James C Robinson1, Dimitra Panteli2, Patricia Ex3. 1. Berkeley Center for Health Technology, University of California, Berkeley. 2. Department of Health Care Management, Berlin University of Technology. 3. German Managed Care Association.
Abstract
Issue: The German health care system resembles that of the United States in important ways — it is financed by multiple private payers and relies principally on negotiation rather than regulation to establish prices. New drugs that offer minimal benefits compared with existing alternatives within a therapeutic class are subject to reference pricing; those with incremental benefits are subject to price negotiations. Together, the reference and negotiated pricing systems have held German prices substantially below U.S. equivalents. Goal: To describe the German reference-pricing system and compare it to tiered formularies and consumer cost-sharing in the United States. Methods: Document review and interviews with leaders in payer, policy, and pharmaceutical industry organizations in Germany. Key Findings and Conclusions: The German pharmaceutical pricing system uses modest levels of consumer cost-sharing to influence consumers’ choices for drugs with therapeutically equivalent alternatives. Manufacturers are free to set the prices of their products, but insurers will not pay more for a new drug than for its comparators unless it offers an additional clinical benefit. For drugs covered by reference pricing, the insurers’ payment maximum is set at a level that ensures sufficient choices of low-priced options. These models offer an alternative to the U.S. system of tiered formularies.
Issue: The German health care system resembles that of the United States in important ways — it is financed by multiple private payers and relies principally on negotiation rather than regulation to establish prices. New drugs that offer minimal benefits compared with existing alternatives within a therapeutic class are subject to reference pricing; those with incremental benefits are subject to price negotiations. Together, the reference and negotiated pricing systems have held German prices substantially below U.S. equivalents. Goal: To describe the German reference-pricing system and compare it to tiered formularies and consumer cost-sharing in the United States. Methods: Document review and interviews with leaders in payer, policy, and pharmaceutical industry organizations in Germany. Key Findings and Conclusions: The German pharmaceutical pricing system uses modest levels of consumer cost-sharing to influence consumers’ choices for drugs with therapeutically equivalent alternatives. Manufacturers are free to set the prices of their products, but insurers will not pay more for a new drug than for its comparators unless it offers an additional clinical benefit. For drugs covered by reference pricing, the insurers’ payment maximum is set at a level that ensures sufficient choices of low-priced options. These models offer an alternative to the U.S. system of tiered formularies.