for pharmaceutical treatment, including nutritional advice and direct, test strips e.g. blood-glucose, bandage material e.g. dressing material and special medical devices. the expenditures are based on prescriptions written by physicians and individuals licensed to administrier 4
5 Main Contract - Pharmacies Framework contract: Contracts between retail pharmacies (regulated by the DAV" German Pharmacist Association) and all health insurance funds providers, regulated by the "Spitzenverband Bund" (Central Association of health insurance funds) Base of pharmaceutical outpatient care Medical supply products contract: Contracts between retail pharmacies ( regulated by "DAV ) and different health insurance associations funds (health insurances providers operating on regional or national basis) Details of pharmaceutical outpatient care 5
6 Main Contracts Pharmaceutical Industry and Physicians Rebate contracts: Contracts between public health insurance funds and pharmaceutical companies: rebates on prescription drugs dosages rebates for overall turnover exceptional rebates agreements Pharmaceutical agreements: Agreement between different health insurance associations funds (all federal states) t and the "KV" (Organisations of physicians) maximum expenditures for prescription p drugs regulations regarding prescription statistics 6
7 Pricing Regulation in Germany Fixed Prices for prescription drugs regulated by law: price consistency in every pharmacy same prices for public and private health insurance providers Pharmaceutical Companies have to sell prescription drugs at the same wholesale prices Fixed margins wholesaler l (about 4% on average) and Pharmacies (3% plus 8,10 per package) 7 78 Abs. 3 Arzneimittelgesetz (AMG)
8 Reference Price system Defined price reference for specific drug groups Price is set by Central Association of Health Insurance Funds (Spitzenverband Bund der Krankenkassen) The Drug groups and prices are regularly reviewed by the G- BA (Federal Joint Committee) The reference prices are based on Market trends allowing for a sufficient supply. Over the last 20 years, 30 billion has been saved in the public health insurance sector by the "Reference Price System" 8
9 General Coverage Regulation Rules Regulations by law As a rule public health insurance funds cover prescription drugs The same prescription and OTC drugs are covered by the public health insurance funds Germany wide The costs for test strips, bandaging material, dietaries and special medical devices are covered by the public health insurance funds 9
10 Federal Joint Committee Regulations Regulations by the G-BA (Federal Joint Committee ) Pharmaceutical Guidelines: legally binding directives Regulations therapeutic advice/consultations a negative list is created to exclude drugs with no proven benefit exclusion of life-style drugs OTC-drug exemption list usage of off-label drugs second opinion cost-effectiveness analysis (work in process) 10
11 Rebates There are different kinds of rebates (federal and individual rebates): Fixed : from pharmacies: 2,30 per package from pharmaceutical industry: percentage of wholesale l prices Negotiated: from pharmaceutical companies: For example the TK has rebate contracts with pharmaceutical companies that produce generic drugs and TK expectation is a rebate of ca. 100 million per annum. 11
12 Savings from Rebate contracts Pharmacist are required to substitute the generic prescription based on the contractual agreement with the health insurance provider and the pharmaceutical company Doctors gain an indirect financial advantage when they substitute to the generic brands, stated in the pharmaceutical contract The patient saves money with the pharmaceutical generic substitution a11. For this reason pharmaceutical firms are willing to provide higher rebate allotments on generic drugs per year. Based on demand the expectation of the provider is to save ca. 1bn per annum 12 Illustration by Federal Ministry of Health
13 Pharmaceutical Benefit Management Plan: Techniker Krankenkasse 1st stage Starts in 2006 Rebate contracts generics patented drugs 2nd stage Therapy Optimisation Starts in 2007 Medical treatments in cost terms 3rd stage In process Individual medication management patients physicians pharmacists 13
14 14 Rabattflyer
15 TK-Arzneimittelverordnungsreport Information Statistics 15
16 Summary 1. Contracts in general leave little room for individuality 2. Pharmaceutical Benefit Management is at its beginning stages 3. Customer care extremely important for TK 4. pharmaceutical industry is one of the most highly regulated Industries 16
17 Thank you for your attation!
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