It’s an odd, chalk-and-cheese notion: that a typically European, rather socialist form of pricing and reimbursement reform such as AMNOG, Germany’s system of early added-benefit assessment for new drugs, could help drive more free-market-style competition between the country’s statutory health insurance (SHI) funds.
There are signs that it’s happening, though — albeit via a roundabout route. That matters to pharma, since more competition among payers means a more aggressive efficacy drive. That may in turn call for direct contracting with individual drug firms, be it to help generate compelling outcomes data, improve adherence or whatever.
Unlike most other European payers, Germany’s SHIs are awash with cash. That’s in part thanks to an increase in individuals’ health care contribution rate, as a percentage of gross wage, to 15.5% from January 2011. But AMNOG helped too, causing a drop in drug expenditure of 6.5% in the first half of 2011.
This comfortable position means few, if any, SHIs have to charge top-up premiums to their insured in order to cover costs. That means less competition, since, to any individual, all of the 150 or so funds look similar.
But less competition is precisely the opposite of what government has been trying to promote since 2009, with reforms designed to increase pricing transparency and consumer friendliness. Before then, sick funds collected contributions (and any top up premiums) directly from their insured, and it was difficult for individuals to compare the cost of one next to another. After 2009, contributions were pooled within a Central Health Care Fund, and distributed to each insurer at a fixed rate per individual covered, adjusted according to a sickness-related risk-factor. Pricing became more transparent, and it was then blatantly clear to patients what if any premium they were paying on top of the standard contribution. Switching rates increased. And incentives to provide more efficient care did, too. (Those funds with surpluses could return these to their insured in the form of rebates.) A couple of funds went bankrupt.
But now, given the money floating about (thanks at least in part to AMNOG) we risk going back to square one — inefficiencies cushioned by cash surplus.
Perhaps that’s why Germany’s government has recently aired draft plans to subject SHIs to anti-trust laws and more free-market-style legislation, just like any privately-owned enterprise.
It may never happen: Germany’s biggest SHI grouping, AOK, has strongly criticised the plans, drawing on the (paid) expertise of a lawyer to outline what they perceive as the dangers. One of those: preventing, or making far more difficult, precisely the kind of SHI collaboration that’s increasingly required – and which the government is also promoting. (One recent example: building a national cancer registry and introducing a wider screening program.) And perhaps the biggest disincentive to unleashing true free-market conditions on Germany’s SHIs is offered by the US: hardly the beacon of health care efficiency.
Still, regardless of whether health minister Daniel Bahr’s plans ever come to fruition, a couple of things are clear. One: SHIs’ current surpluses won’t last forever. The Federal Insurance Office predicts a doubling in average top-up premiums to E16 per month in 2014, according to Michael Stolpe at the Kiel Institute for the World Economy. Two: The SHIs’ efficacy drive will continue (it has already shrunk their numbers by almost 40% since 2007).
That means that Germany’s sick funds, whether they like it or not, will have to be more open to the kinds of collaboration with individual pharma that the AMNOG laws (coincidentally?) allow them to engage in. Pharma, you should bear that in mind as you tackle Europe’s biggest market: hashing out a price with the sick fund association isn’t the end of it.
image by flickrer poppet under creative commons