Cost-benefit-based determination of the appropriate reimbursement price for medicines in the statutory health insurance system

The German statutory health insurance drug market is certainly not lacking in regulatory mechanisms of any kind, both centralized and decentralized. From a political perspective, the traditional system in the statutory health insurance drug market was not sufficient in terms of the control effect achieved. The new system of discount agreements is being discussed increasingly critically in expert circles. This situation gives reason to look for new ideas off the beaten track.

>> The determination of reimbursement prices on the statutory health insurance drug market in Germany is currently a coexistence of central price regulation and decentralized price negotiations. On the one hand, the Federal Association should set maximum reimbursement amounts and fixed amounts (central reimbursement and price regulation) - on the other hand, since the implementation of the GKV Competition Strengthening Act (GKV-WSG), health insurance companies have increasingly concluded discount contracts with individual manufacturers (decentralized price negotiations). .
Alternative to discount contracts:
Determination of the appropriate GKV reimbursement price
based on a cost-benefit assessment
The regulatory mechanisms, which had a significant influence on the prices of medicines in the GKV before the GKV-WSG, are not based on an assessment of the benefit and therefore cannot be an expression of the respective drug benefit or the value of the preparations.
In addition, it is currently becoming apparent that the discount agreements are reinforcing a development that leads to market results - in particular to (effective) price structures - that do neither the relative nor the absolute value of the medicines justice. These distorted price structures cannot develop the optimal effect of pretial supply and especially demand control and almost inevitably induce wrong decisions at these levels that do not maximize welfare. In practice, this concerns control incentives that the system sets for prescribing behavior within the areas of application or in the relationship between the indication groups.
In addition, the existing incentive and control system also means that product features that are useful but not (sufficiently) relevant to price, such as compliance and patient satisfaction, are neglected when controlling the prescription process. Examples of this have already been documented in the generic discount market (Neye 2008).
On the supply side, ie among drug manufacturers, distorted price structures create suboptimal incentives, especially with regard to product developments and further developments. Preparation properties that have a benefit from a therapeutic and/or social perspective, but which are not reflected in the price (and are therefore not compensated for), are consequently not taken into account by the providers or not sufficiently taken into account.
In addition, there is a real danger that the one-sided price focus of a system such as that of discount agreements will lead to drug prices that, in their absolute level, do not do justice to the benefits of the preparations or to the business interests of the company (Kötting/May 2008,1).
These price structures lead to allocative inefficiencies from both a static and a dynamic perspective. Against this background, the following question will be examined as to how an alternative system for centrally determining an adequate reimbursement price could be designed. “Central” here means either through a state institution or an institution of self-government. In the model presented here, the basis of the reimbursement amount on a modified form of cost-benefit assessment represents the appropriate benchmark for centrally determining the reimbursement amount: If the relationship between the costs and benefits of the medicines was determined in this cost-benefit assessment, This provides an indication of the level of expenditure that the health insurance companies should reasonably spend on individual medicines.
Basics of a new procedure for determining the reimbursement amount
Normal market economy laws obviously cannot be transferred to the supply of pharmaceuticals and have proven to be only of limited use in determining prices. The fundamental question therefore arises as to what price is actually appropriate and fair for a specific drug and who should determine this price. Just like every consumer who is thinking about making a purchase decision for a consumer good, the community of people with statutory health insurance (solidarity community) also has to ask themselves how much the “purchase” of a particular drug is worth to them. Just like the individual consumer, the decision of the solidarity community will also have to be based on how useful the products on offer (here medicines) are and how much money is available for all the desired purchases. Here as there, buyers or the insured community will be willing to spend more money on a good with greater utility than for a less useful good. This decision-making principle, which is as simple as it is practiced every day by every consumer, represents the basic idea of the present proposal for the future setting of reimbursement prices for generic medicines in statutory health insurance.
The model for determining the reimbursement prices corresponds to the following basic conditions:
• The reimbursement price of the health insurance companies reflects the willingness and ability to pay of the insured community.
• The reimbursement prices correspond to the benefits of the respective preparations. Ie more benefit = higher price.
• The benefit of a drug is determined by all properties of the preparation that are therapeutically and economically relevant from society's perspective.
The core of the proposal is that the reimbursement prices in statutory health insurance (quasi: fixed amounts) are set centrally, similar to today's fixed amounts. The group formation would be based on the indication and the “quasi-fixed amount” would not only depend on the market situation, but primarily on the benefits of the preparations. Also based on the model of fixed amounts or the existing cost-benefit assessment, the market could be recorded successively according to the sales and therapeutic importance of the groups.
The reimbursement prices to be paid by statutory health insurance should consistently represent the benefit ratio of the preparations compared to other medicines and other therapeutic options and health services, assessed from a social perspective (or alternatively from a statutory health insurance perspective). This means that when such an approach is implemented, medicines should be more expensive or cheaper than (especially) other medicines depending on the ratio of their additional or reduced benefits. The GKV reimbursement price should reflect the willingness to pay of the GKV solidarity community, understood in this sense. In this respect, the result of the cost-benefit assessment would replace the current regulated reimbursement prices or effective reimbursement levels, which do not reflect the relative benefit ratio of the medications to one another due to the complex mechanisms that have been at work on the pharmaceutical market to date (Greß et. al. 2008 ).
The gradual introduction of such a central model for reimbursement and pricing would sensibly be based on a three-stage evaluation and prioritization process. This three-stage process begins at the level of individual indication groups in the GKV drug market. The second level is about prioritizing the entire drug market across indications. Finally, a possible, economically and systematically obvious, although not absolutely necessary, third stage of cross-sector prioritization for all service areas of the statutory health insurance is outlined. The figure illustrates the interdependencies of the three assessment levels (Fig. 1).

The three-stage evaluation process
At the first stage of the evaluation process, individual drug indication groups, ie areas of application such as antidiabetics or lipid-lowering drugs, are each considered separately (comparable to indication-related fixed amount groups). The aim of the first stage of the procedure is to evaluate the benefits of the respective drugs in an indication group (based on the established benefit assessment procedure) and to compare them to each other. It should be emphasized that in addition to the therapy-relevant differences in the active ingredients within an area of application, relevant differences in benefit due to different recipes, dosage forms, etc. can also be relevant, even for preparations with the same active ingredients. The relative reimbursement prices of the drugs within an area of application are directly derived from this benefit comparison. The absolute level of the prices then results from the given expenditure volume in the relevant area of application. Ad hoc distortions with regard to price conditions in the market would be ruled out because the system uses the existing spending volumes for the defined drug groups as a distribution basis. This means that the price changes induced at level 1 cannot exceed the framework specified by the volume of expenditure given at the time of calculation.
As soon as this first stage of the assessment process has been completed for at least two areas of application, the second stage of the process can be opened in parallel. The aim here is to compare the expenditure volume of the individual application areas. It must be determined which benefit (again based on the established benefit assessment) is achieved with the medicinal therapies available in an area of application. The expenditure budgets for the areas of application must be redefined according to this benefit or the benefit ratios. For areas of application with a particularly high benefit, the willingness to pay is higher, so that more money can be used here. The structure of the evaluation model ensures that the total amount of GKV drug expenditure remains unchanged during the introductory phase due to this redistribution process. Mechanisms are also conceivable at the second level of the model to ensure that price changes induced by the system do not lead to disproportionate distortions in the evolved market conditions.

The consistent continuation of the model idea would require expanding the model to include a 3rd evaluation level. Here, the benefits of medicines would have to be compared with the benefits of other health services and, if necessary, the budget would have to be reallocated in favor of the more efficient types of services.
Dimensions of benefit in the
Cost-benefit assessment of medicines
The procedure described aims to take into account all relevant criteria from a social perspective (or from a statutory health insurance perspective) when determining the price. On the outcome side, this refers to patient-relevant benefits, particularly lifespan and quality of life. A possible cross-indication outcome of the benefit assessment that is conceptually compatible with the approach described would be the quality-adjusted life year (QALY), which has established itself internationally as a “de facto standard” in recent years (Antes et. al. 2007). In contrast to the many uses of this outcome parameter in resource allocation processes, the proposal presented here would not provide for the use of a threshold value per QALY as an indicator of society's willingness to pay for medical progress; Rather, the relationship between outcome and resources used results from the premise of neutral spending for statutory health insurance companies. Ethically controversial value judgments, for example about what a year of life “may cost”, have no place in the model described here. Rather, the conceptual approach represented here is fundamentally compatible with any given willingness to pay for health and health goods.
Against the background of scarce resources in all areas of medical care, it is obvious that with comparable therapeutic benefits of alternative medicines, the socially relevant overall benefit of a therapeutic option is greater if it is accompanied by cost savings compared to the alternatives. That is why it has become established in health economic evaluation - and is also reflected in draft 1.1 of the IQWiG for a method paper for cost-benefit assessment - not only the respective intervention costs, but also the follow-up costs and savings through avoided follow-up costs (complications, side effects , in the case of chronic illnesses but in particular also: changes in the cost flows that arise from changed probabilities of alternative disease courses) must be taken into account (IQWiG, 2008). The approach presented takes this idea into account in that the economic advantages of a preparation are relevant to the benefits and are therefore reflected in the reimbursement price.
The relationship between expenditure on a drug and the benefits achieved also provides the evaluation rule with which cost savings can be converted into additional benefits (in the form of QALYs).
Impact and feasibility
The core of the model presented is that the reimbursement prices in the statutory health insurance are set in such a way that they reflect the benefit ratio of the drugs to each other. At the same time, the expenditure ratio of the individual indication groups should also be determined by their benefit ratio to one another. In practical implementation, e.g. B. the Institute for Quality and Efficiency in Health Care will be commissioned to carry out a step-by-step but ultimately comprehensive cost-benefit assessment of the pharmaceutical market; An extension of the model beyond the pharmaceutical sector can be discussed. Since such an approach cannot realistically be implemented in one step, a pragmatic multi-step scenario was developed in which efficiency gains can be achieved with each implementation step right from the start. This scenario also took into account the expected political requirement for budget neutrality in the introductory phase. In the medium and long term, however, the conceptual approach can in principle provide arguments for a reduction or, if necessary, an increase in pharmaceutical expenditure. What is decisive is the established cost-effectiveness of the drug therapy and the degree of innovation of therapeutic developments measured against the benefit criteria defined here. If the third assessment level is included, higher or lower drug expenditure could result from a comparison of cost-effectiveness with other service areas. This basic idea has already been taken up by the Expert Council for Concerted Action in the Health Care System in its report “Needs Fairness and Economic Efficiency” (Expert Council for Concerted Action in the Health Care System, 2001).
The model outlined here would shift the competition's exclusive focus on price in favor of quality competition. Quality means benefit in the sense of the underlying concept of benefit here. Since the solidarity community's willingness to pay results directly from the relative benefit of a product from the perspective of this solidarity community, drug manufacturers who strive for a high market share and an adequate price are therefore incentivized to market drugs that are as beneficial as possible. From a static perspective, this means that providers will strive to prove the benefits of their preparations and, moreover, to promote the best possible, i.e. benefit-maximizing, use of their preparations (e.g. in the sense of comprehensive drug management). From a dynamic perspective, the model offers incentives to direct innovation efforts towards product properties and therapeutic advances that meet the benefit criteria specified by the solidarity community. In this way, such a model would make positive contributions to the static and dynamic efficiency of drug supply.
Examples from abroad make it clear that even a comprehensive implementation of a comparable cost-benefit approach is possible within a reasonable period of time (Swedish Pharmaceutical Benefits Board, 2007). The evaluation effort to be carried out would have to be adapted to the market segments and their economic importance from a work-economic and pragmatic point of view and worked through gradually. The institutional and financial effort associated with this approach exceeds the assessment and control effort in drug supply in Germany today. However, in view of an annual expenditure volume of around 26 billion euros - and the control and economic efficiency potential assumed by experts - the process costs should prove to be a very worthwhile investment in relation to the quality and efficiency gains that can be achieved - precisely through the new system. The institutions and instruments that could put such an idea into practice already exist in Germany. What has been missing so far is a corresponding mandate from the legislature. <<