gms | German Medical Science

Introduction: The therapeutic reference price system (RP) in Germany is regarded as a successful mechanism to reduce pharmaceutical spending. However, price directed measures such as the so-called payer contracts (pharmaceutical tender contracts (TC)) interact with the reference price mechanism. The effects of both instruments on pharmaceutical price, volume and expenditure for substances at the period around loss of exclusivity are analyzed.

Methods: A group of frequently prescribed drugs with patent expiry (p.e.) between 2001 and 2008 are investigated and the sales and unit data utilized in the statutory health insurance system are analyzed for a period one year before and 2 years post generic entry (g.e.).

Results: The data shows for the group with reference price and no tender contract (RP+/TC-) and the group with no reference price but tender contracts (RP-/TC+) similar levels of price decrease in the period 2 years post g.e. If both mechanisms to control costs are applied (RP+/TC+), the price reduction is even more significant.

For the volume curves it is interesting to observe, that the group without RP and TC shows a significant increase of the sales volume immediately after the entry of generic competitors. The group of drugs with both cost control mechanisms shows on the opposite a significant decline in volume in the first 24 month following g.e.. The groups RP+/TC- and RP-/TC+ show a slight increase of the volume respectively in the same period.

The resulting overall sales volume curves show a significant increase in the sales volume for the group RP-/TC- in the first 24 month following g.e.. The group of drugs with both cost control mechanisms shows on the opposite a significant decline in overall sales volume. Both ‘mixed’ groups show some moderate decline of overall sales.

Conclusion: These often as contradictory regarded cost control mechanisms are two effective cost containment measures with additive effects. If applied alone, they appear to be almost equally effective and, if applied together, the negative price and sales effect is even more prominent. The savings from the therapeutic reference price system might well be generated through a decentralized market mechanism, as the tender contract system. The combination of the two cost control mechanism might lead to a very powerful mechanism to reduce drug expenditure.