Proportion of spending on brand name drugs continues to rise in Germany

BMJ 2010; 341 doi: (Published 22 September 2010) Cite this as: BMJ 2010;341:c5185
  1. Ned Stafford
  1. 1Hamburg

    Brand name drugs accounted for more than 40% of Germany’s public insurance drug budget in 2009, up from 10% in 1993, a new report has shown.

    The report says that patent protected drugs accounted for €13.2bn (£11.2bn, $17.3bn) (41%) of the €32bn drug budget in Germany in 2009. In 1993 they accounted for €1.6bn (10%) of the €16bn budget.

    Ulrich Schwabe, co-editor of the report and professor emeritus of pharmacology at the University of Heidelberg, has called on politicians to take legislative action to break the upward trend in German drug costs, which he says are the highest in Europe.

    Speaking at a press briefing in Berlin on 14 September to launch the report, he said that €9.4bn of the total €32.4bn spent on drugs in 2009 could have been avoided if German prices fell to Swedish levels.

    Professor Schwabe told the BMJ that he compared German prices with those in Sweden because Swedish prices, which are in the lower third of European prices, are readily available on the internet. However, he noted, “From previous analyses we found that UK prices are even lower than Swedish prices.”

    His analysis of Swedish prices included a detailed comparison with Germany’s top 50 selling patent protected drugs, which he said cost 48% more, on average, than in Sweden. The cost of two doses (enough for one month of treatment) of the rheumatoid arthritis drug adalimumab (sold as Humira), Germany’s top selling patent protected drug with sales of €422m in 2009, was €1919 in Germany but €1149 in Sweden. However, the German price includes 19% value added tax, while Sweden doesn’t charge VAT on prescription drugs.

    Two doses of adalimumab in the UK cost the equivalent of around €800 in 2009, Professor Schwabe said.

    Of his total estimated potential savings of €9.4bn in 2009, €2.5bn would be saved if the prices of patent protected drugs in Germany fell to Swedish levels and €4.1bn would be saved if the prices of generic drugs fell to Swedish levels.

    The remaining savings could be made by switching from more costly brand name drugs to analogue drugs with similar therapeutic effects and by discontinuing coverage of “disputed drugs,” popular herbal remedies that many experts believe lack therapeutic benefit.

    Cornelia Yzer, managing director of the Berlin based Association of Research-Based Pharmaceutical Companies, criticised the report for comparing prices only with Sweden, saying it is like “comparing apples with pears.”

    She said that new changes that are due to come into effect will require drug firms to pay public insurers €1.2bn a year in rebates. The new changes will also require drug firms to negotiate prices of new patented drugs with public insurers.

    Professor Schwabe acknowledged that new changes will end the practice among drug firms of unilateral price setting but said that this doesn’t affect drugs already on the market, meaning that the cost reducing benefit will take “several years” to achieve. He added that the change will not affect the prices of generic drugs, which are generally sold at higher prices in Germany and within wide price ranges for the same active ingredient.

    In the meantime German law makers should make changes to allow public insurers to systematically compare prices in Germany with those in other European nations and to give insurers the authority to demand that the companies lower their prices to Europe-wide levels.

    He noted that German drug prices are often used by other European nations as a reference for setting prices and that if German prices fell a ripple effect of even lower prices would spread across Europe.

    Professor Schwabe said that the rising proportion of branded drugs in total drug sales is not reflected in the numbers of defined daily doses prescribed. On the contrary, he says, the proportion of defined daily doses of branded drugs as a percentage of total drugs sold has decreased since 1993, while the percentage of defined daily doses of generic drugs has risen.

    The reason for the discrepancy—a rise in patented drugs as a proportion of total drug costs but a fall as a proportion of defined daily doses—lay in the pricing of patented and generic drugs, he said.

    “The prices for generic drugs per prescription have steadily declined since 1993, while the prices of patent drugs have steadily risen. This is why the cost of patent drugs as a percentage of total expenditures rose from 10% in 1993 to 41% in 2009.”

    Specifically, in 1993 non-generic drugs accounted for 11.8 billion (42%) of the total of 27.9 billion defined daily doses prescribed. The actual number of doses of non-generic drugs prescribed edged up in the 1990s and early 2000s but began falling in 2004. In 2009, a total of 34.1 billion defined daily doses were prescribed, of which 9.4 billion (28%) were non-generic drugs.


    Cite this as: BMJ 2010;341:c5185


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