5.6. Pharmaceutical care

This section explains the distribution of pharmaceuticals, SHI-specific provisions on pharmaceutical spending caps, prescription data and controls on physician prescribing behaviour, as well as expenditure trends in various segments of the pharmaceutical market and current reforms. The process of licensing pharmaceuticals, including them in the SHI benefit catalogue and determining their prices is described in detail in section 2.7.4. Regulation and governance of pharmaceuticals.

5.6.1. The pharmaceutical market (SHI and PHI)

The pharmaceutical industry in Germany is among the most powerful among developed countries and contributes significantly to the export market. In 2018 119 535 people were employed in 364 pharmaceutical-producing companies. The industry recorded a total turnover of €54.0 billion in 2018, €17.6 billion of which was earned in the domestic market and €36.4 billion (67% of turnover) from exports (Statistisches Bundesamt, 2020i).

Looking at production size, Germany ranked third in Europe after Switzerland and Italy in 2016 (European Federation of Pharmaceutical Industries and Associations, 2018). In 2018 €60 billion was spent on medicines, which accounts for 15.4% of total health expenditure. Of the total pharmaceutical expenditure in 2018, 72.2% was spent by SHI, 6.7% by PHI companies, 15.9% by private households’ OOP payments and the remaining 5% by employers and other social security schemes (Statistisches Bundesamt, 2019c).

Around 83% of pharmaceutical expenditure was spent in community pharmacies and 9% within acute hospital care (with the remaining 8% in other sectors, e.g. rehabilitation) (Statistisches Bundesamt, 2019g). The vast majority of the expenditure (88%) within community pharmacies in 2018 was spent on prescription drugs and 12% was OTC medication. In the case of OTC medicines, 81% was spent on self-medication and 19% on OTX drugs (prescribed non-prescription) (Bundesverband der Arzneimittel-Hersteller, 2019).

An analysis of prescriptions is undertaken annually (Pharmaceutical Prescription Report – Arzneiverordnungs-Report) by a sickness fund-affiliated scientific institute. This report is based on virtually all drug prescriptions in the ambulatory care sector, but it does not include prescriptions paid by PHI, drug supply in hospitals or OTC drugs. It can be of value for assessing trends in the prescription behaviour of physicians (Schwabe et al., 2019). In 2018 people covered under SHI were each prescribed an average of 569 defined daily doses (DDDs). Predictably, the prescription rate varied significantly by age, with an average of 76 DDDs among those aged 20–24 and 1742 DDDs among those aged 85–89. Children under 4 received 203 DDDs and people over 90 received 1522 DDDs per year. In 2018 each SHI-affiliated physician prescribed an average of 3123 “ready preparations” in 196 000 DDDs, with an average turnover of €202 700. The greatest number of prescriptions were issued by GPs (49.2%) and internists (20.5%), followed by paediatricians (5.9%), gynaecologists (2.2%) and ophthalmologists (2.0%). In 2018 the average turnover was around €64.91 per prescribed package, the costs varying by specialty from €24.90 for paediatricians, €34.44 for GPs and €65.10 for ear, nose and throat (ENT) physicians to about €473.29 for gastroenterologists and €721.95 for oncologists/haematologists (Schwabe et al., 2019).

5.6.2. Distribution of pharmaceuticals

Pharmaceuticals may be dispensed by hospitals as well as through institutional and “public” (though privately owned) community pharmacies. If pharmaceuticals are not labelled “pharmacy-only”, they can also be sold by drugstores, health food stores, supermarkets, food retail markets and pet shops, but this requires an “expertise examination” (Sachkundeprüfung) to be passed. The responsible Chamber of Industry and Commerce (Industrie- und Handelskammer – IHK) certifies expertise to entrepreneurs, representatives or sales staff by means of an examination according to §50 I of the Pharmaceutical Act (Arzneimittelgesetz) (Industrie- und Handelskammer Karlsruhe, 2020). This applies for vitamins, minerals and some phytotherapeutic products. Excluded from this “expertise examination” regulation are products such as healing waters, products intended for the prevention of pregnancy or sexually transmitted diseases and disinfection products. Pharmacy-only products include all prescription pharmaceuticals and non-prescription items such as OTC drugs (e.g. paracetamol), nicotine-replacement items, homoeopathic drugs and specific alternative medicines. Most pharmaceutical prescriptions are issued in the ambulatory care sector. Community pharmacies sold 1496 million packages in 2018, which included 744 million prescription packages and 752 million pharmacy-only products, with the former accounting for 87.5% of total turnover (Bundesverband der Arzneimittel- Hersteller, 2019).

There were 19 423 pharmacies in 2018, of which 4541 were branches. This equals a density of 23 pharmacies per 100 000 population (or 4274 population per pharmacy). Slight differences can be seen across the states, ranging from 21 pharmacies per 100 000 population in Bremen to 30 pharmacies per 100 000 population in Saarland. The number of community pharmacies in Germany has decreased by 10% over the last 10 years (2008: 21 602 pharmacies) and is now at its lowest level since the mid-1980s (Bundesvereinigung Deutscher Apothekerverbände e.V., 2019).

Overall, 159 141 people worked in community pharmacies in 2018 (i.e. on average eight per pharmacy), of whom 52 048 were pharmacists with an average age of 47; 73.0% of these pharmacists were women. Another 2445 pharmacists worked in one of the 375 hospital pharmacies (Bundesvereinigung Deutscher Apothekerverbände e.V., 2019).

All “public” pharmacies are actually privately owned and operated by self-employed pharmacists who are mandatory members of pharmacists’ chambers. Hospital pharmacies are allowed to deliver certain medications, especially chemotherapies, directly to office-based physicians. Office-based physicians may not dispense medications, with a few exceptions. Pharmacists may run a maximum of four pharmacies, and the three branch pharmacies must be in the same or a neighbouring county as the main pharmacy. Authorized mail order and online pharmacies need to have a mail order licence (§11a Pharmacy Act (Apothekengesetz). They are subject to the same legal requirements and control mechanisms as traditional on-site pharmacies. In 2018, 2899 pharmacies had a licence as a mail order pharmacy (approximately 15% of all pharmacies), but only about 150 operated a serious mail order business.

Mail order services are used predominantly to purchase OTC medicines: in 2018 only 8 million packages of prescription-only pharmaceuticals were sold by mail order pharmacies, generating a turnover of €300 million (compared with 736 million packages in community pharmacies with a turnover of €30 462 million), while a total of 118 million packages of OTC medication were sold via mail order, with a turnover of €910 million (compared to 747 million packages in on-site community pharmacies with a turnover of €4220 million) (Bundesvereinigung Deutscher Apothekerverbände e.V., 2019).

5.6.3. Spending caps and prescription controls in SHI

The German benefits basket includes all licensed prescription pharmaceuticals and there is no positive list of SHI-covered pharmaceuticals. This means that new and often very expensive pharmaceuticals are reimbursed. Therefore, Germany relies on price mechanisms to regulate pharmaceutical care, such as mandatory discounts and internal reference price setting for groups of comparable medicines (see section 2.7.4 Regulation and governance of pharmaceuticals).

The Healthcare Strengthening Act (2015) (see section 6.1 Analysis of recent reforms) obliged each Regional Association of SHI Physicians to define individual target volumes for pharmaceuticals in each respective region and to establish procedures and performance audits (Wirtschaftlichkeitsprüfung) when physicians exceed these target volumes. According to the SHI Care Structures Act (2012), physicians exceeding the target volume by more than 15% and up to 25% are subject to an inspection procedure and advice (a consultation session) is offered. Physicians who exceed the target by over 25% are asked to justify the over-prescription and if their arguments are rejected they may be subject to remedying the situation, which mainly involves paying back an amount to the sickness fund. However, many Regional Associations of SHI Physicians follow the principle of “consultation before remedy”, i.e. if the target volume is exceeded by more than 25% for the first time, no action is taken until at least one personal consultation has been offered. Where a remedy is called for, only the difference between the target volume and the prescribed volume needs to be paid back (Deutsches Ärzteblatt, 2020a, 2020b; Kassenärztliche Bundesvereinigung (KBV), 2020e).

Furthermore, the Regional Associations of SHI Physicians define quotas for the prescription of generics and biosimilars (either minimum or maximum quotas) and physicians meeting these are exempted from performance audits. This policy aims to promote the prescription of generics and biosimilars (Kassenärztliche Bundesvereinigung (KBV) & GKV-Spitzenverband, 2019).

Every SHI-accredited physician is informed about the prescription behaviour of all physicians in their region, based on a federal information system on SHI-covered prescriptions known as GAmSi (GKV-Arzneimittel-Schnellinformation) (GKV-Spitzenverband, 2020a). They also receive a quarterly overview of the aggregate prescription volume of their specialist group in the region and their individual prescription volume. In this way, physicians can adjust their future prescription behaviour according to the provided data. The prescription feedback system, GAmSi, monitors the attainment of negotiated goals. It is based on indicators that have been agreed at federal level and has up to now focused on cost-containment rather than on quality, safety or equity: i.e. it monitors whether there has been an increase in the share of prescriptions as well as turnover from generics and parallel imports or a decrease in the share of disputed drugs and “me-too” drugs (analogous agents with no or only marginal difference from approved agents). In addition, the share of “special preparations” reflects access to high-cost drugs for certain diseases (e.g. for cancer care, AIDS, in reproductive medicine and after organ transplantation).

5.6.4. SHI expenditure and prescription behaviour

The prescription volume according to DDDs amounted to 41.4 billion DDDs in 2018, which represents an increase of 0.1 billion DDDs (+0.3%) compared with 2017 and 9.1 billion DDDs (+28%) since 2008. This means that every SHI insuree, on average, received 569 DDDs – or 1.5 per day – in 2018. The total DDD volume of generic products was 35.8 billion DDDs in 2018, a decrease by 0.4 billion (−1.6%) compared with 2017. The total DDD volume for non-generic products amounts to 2.7 billion DDDs, a decrease of 0.1 billion (−3.5%) since 2017 (Schwabe et al., 2019).

While a DDD of patent-protected pharmaceuticals cost about €4.38 in 2018, generics were only €0.16 based on list prices. Generics amounted to 9.3% of SHI expenditure on pharmaceuticals in 2018, covering 78% of the DDDs (Pro Generika e.V., 2019). Data reveals an increasing readiness among physicians to prescribe generics, amounting to 87% of all prescriptions in 2018 (Schwabe et al., 2019). According to OECD data from 2017, Germany (82.3%) had one of the highest shares of generics (volume) in the reimbursed pharmaceutical market among EU and OECD countries (see Box5.6), only surpassed by the United Kingdom (85.3%). At the same time, the share of generics (value) was 34.6% in Germany, which was below Austria (50.2%) and the United Kingdom (36.2%) (OECD, 2020d).

Box5.6

5.6.5. Current reforms in pharmaceutical care

Current reform plans include a focus on the distribution of pharmaceuticals and aim to improve access to medicines, e.g. via electronic prescriptions, repeat prescriptions, and fair competition between online pharmacies and local on-site pharmacies. The Act for More Safety in the Supply of Pharmaceuticals (2019) (Gesetz für mehr Sicherheit in der Arzneimittelversorgung) aims to facilitate cooperation between federal and state authorities, regulate pharmaceutical manufacturers, provide information to the public about recalls of pharmaceuticals and prepare for the introduction of electronic prescriptions (Bundesministerium für Gesundheit (BMG), 2019c). The Measles Protection Act (2020) (Gesetz für den Schutz vor Masern und zur Stärkung der Impfprävention) (see section 5.1 Public health) introduces the so-called “repeat prescription”, which allows pharmacies to dispense a pharmaceutical up to three times for people who regularly need certain pharmaceuticals (Bundesministerium für Gesundheit (BMG), 2019a), thus supporting the provision of pharmaceuticals to people with chronic conditions. The Strengthening Local Pharmacies Act (Apothekenstärkungsgesetz) was passed by the cabinet in July 2019 and aims at ensuring fair competition between online pharmacies and local on-site pharmacies. Once the Act comes into force, prescription pharmaceuticals must be provided at every pharmacy for the same price for people insured with SHI (fines of €50 000 apply for each violation). Pharmacies may also offer additional services, such as influenza vaccinations and courier services, and the remuneration of night and emergency services will be strengthened (Bundesministerium für Gesundheit (BMG), 2019b).