Pharmaceutical Sector and

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Introduction to the

Pharmaceutical Sector and

Rebate Contracts in Germany

Dr. Frank Verheyen, Director WINEG

Tim Steimle, Head of Pharmacy Department

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General Facts about the pharmaceutical

sector in Germany

 There are ca. 22.000 retail pharmacies in Germany

 only pharmacist are permitted to run pharmacies (a maximum of 4 shops per pharmacist )

pharmacist )

 There are more than 150 000There are more than 150.000

physicians non of which are federally employed

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Further factual information

 Patients can select their own health care provider, healthPatients 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 g g , g g g and special medical devices.

 the expenditures are based on prescriptions written by physicians and individuals licensed to administrier

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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

insurance funds providers, regulated by the

"Spitzenverband Bund" (Central Association of health insurance funds)

 Base of pharmaceutical outpatient care



Medical supply products contract:

pp y p

Contracts between retail pharmacies ( regulated by "DAV„) and different health insurance associations funds (health insurances providers operating on regional or national insurances providers operating on regional or national basis)

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Main Contracts – Pharmaceutical Industry

and Physicians

R b

Rebate contracts:

Contracts between public health insurance funds and pharmaceutical companies:

p p

 rebates on prescription drugs dosages

 rebates for overall turnover

 exceptional rebates agreements p g

Pharmaceutical agreements:

Agreement between different health insurance

i ti f d ( ll f d l t t ) d th "KV" associations funds (all federal states) and the "KV" (Organisations of physicians)

 maximum expenditures for prescription drugsp p p g

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Pricing Regulation in Germany

g

y

 Fixed Prices for prescription drugs regulated by law: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 pricesp

 Fixed margins

h l l ( b t 4% ) d

 wholesaler (about 4% on average) and

 Pharmacies (3% plus 8,10 € per package)

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Reference Price system

y

 Defined price reference for specific drug groupsDefined price reference for specific drug groups

 Price is set by Central Association of Health Insurance Funds y (Spitzenverband Bund der Krankenkassen)

G

 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

 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"y

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General Coverage Regulation Rules

g

Regulations by lawg y

 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

health insurance funds Germany wide

 The costs for test strips, bandaging material, dietaries and special

di l d i d b th bli h lth i f d

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Federal Joint Committee Regulations

g

Regulations by the G-BA (Federal Joint Committee ) Regulations by the G BA (Federal Joint Committee )

 Pharmaceutical Guidelines: legally binding directives

 Regulations

 therapeutic advice/consultations

ti li t i t d t l d d ith

 a negative list is created to exclude drugs with no proven benefit

 exclusion of life-style drugs

 OTC drug exemption list

 OTC-drug exemption list

 usage of off-label drugs

 second opinion

 cost-effectiveness analysis (work in process)

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Rebates

 There are different kinds of rebates (federal and individualThere are different kinds of rebates (federal and individual rebates):

 Fixed :

 from pharmacies: 2,30 € per package

f h ti l i d t t f h l l i

 from pharmaceutical industry: percentage of wholesale prices

 Negotiated: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 drugs and TK expectation is a rebate of ca. 100 million € per annum.

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Savings from Rebate contracts

g

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

a11

in the pharmaceutical contract

The patient saves money with the pharmaceutical generic substitution _________________________________________________

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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

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Pharmaceutical Benefit Management Plan:

Techniker Krankenkasse

Rebate contracts

generics patented drugs

1st stage

generics patented drugs

Starts in 2006

Therapy Optimisation 2nd stage

Medical treatments in cost terms

Starts in 2007

Individual medication management 3rd stage

patients physicians pharmacists

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TK-Arzneimittelverordnungsreport

g

p

Information

_Statistics

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Summary

y

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

3. Customer care extremely important for TK

4. pharmaceutical industry is one of the most highly regulated p y g y g Industries

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Pharmaceutical Sector and

Introduction to the

Introduction to the