Global Health Technology Assessment Road Maps

Germany - Pharmaceutical


Updated: June 2009
Validated by: Member of Federal Joint Committee (G-BA)
Germany

Decision Makers and Decision-Making Processes Diagram


*N.B. By law, DAHTA has a virtual possibility to work with IQWiG. In reality, they do not participate in benefit or cost-benefit assessments
Model description and Symbols:
The ultimate decision maker is listed at the top of the model

Boxes: Decision-making bodies
Solid Arrows: Required step in decision-making process
Broken Arrows: May or may not impact decision

BACKGROUND

The German health insurance system is based on the Bismarckanian social insurance system, first established as a social health insurance for workers in 1883. Germany has a population of 82.2 million, 90% of whom are covered by one of 202 (January 2009) statutory health funds (SFHs) and 10% by private insurance (access limited by minimum income level). Contributions to statutory health funds are shared (50:50) by employees and employers and sum up to 15,5 % (January 2009) of the income of the insured. Family members can be insured by a parent or husband/wife. Unemployed are covered by state funds. Private insurance charge per head fee (as opposed to per family at statutory insurance) and people who have changed into private insurance cannot reverse to statutory insurance. Since 1996 almost every insured person has had the right to choose a sickness fund freely, while funds are obliged to accept any applicant.

The framework for health care in Germany is based on central decision making:

1) Legislation established by the parliament,
2) Decrees issued by the Ministry of Health,
3) Directives issued by the G-BA under supervision of the ministry, and
4) Contracts between self-governing organizations under supervision of the ministry.

There is no competition on products on services between the funds. All provide the same services as defined by the G-BA (Gemeinsamer Bundesausschuss) or the different umbrella organizations of the SHFs (referred to in the following the Statutory Health Insurer's organizations (SHIs). Private insurance covers nearly the same services but allows additional benefits (e.g. first class service) – there is competition between private insurers. Since 2004, decision-making in statutory health insurance has been integrated into a trans-sector federal joint committee that is supported by an independent institute for quality and efficiency in health care, the German IQWiG. Since 2008, according to the new Competition Enhancement Act, the IQWiG has to evaluate the cost-benefit ratio of pharmaceuticals in Germany based on international accepted guidelines in evidence based medicine and in health economics.

In 2005, health expenditure in Germany comprised 10.7% of GDP, and 79% was covered by public funds, giving the country the fourth rank among countries in the Organization for Economic Co-operation and Development (OECD). In the same year, German total per capita expenditure amounted to US$ 3287 and public per capita expenditure ranked tenth among OECD count. Out of the total expenditure (239.5 billion EUR), 56.6% of the funds came from statutory health insurance, 7.6% from statutory long-term care insurance, 3.1% from other statutory insurance schemes and 5.7% from government sources. Private health insurers financed 9.2%, employers 4.2% and non-profit-making organizations and households 13.6%. Most out-of-pocket payments went to purchase over-the-counter drugs and to co-payments for prescribed drugs. On 1 January 2004, co-payments were introduced for outpatient visits and raised for virtually all other benefits.

Within the statutory-health-insurance, a risk-compensation scheme among sickness funds aims to level out differences in the age, sex and health-status structure of those insured through the different schemes. Since 2009, the rate of contribution to all statutory sickness funds will be set by the government; the money will flow into a central fund and then paid to the sickness funds according to the risk and disease profile of their members in 80 diseases. Incentive for disease management programs or other innovative contracts are not foreseen.

In ambulatory physician care, a regional physicians’ association negotiates a collective contract with a single sickness fund in the form of a quasi-budget for physician services. The association distributes the funds among general practitioners (GPs) and specialists who claim reimbursement mainly on a fee-for-service basis; capitations of service volumes per quarter apply. SFHs can now enter into rebate contracts with the pharma companies on specific products. Thus free access to drugs for their insured members may be limited and decision power may start to shift from the physician to the payer.

Hospitals are financed on a dual basis: investments are planned by the governments of the 16 Bundesländer, and subsequently co-financed by the Bundesländer as well as the federal government, while sickness funds finance recurrent expenditures and maintenance costs. Since January 2004, the German adaptation of the Australian diagnosis-related group (DRG) system is the sole system of paying for recurrent hospital expenditures, except for psychiatric care where per diem charges still apply.

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DECISION-MAKERS AND INFLUENCERS

The Ministry of Health
(Bundesministerium fuer Gesundheit) sets the framework for health care interventions, approves measures taken within this framework, monitors the outcome of reforms and controls the work of the Statutory Sickness Funds. It is also the final decision-maker concerning reference pricing groups and reimbursement.

Federal Institute for Drugs and Medical Devices
(Bundesinstitut für Arzneimittel und Medizinische Produkte - BfArM) is an independent higher federal authority within the portfolio of the Federal Ministry of Health. Roughly 1000 employees – including physicians, pharmacists, chemists, biologists, technical assistants and administrative staff – work at the BfArM with the aim of preventing health risks by continuous improvement in the safety of medicinal products and by risk monitoring of medical devices as well as by monitoring the legal traffic in controlled substances scheduled in the UN-Conventions of 1961, 1971 and 1988. One of the main tasks of the BfArM is the authorization of finished medicinal products on the basis of the German Medicines Act (Arzneimittelgesetz, AMG). In the course of these licensing procedures it reviews the proof of efficacy, safety, and adequate pharmaceutical quality of the finished medicinal products.

The German Institute for Health Technology Assessment
(DAHTA) was established in 2000 as part of the German Federal Ministry of Health and is a division of the German Institute of Medical Documentation and Information (DIMDI). DAHTA produces reports on medical, economic, social, ethical and legal issues related to the German health system, along with administering a database containing its own HTA reports, as well as national and international reports produced by other organizations. It provides information to interest groups and, together with scientific institutes, is involved in developing standards.

The Federal Joint Committee
‘G-BA’ (Gemeinsamer Bundesausschuss) is comprised of doctors, dentists, hospital representatives, representatives of the SHIs and patient representatives. The G-BA is the central decision making body concerning drug provision for those with statutory health insurance. It regulates reimbursement and restrictions on prescribing on efficiency grounds. Furthermore G-BA assesses new methods of medical examination and treatment, evaluates and classifies new drugs on the German market and is responsible for the publication of treatment guidelines (submitted for approval to the Federal Ministry of Health). Appeals to G-BA's decisions are possible (on evidence as well as on legal grounds). The G-BA is tasked with evidence based coverage decisions, evidence-based patient information, pharmaceutical evaluation and decision, quality assurance, disease management for chronic diseases, guidance for care for rare diseases, outpatient treatment.

Institute for Quality and Efficiency in Healthcare
(IQWiG) was established in 2004, as an independent federal organization for the evaluation of medical efficiency, quality and effectiveness.  IQWIG evaluates the effectiveness of drugs, either at the request of the G-BA or self-initialized.  It prepares non-binding recommendations to the G-BA. Formal cost effectiveness analysis has initially not been part of the system; however, it will be incorporated into the process in 2008 onwards.  IQWiG cooperates with NICE and HAS (http://www.has-sante.fr/ - Haute Autorité de Santé, the French decision-making expert body) on an informal basis to exchange basic information and scientific evidence. Director of IQWIG: Prof. Dr. med. Peter T. Sawicki (http://www.iqwig.de/institute-management.22.en.html).

The Social Insurance Organization
(Deutsche Sozialversicherung; http://www.deutsche-sozialversicherung.de/en/health/index.html) is responsible for administering and monitoring the Reference Price Groups. It calculates reference prices in the different groups following a defined formula and updates reimbursement levels if necessary. The organization also monitors doctors' prescribing behavior, sets doctors' budget targets and tries to influence prescribing behavior through information campaigns. The social insurance is also represented in the G-BA.

The Federal Association of the Statutory Health Insurances (GKV-Spitzenverband)
Since 2006, the German Federal Association of Statutory Health Insurance Funds who represents the health and care insurance in all general, non competitive issues has sponsored the University of Bremen and the NEPI Institute (epidemiology) at the Lund University Malmo (Sweden) in the development of an evaluation tool called EVITA (Evaluation of Innovative Therapeutic Alternatives (Evaluation Innovativer Therapeutischer Alternativen)). The evaluation is purely based on clinical outcome - not on economic evaluations. It is a standardized process to assess literature on new technologies. Important are efficacy as compared to current standard, risks of new therapy (ADEs), quality of studies, and relevance of study endpoints to patients. The objective is that evaluations can be done fairly fast when a new product is launched, that the result will give indication on the degree of innovation of the new therapy, and that the tool is also useful to show up current gaps in the evidence. EVITA may be used as a prioritization tool for the association’s decisions according new recommendations to the IQWiG. In addition, the results may be used in the price and reimbursement negotiations with the manufacturers.

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DECISION-MAKING PROCESS

The G-BA and SHIs decide to what extent a drug is reimbursed. Where applicable, patients have to cover the difference between a drug's price and its reimbursement level (top-up copayment, additionally to an obligatory basic copayment). The G-BA has to identify new drugs in the market and classify them into ‘reference price groups’. Before any decision is taken, independent experts and practitioners are heard by the G-BA and IQWiG may be consulted (who again may charge DAHTA with assessing a technology). Therapeutic classification and comparability with existing products are the main criteria in the process of classification. Innovative drugs and drugs without any therapeutic equivalent are exempt from categorization and are fully reimbursed.

The German health insurance system is based on the Bismarckanian social insurance system, first established as a social health insurance for workers in 1883. Today, 212 sickness funds collect contributions, and purchase proactively or pay retroactively for health services for members. Since 1996 almost every insured person has had the right to choose a sickness fund freely, while funds are obliged to accept any applicant. Since 2004, decision-making in statutory health insurance has been integrated into a trans-sectoral federal joint committee (G-BA) that is supported by an independent institute for quality and efficiency in health care, the German IQWiG. Since 2008, according to the new Competition Enhancement Act, the IQWiG has to evaluate the cost-benefit ratio of pharmaceuticals in Germany.
In 2005, health expenditure in Germany comprised 10.7% of GDP, and 79% was covered by public funds, giving the country the fourth rank among countries in the Organization for Economic Co-operation and Development (OECD). In the same year, German total per capita expenditure amounted to US$ 3287 and public per capita expenditure ranked tenth among OECD count.

Out of the total expenditure (239.5 billion EUR), 56.6% of the funds came from statutory health insurance, 7.6% from statutory long-term care insurance, 3.1% from other statutory insurance schemes and 5.7% from government sources. Private health insurers financed 9.2%, employers 4.2% and non-profit-making organizations and households 13.6%. Most out-of-pocket payments went to purchase over-the-counter drugs and to co-payments for prescribed drugs. On 1 January 2004, co-payments were introduced for outpatient visits and raised for virtually all other benefits.
Within the statutory-health-insurance, a risk-compensation scheme among sickness funds aims to level out differences in the age, sex and health-status structure of those insured through the different schemes. This system has been complemented by a high-risk pool since 2001 and by incentives for disease-management programs for the chronically ill since 2003. In 2009, a new morbidity adjusted risk-compensation scheme covering up to 80 different diseases will be introduced, while the rate of contribution to all statutory sickness funds will be set by the government. Until then, statutory health funds can set their rate of contribution by themselves.

In ambulatory physician care, a regional physicians’ association negotiates a collective contract with a single sickness fund in the form of a quasi-budget for physician services. The association distributes the funds among general practitioners (GPs) and specialists who claim reimbursement mainly on a fee-for-service basis; limitations of service volumes apply. Hospitals are financed on a dual basis: investments are planned by the governmentsof the 16 Bundesländer, and subsequently co-financed by the Bundesländer as well as the federal government, while sickness funds finance recurrent expenditures and maintenance costs. Since January 2004, the German adaptation of the Australian diagnosis-related group (DRG) system is the sole system of paying for recurrent hospital expenditures, except for psychiatric care where per diem charges still apply. In 2009, a new health care reform act will be established to redefine the hospital financial system, while the DRG base rate will be harmonized on a state (Bundesland) level.

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REIMBURSEMENT AND PRICING APPROVAL PROCESS

In contrast to the majority of other health care systems, market access of most pharmaceuticals approved by the EMA or the German Federal Insitute for Drugs and Medical Device (Bundesinstitut für Arzneimittel und Medizinprodukte, BfArM) means coverage by the German statutory sickness funds. But there exist some exceptions:

  1. Drugs for trivial diseases are legally excluded from the benefits' package for insurants over 18 years.
  2. Inefficient drugs (not effective for the desired purpose or effect not certainly evaluated) can be included to a negative list and will not be reimbursed. In general, the Federal Joint Committee (representatives from sickness funds, healthcare providers and patient organizations) may commission the Institute for Quality and Efficiency in Health Care (IQWiG) to conduct a benefit or a cost-benefit assessment.
  3. Prescribing limitations to specific indications, to specific usage requirements (after failed nonmedical treatment, second-line, third-line), can be defined by the FJC using self assessment or an IQWiG assessment (but the FJC is free to decide independently).
  4. Reference prices can be fixed for a group of therapeutic or generic substitutes.
  5. Maximum prices can be set for drugs protected by patent, if a negative cost-benefit-assessment supports such a decision

DATA REQUIREMENTS

Benefit-Assessment
The German Institute for quality and efficiency in health care (IQWiG) is responsible for the scientific evaluation of the benefits and harms as well as the quality and efficiency of health care services. Since April 2007, a new cost-benefit-assessment is established by federal law. The responsibilities include the evaluation of clinical practice guidelines, the submission of recommendations on disease management programs, the evaluation of the benefits, harms and a cost-benefit-ratio of pharmaceuticals, and the publication of health information for patients and consumers.

The IQWiG-HTA-process is described within their general methodological paper (Version 3.0, May 27th 2008). The process for detailed reports is:

  1. Exclusively, the Federal Joint Committee or the Federal Ministry of Health commission a new assessment (benefit or cost-benefit assessment). The commission does not include a time frame. The IQWiG may use their own prioritisation-method according to their capacities.
  2. The IQWiG form a project group which (re)define the outcome criteria (esp. state of health, duration of illness, duration of life, rate of side effects, quality of life).
  3. A report plan (study plan) will be prepared by IQWiG incl. research questions, outcome criteria, inclusion and exclusion criteria, methods of literature-search and information synthesis. The report plan does not include a timetable.
  4. Stakeholders have the opportunity to send written comments (only in German language; deadline 4 weeks after publication of the report plan with a maximum amount of 5 pages; citations have to be submitted in hardcopy or electronic form).
  5. A preliminary report will be available once the literature search and scientific evaluation is finished.
  6. A second hearing with comparable obligations as in the report plan hearing will be conducted. In addition, a scientific oral hearing can optionally be held. Only persons, who have submitted a written comment, can attend. The IQWiG has not to justify their decision concerning the invitation to the scientific meeting.
  7. The final report will be published including the results of the hearing.


Furthermore, the IQWiG can conduct rapid reports. Rapid reports can be commissioned by the FJC, the Federal Ministry of Health, and by the IQWiG itself. The two main differences between a full (detailed) report and the rapid report are the missing ‘intermediate’ products (project plan, preliminary report) and the lack of hearings.

graph

Cost-Benefit-Assessment
In January 2008 (updated to version 2.0 in March 2009), the IQWiG published their first draft of the ‘Methods for Assessment of the Relation of Benefits to Costs in the German Statutory Health Care System’. In contrast to other HTA agencies like NICE (England & Wales), SMC (Scotland) or TLV (Sweden), the German IQWiG did not use the incremental-cost-effectiveness-ratio (ICER) approach, but they introduce a different methodological instrument, the efficiency frontier. Within the efficiency frontier, all available compounds / agents have to be compared using their total benefit in relation to their total costs. This results in an efficiency frontier. New agents have to show comparable efficiency, compared to (a) the cost-benefit ratio of the alternative with the best available maximum benefit, or (b) compared to the mean cost-benefit-ratio within the specific indication.

Since the new methods have been published, there is an ongoing crucial discussion in Germany whether the new methods are consistent with federal social law (§§ 31, (2a); 35b; 139a social code book) and whether the efficiency frontline approach is appropriate to use.

Furthermore, there exists no example in real life of the usage of the efficiency frontier approach – not in Germany and not in other health-care-systems. The most relevant of the critical comments are:

  • Is the efficiency frontier an appropriate methodological approach / tool for decision makers to justify maximum reimbursement prices of new drugs in relation to their health-economic efficiency ?
  • The authors suggest that no national budget exists for the statutory health care system and therefore there would be no need for a specific resource allocation. But on the other hand, the federal government introduced a new risk-adjustment-scheme in January 2009, were the general premium will be set by the government and sickness funds will receive contributions as a result of their specific risk structure (age, gender, morbidity and mortality of the insures).
  • What is the appropriate general benefit measure if the QALY-concept is disapproved?
  • How to manage conflicting evidence in different benefit measures (e.g. more absolute benefit in reducing disease specific mortality but lower level of disease specific quality of live)? What is the theoretical basis for the suggestion that costs have to be calculated for the whole case of illness (for chronic conditions until the end of live), but for the benefit only for the timeframe where clinical evidence can be provided?
  • The authors do not reflect the existing German scientific guidelines for health-economic-evaluations while federal law demands the use of methods which are in line with the accepted standards within the health economic community.

Fig 3

Source: IQWiG (2008)

Pricing Approval Process
In Germany, manufactures are free to set their drug prices (for limitations please compare the reimbursement part).

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ACRONYMS

OECD:  Organization for Economic Co-operation and Development
DRG: Diagnosis-related group
EMA:  European Medicines Agency
FJC:  Federal Joint Committee

 

SUGGESTED READING

  1. Gress S, Niebuhr D, May U, Wasem J. Reform of prescription drug reimbursement and pricing in the German social health insurance market: a comparison of three scenarios. Pharmacoeconomics. 2007; 25(6):443-54.
  2. ÖBIG (2006). Surveying, Assessing and Analysing the Pharmaceutical Sector in the 25 EU Member States. Available at: http://ec.europa.eu/comm/competition/mergers/studies_reports/oebig.pdf
  3. Busse R, Riesberg A. Health care systems in transition: Germany. Copenhagen, WHO Regional Office for Europe on behalf of the European Observatory on Health Systems and Policies, 2000. Available at: http://www.euro.who.int/document/e68952.pdf

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USEFUL LINKS

Federal Health Care Information Sources:

National Information Sources:

International Information Sources:

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REFERENCE
Busse R, Riesberg A.  Health care systems in transition: Germany. Copenhagen, WHO Regional Office for Europe on behalf of the European Observatory on Health Systems and Policies, 2004.

AUTHORS & CONTRIBUTORS
Anke-Peggy Holtorf, PhD, MBA, Business Director, BioBridge Strategies, Basel, Switzerland
Karl Matuszewski MS, PharmD, Senior Director, Clinical Knowledge Service, University HealthSystem Consortium, Oak Brook, IL, USA
Mark Nuijten PhD, MD, MBA Erasmus University, Rotterdam, The Netherlands
Christoph Vauth PhD, Head of Integrated Health care (IGV), KKH-Allianz , Hanover, Germany

Contributor:
Noreen Sullivan BS
, President and CEO Technology Assessment Evaluation Group LLC, Encinitas, CA, USA

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