It wasn't until the Pharmaceutical Supply Efficiency Act (AVWG), which came into force in May 2006, that health insurance funds were able to conclude bilateral discount agreements with pharmaceutical manufacturers through an amendment to Section 130a, Paragraph 8 of the Social Code (SGB): This would have been possible since 2003. However, it wasn't until the GKV-WSG (Statutory Health Insurance Efficiency Act) came into effect on April 1, 2007, that this healthcare policy instrument achieved its breakthrough. That April, the first contracts entered into force, and more than 25,000 pharmaceuticals are now covered. The purely quantitative market significance of the contracts is constantly increasing: While in the second quarter of 2007, only one in six prescribed medications was discounted, by April of this year – as INSIGHT Health shows – this was already the case for one in three prescriptions. But what does the qualitative level – primarily the actual lever for savings potential – look like in the overall market?

>> The proportion of discounted pharmaceuticals in all statutory health insurance prescriptions – whether generics, old originals, or originals – has steadily increased since the Statutory Health Insurance Competition Strengthening Act came into force on April 1, 2007. According to figures from INSIGHT Health, 1,303,336 discounts had already been agreed upon at the product level according to pharmaceutical central numbers in April 2008. These individual discounts are distributed across 25,058 pharmaceuticals sold as active forms in pharmacies. Thus, on average, each of these pharmaceuticals was subject to 52 (!) discount agreements.
At first glance, this seems like an enormous number, and one that health insurance companies, companies, doctors, pharmacies, and even suppliers of physician and pharmacy information systems are yet to grasp. However, if we examine the overall pharmaceutical market, we see that in the first four months of this year, only (or already) 30 percent of all statutory health insurance prescriptions were covered by discount agreements!
Focus on the overall market
If you look at the associated sales rather than the prescription share, you'll see that, according to market data, only 10.4 percent is attributable to discounted pharmaceuticals. This simply means that while the discount instrument was implemented relatively quickly by the parties involved, the actual impact on the (theoretically) possible savings potential in the overall market has so far been relatively moderate.
There are several reasons for this. The significant difference in the overall market is primarily due to the fact that patent-protected medicines accounted for almost 40 percent of total pharmaceutical sales within the statutory health insurance system this year – yet this was despite a prescription share of less than 9 percent!
However, in the area of patent-protected pharmaceuticals, only a marginal increase in the discount share can be observed: from 3.4 percent in the second quarter of 2007 to 3.7 percent in April 2008. Another reason may be that the manufacturers of old originals (original products whose patent protection has expired) only began to conclude more discount agreements with health insurance companies at the beginning of this year: the discount share recorded is currently 10.5 percent.
Insulin analogues, for which discount agreements existed up to and including the third quarter of 2007 as the only patented preparations, still accounted for the lion's share in April 2008, with over 96 percentage points.
Boom in generics
However, the overall market analysis only reflects part of the truth, as there are significant impacts in certain submarkets. This is especially true in one market: 1,278,070 of the 1,303,336 discounts concerned generics, as the industry association progenerika recently announced, citing data from INSIGHT Health. Generics account for 98.1 percent of all discounts, leading the industry association to state that "generics would therefore reduce the burden on health insurance companies' pharmaceutical spending not only through their already very low list prices, but also through individual discounts.".
However, this by no means means that the entire generics market is equally affected by discounts. In the generics segment, the total share of discounted prescriptions in April of this year was 52.8 percent, meaning that more than half of all generic prescriptions are discounted. Looking at it the other way around: Almost 50 percent of the generics market is not yet subject to bilateral discount agreements!
Here, too, a somewhat differentiated view is appropriate. The prescription share of discounted generics was only just eight percentage points higher than the sales share. In comparison, for the originals, the prescription share, at 9.2 percent, is almost twice as high as the sales share. This simply means that with generics, discounts are more likely to be given on cheaper rather than more expensive drugs, which certainly limits the leverage desired by policymakers.
In the generics market, however, no manufacturer can avoid discount agreements. According to current figures, ten pharmaceutical manufacturers already generate more than half of their sales with discounted drugs. For three manufacturers, only one in four dispensed drugs was not subject to a discount.
However, when looking at the top 25 generic drug manufacturers by statutory health insurance prescription sales, another system becomes apparent: There is definitely a correlation between the proportion of discounted drugs and changes in the number of prescriptions! Discount agreements certainly influence prescription trends (see chart on the right) and must therefore be viewed not only as a control tool, but more than ever as a marketing tool!
The tenders for indication-based lot groups considered by many health insurance companies (and practiced by the IKK) could also steer market opportunities toward larger providers. Many smaller, especially medium-sized, generic drug providers cannot cover these lot groups with their respective portfolios and would thus fall through the cracks.