Sustainability of pharmaceutical expenditures in the German social health care system

  • Background Pharmaceutical expenditure grow strongly in most health care systems. Especially high prices of new drugs are perceived to be driver of growth which might threaten the sustainability of financing drugs. Objective The study aims to analyse a) whether German health policies can achieve sustainable growth of pharmaceutical expenditure, and b) which therapeutic groups fasten and slow pharmaceutical growth based on price and/or volume effects. Methods Annual growth rates of pharmaceutical expenditure in the German social health insurance (SHI) between 2006 and 2018 are compared with indicators reflecting the ability to pay. Annual growth rate in therapeutic subgroups are analysed with respects to volume and price developments. Results Without policies to control pharmaceutical spending, annual growth rates are significantly higher than the growths of indicators of ability to pay. After accounting for the savings from health policy measures, net pharmaceutical expenditure does not grow significantly faster than ability to pay. Policies mainly targeting generic drugs achieve threefold savings compared with policies targeting at patent-protected drugs, although the latter account for more than halve of the expenditure. A limited number of therapeutic subgroups with new drugs grow significantly faster than average expenditure, but this growths is counterbalanced by subgroups which in the end of their innovation cycle and a huge proportion of generic drugs. Conclusion The growths of net drug expenditure in the German SHI does not threaten the sustainability of financing health expenditure based on comprehensive policy measures and innovation cycle effects. Generics do contribute savings to a larger extent. Key points for decision makers: • Germany efficiently uses a comprehensive set of health policies to control drug expenditure in the social health insurance with limited impact on reimbursement. • Net drug expenditure grow on annual rates which correlate to ability to pay and thus do not threaten sustainability of health care financing. • Natural progress of innovation cycles together with targeted policies on patent-protected as well as generic drugs counterbalance exaggerated growth in areas with a high degree of innovation. • Policies targeted mainly on generic drugs yield threefold savings compared with policies targeting on patent-protected drugs. This imbalance should be considered in potential refinements of drug policies.

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Author:Thomas Hammerschmidt
Series (Serial Number):Rosenheim Papers in Applied Economics and Business Sciences (4)
Document Type:Working Paper
Publication Year:2022
Tag:German social health insurance; generic drugs; health policies
Page Number:16
faculties / departments:Fakultät für Angewandte Gesundheits- und Sozialwissenschaften
Licence (German):License LogoCreative Commons - CC BY - Namensnennung 4.0 International