Discount and direct contracts - contract management from the perspective of the health insurance companies

The development of pharmaceutical expenditure has been the focus of statutory health insurance (GKV) for years. Originally intended as a supplementary service to medical treatment, they have since risen to the “TOP 3” of the most expensive types of services. At times they were even higher than the statutory health insurance costs for medical treatment. In 2008, the GKV spent 29.1 billion euros on medicines; in 2009 the total expenditure increased by 5.4 billion euros to 30.7 billion euros. In the first quarter of 2010 there was also an increase in spending of almost 5.5 %. This unstoppable increase in spending, which occurs without any conceivable compensating effects for other types of benefits, ensures that new instruments are constantly being developed and used to control the level of spending. Control approaches that bring quality of care and cost-effectiveness into line are primarily discussed.

>> Discount contracts can not only be used to reduce costs, but also to open up other markets and have a positive influence on the quality of care. The need is particularly apparent given that the increases in pharmaceutical expenditure are primarily caused by patent-protected drugs. Assuming that the use of patent-protected and therefore expensive, but not necessarily innovative, drugs can be controlled, specific supply contracts can be extended to include the drug component. Among other things, existing structures within the framework of integrated care or disease management programs are available here, in which drug supply can be implemented appropriately and in accordance with guidelines in collaboration with the treating doctors and their specialist societies.
Selective contraction as
regulatory requirement
In 2004, the Health Modernization Act created the legal framework for selective contracts in some sub-markets. This was the beginning for healthcare actors to initiate control measures through selective contracting. Health insurance companies can now conclude individual contracts with individual service providers and thus move away from the uniform collective agreement. A competitive instrument was developed with which health insurance companies can differentiate themselves from one another in terms of quality, cost-effectiveness and patient orientation. Two main effects are particularly advantageous from the point of view of the payers. On the one hand, selective contracting gives each individual fund the chance to control expenditure and, on the other hand, it gives the opportunity to select high-quality service providers, i.e. to influence the quality level. In particular, the influence on costs in a system in which the cost bearer has so far only had a small influence on pricing is used as both a competition and a control instrument. Insured people, on the other hand, fear a loss of quality because they are concerned that payers will focus exclusively on price when selecting their contractual partners, while quality plays a diminished role. A lack of transparency in contracts, increasing information expenditure and transaction costs for all those involved increase this fear among insured persons, but is also often cited by other players as an argument that it is the result of competition entering the healthcare market.
In fact, through selective contracting, all actors involved have the opportunity to break up the old collective structures by testing innovative concepts, needs-based contracts for high-quality and targeted services and to build up competitive advantages. Health policy becomes health management through selective contracting.
Methodological conditions selective
contraction
The possibility of concluding selective contracts in the pharmaceutical sector is explicitly granted to health insurance companies in the Social Security Code (SGB V). Since its introduction, the instrument has been used by many health insurance companies as part of discount agreements for generic medicines. The basic requirement for implementation is the substitutability of the drugs, i.e. the precise definition of the homogeneity conditions of the goods to be contracted. In §129 Para. 1 SGB V, the same active ingredients, the pack size, the indication area and the dosage form are used as criteria in this context. With regard to the dosage form, either the same or interchangeable (defined by the Federal Joint Committee) is considered substitutable. In practice, the issue of the same indications for medicines in particular leads to discussions between the individual actors. The construct of the discount agreements is based on the legally defined homogeneity of generic medicines. In this context, it should not be forgotten that the effect of drugs can have an objectively measurable benefit, but can also be an individually dependent variable.
Both in public debate and in real contracts, the price component is often seen as the only content of selective contracts. But especially in healthcare, benefits play a significant, if not the most important, role. Measuring the benefit is complex, but is crucial for the long-term assessment of the contracts. In this context, the analysis of an empirically reliable cost/benefit ratio will only be a measuring tool. With these arguments in mind, the instrument of selective contracts can be used to control expenditure in a targeted manner.
Discount agreements have now become very important in the pharmaceutical sector. They have established themselves in the market and are no longer questioned in terms of content. However, legal framework conditions continue to emerge that require definition. The way the contract is concluded and the assignment to a branch of law are the most important elements.
While generic medicines are legally defined as homogeneous under the defined conditions and thus play a unique role in the complex of selective contracts, the methods of contract formation will have to be changed for patent-protected original preparations or other possible content. Other instruments are necessary, especially with regard to implementation in the market, and the participation of other actors will also be necessary. Generic discount agreements are usually concluded between a health insurance company and a pharmaceutical manufacturer; implementation is regulated by the pharmacy; Doctors, on the other hand, are not the focus of action. The treating physician will play a prominent role in establishing contracts in the patent-protected market. This allows the complex of selective contracts to develop from a focus on the price component to innovative supply concepts. Here, a further foundation stone can be laid for selective care contracts, which then develop into a competitive tool for health insurance companies to attract their insured persons based on their quality and individual patient benefit.
Target concepts of contract strategies
Strategies pursue long-term goals, this also applies to contract strategies. From the perspective of statutory health insurance companies, the following goals should be pursued with pharmaceutical contracts:
• Process optimization
• Quality optimization
• Promoting innovation
• Quantity control
• Price control.

These goals are explained below.
Process optimization
Effectiveness and efficiency are buzzwords that are becoming increasingly important in the healthcare system. When selecting the treatment process, it is important that it is effective first and then that it is designed to be efficient in terms of content. Unfortunately, not every treatment process in the German healthcare system is optimally designed. In addition to the content, it also has structural deficits. The separation, even downright isolation, of the sectors repeatedly leads to inefficiencies in the form of
• Duplicate examinations
• Loss of information
• Waiting times and
• increased use of examination methods.

Against this background, it is a clear objective of the health insurance companies to use intelligent and innovative drug contracts to influence the treatment process in such a way that the patient is not “moved” to another sector or even just within the sector for cost reasons (which lie in drug therapy). becomes.
In addition to this cross-sectoral consideration, it is also important to make the medication supply process by the individual doctor efficient. Today the doctor has to decide from a number of over 60,000 medicines which preparation to prescribe at the expense of the health insurance companies. Additional rules regarding the interchangeability of medicines, negative lists, medicine guidelines, etc. must also be taken into account by the doctor. He has a variety of sources of information (reputable and less reputable) at his disposal as a basis for his decision - and with each regulation he has to examine the question of the economic viability of his prescription behavior.
Drug contracts can be helpful in this situation - the cost-effectiveness of the relevant preparations has been checked in advance by the health insurance companies and the doctor is only responsible for the use and dosage or prescribed amount in accordance with the guidelines. The required freedom of treatment still applies, as the doctor is usually free to choose his medication. At the beginning, drug contracts will hold up the process in the doctor's office - after all, you have to deviate from the usual prescription behavior. Through the targeted use and further development of practice software, this additional effort can be reduced - and the procedural reliability described above should mean that doctors have more time for their patients.
Overall, it should be noted that intelligent drug contracts can make both the entire treatment process and the treatment process in the doctor's office more efficient.
Quality optimization
According to a report by the Expert Council for the Assessment of Developments in the Health Care System from 2000/2001, the quality of drug supply in Germany is inadequate, particularly when it comes to the care of chronic patients. The care of sick people often does not correspond to the state of medical and pharmaceutical knowledge. This situation has not changed in many areas to this day. The lack of medical care leads to significant follow-up costs, which could be prevented or at least delayed through early drug therapy. One approach to avoid this waste of resources is the use of evidence-based medicine. This is the “conscientious, explicit and judicious use of the current best external scientific evidence to make decisions in the medical care of individual patients.
The practice of evidence-based medicine means integrating the basic elements of individual clinical expertise with the best possible external evidence from systematic research based on the needs of the individual patient.”
Based on the findings of evidence-based medicine, it is important to develop guidelines that serve as a basis for decisions for doctors in their everyday treatment. The medical profession also recognizes the need to reduce the complexity of the existing studies to an implementable guideline.
The above statements make it clear that pharmaceutical contracts alone cannot achieve an improvement in the quality of drug supply. Only through constructive interaction between health insurance companies, doctors and patients can the framework conditions be created to improve the quality of drug supply. From the perspective of the health insurance companies, it is not necessary to abolish the control instruments in the form of performance audits and benchmark agreements in order to achieve the necessary financial resources to improve quality. By using the right medicines, savings potential can be generated that can be used to improve quality. An increase in the quality of treatment from the patient's perspective can be achieved through so-called value-added contracts. With this form of contract, additional services are agreed between the health insurance company and the pharmaceutical company, which the patient can use free of charge. In addition to the classic offers such as access to special Internet offers or the use of telephone hotlines, the spectrum of these contracts extends to the offer for patients to receive personal instruction from specially trained medical staff. The aim of these additional services is to increase compliance on the part of the patient and thus increase the quality of treatment.
Promoting innovation
Patent-protected drugs account for the majority of drug spending. However, high-priced innovative medicines sometimes find it difficult to gain a foothold in the market. What complicates this initial situation is that the positive effects of innovative medicines are not taken into account in the “performance assessment” and “benchmark” control instruments. If, for example, hospital admissions are avoided through the targeted administration of appropriate medication, this will not be taken into account in the performance audit. Against this background, the practitioner has a negative incentive to use (costly) innovative preparations. Drug contracts can be effective tools to promote real drug innovation in the market. The term “innovation” and especially “real drug innovation” is still not clearly defined in the literature and is very controversial.
For reasons of simplicity, it should be assumed here that drug innovations are drugs that have greater benefits for the same cost. The targeted use of such preparations can be initiated through special forms of contract. In the past, risk-share contracts in particular have proven to be suitable. In this contract model, the health insurance company and the pharmaceutical company agree that a specific (treatment) goal should be achieved through the use of medication. If the goal is not achieved, the costs incurred will be borne by the pharmaceutical company. With this “money-back guarantee”, the pharmaceutical company documents its confidence in the effectiveness of its preparations and guarantees appropriate reimbursement of costs in the event of failure. From the perspective of health insurance companies, this form of contract offers a good opportunity to improve drug supply. The fact that health insurance companies receive a reimbursement with this form of contract if the treatment is not successful must be critically questioned from an ethical point of view. The risk of volume expansion or oversupply through risk-share contracts must be countered by prescribing the corresponding innovative medicinal products in accordance with the guidelines. Desired volume increases can definitely occur - this is the case if the additionally prescribed medicines do not make further treatments necessary (e.g. hospital admissions) and the costs of the entire treatment process do not increase or even decrease.
Quantity control
Drug expenditure is made up of the factors quantity of drugs dispensed and pharmacy sales price. In order to limit the continuous increase in expenditure, health insurance companies are faced with the challenge of avoiding an increase in the quantity of medicines without compromising the quality of care. From the perspective of the health insurance companies, this can only be achieved through a narrower indication based on guidelines. The opportunity for cost containment associated with this approach is associated with the risk that the practitioner will feel restricted in his freedom of therapy and at the same time the impression of rationing instead of rationalization arises. Patients' sense of entitlement must be counteracted by making it clear to health insurance companies and practitioners that a medication prescription is not part of good treatment for every illness.
Price control
Pricing in the pharmaceutical sector evades the classic market pricing process: based on the manufacturer's retail price, which is freely set by the manufacturer, there are various legally regulated surcharges that lead to a uniform pharmacy sales price. The corresponding surcharge regulations can be found in the Medicines Price Ordinance. This means that the price of medicines in Germany is indirectly regulated by law. Violation of the Drug Price Ordinance is inadmissible and will be punished accordingly. It was only with the introduction of Section 130a Paragraph 8 SGB V on January 1, 2003 that health insurance companies were given the opportunity to agree manufacturer discounts with pharmaceutical companies. However, the framework conditions that made this regulation possible were only created on April 1, 2007 with the substitution obligation by the dispensing pharmacies. This obligation on the part of pharmacies gave rise to great interest on the part of pharmaceutical companies in concluding discount agreements with health insurance companies. The health insurance companies, in turn, used this pricing option to contain costs, but also for market positioning through appropriate brand partners on the pharmaceutical industry side. The market quickly divided into the areas of price-oriented health insurance companies (including AOKen) and health insurance companies that also placed value on a high brand image (particularly replacement insurance companies). The majority of the discount agreements concluded in the past were awarded as part of contract negotiations. The recent case law has stipulated that statutory health insurance companies must generally advertise discount contracts. This procurement route applies in particular to the area of generic drug supply. Whether the tendering process is necessary or whether a market exploration process for original products is sufficient has not yet been finally decided in terms of procurement law. Health insurance companies implement the obligation to tender in different strategies:
1. Price leadership through lowest procurement prices
2. Brand leadership through the use of the existing game
space to select possible contractual partners
Systemic incentive structures
Since 2009, the health fund has existed in combination with a morbidity-oriented risk structure compensation (RSA). With this instrument, the health insurance companies were deprived of their autonomy to contribute. The health fund is funded by employer and employee contributions based on a uniform contribution rate set by the federal government. In addition, government subsidies flow into the fund. The money is then distributed to all health insurance companies as part of the morbidity-oriented RSA. In the first step, the distribution takes place according to the criteria of indirect morbidity, including age, gender and incapacity. In the further process, the health insurance companies receive risk-adjusted allocations based on selected diseases (direct morbidity). These allocations are intended to ensure that health insurance companies, which are burdened with the costs of treating these compensable diseases, have no financial incentives to carry out risk selection in these areas. The legislator assumes that this will initiate additional competition to increase efficiency and improve quality on the part of the health insurance companies. In comparison to the previous compensation procedure, there are no compensation payments for high-cost cases (risk pool) and payments for enrollment in special treatment programs (DMP).
Given these financial allocations, health insurance companies have a great interest in developing and implementing effective and efficient case management. The aim of this case management is to bring the average case costs for compensable illnesses to a level that is below the allocations from the health fund. At the same time, health insurance companies have a great interest in receiving the appropriate allocations for all insured persons with compensable illnesses.
The aforementioned approaches can certainly lead to improved quality of treatment - especially in areas where undercare is known. However, in relation to the financial situation, the health insurance company must take the following into account:
The surcharges for direct morbidity are determined for 2009 on the basis of the doctor and drug data from 2006 and the expenditure on other types of benefits from 2007. Due to this time delay, financial investments in new forms of therapy only become noticeable in the flow of money to the health insurance companies much later. However, if the allocations from the health fund are not sufficient to guarantee the health insurance company's liquidity until the cash flows, the health insurance company is forced to charge an additional contribution, which in turn leads to a competitive disadvantage. This situation has now occurred with some health insurance companies and will affect more and more health insurance companies in the future. This situation poses a risk that health insurance companies will not initiate innovative care projects that are cost-intensive. Against this background, health insurance companies will separate their contract strategies based on the time horizon:
• Short-term projects with the aim of securing liquidity
• Medium and long-term projects with the aim of improving the quality of care and increasing cost efficiency.
Conclusion
With the possibility of selective contracting in the pharmaceutical sector, the legislature has given health insurance companies an instrument to introduce price and quality improvements in the area of outpatient pharmaceutical care. However, innovative and intelligent pharmaceutical contracts alone are not enough - they require contractual frameworks in which they can be controlled. Whether and to what extent these opportunities are used depends on everyone involved. When concluding individual contracts, it must be noted that the contract contents may well collide with existing collective control instruments such as fixed amounts, benefit exclusions of the Federal Joint Committee and performance audits - here each individual health insurance company will have to decide for itself whether it should focus more on selective contracts and their effects but relies on collective control instruments. The competition between health insurance companies intended by the legislature through pharmaceutical contracts also affects the pharmaceutical industry. The discount agreements in the generics sector impressively show the market shifts such agreements can create. These market changes can become existential for small and medium-sized pharmaceutical companies - but this is obviously the intention. Here, the health insurance companies are required to use the instrument of contract design in such a way that the pharmaceutical companies do not have a monopoly position. There is no golden solution for pharmaceutical contracts - everyone involved is required to get involved, develop new contract models or further develop existing contracts. The active participation of all actors is an absolute necessity in order to produce market-oriented and practical models that lead to process and quality optimization and the promotion of innovation. Health insurance companies must not ignore economics when drafting contracts - the relationship between transaction costs and benefits from the contracts must be proportionate. <<