The Pharmaceutical Industry and the Health Care Sector
Thanks also to new pharmaceuticals, people in Germany are living longer and longer. Health care expenditures as a share of gross domestic product remains stable at just below 11 percent and is therefore in the upper medium range when compared internationally. The share of expenses for pharmaceuticals also remains constant at under two percent of the gross domestic product, even though more and more people depend on pharmaceuticals with increasing age. The share of pharmaceutical expenditures in overall health care spending has remained unchanged at 15 percent for years.Germany ranks in the middle segment in Europe in this respect as well. This shows that pharmaceutical expenses are predominantly controlled by the growing demand and do not represent a risk for the overall financing of the German health care system.
Life Expectancy Trends in Germany
Thanks partly to new pharmaceuticals, the average life expectancy in Germany has increased by four years for women and five years for men over the past 20 years. For example, several drugs targeted at tumors have helped make the median lifetime after a cancer diagnosis significantly longer for many patients and prevent a relapse in many cases. This applies e.g. to breast, colon and renal cancer and some types of leukemia and lymphoma. Disease prevention was also improved, i.e. based on new vaccines against rotaviruses, pneumococci and meningococci. Physicians can also protect patients suffering from diabetes or hypertension better and better from life-threatening secondary diseases. Moreover, an increasing number of rare diseases have become more treatable, or treatable at all, due to pharmaceuticals.
Increasing Therapeutic Benefits of Innovative
Of the 87 molecular entities that received marketing authorization in Germany for the first time during the past three years, 63 (i.e. more than 72 percent) were rated innovations or therapeutically relevant improvements – even by critical experts. The share of new molecular entities that can be considered innovative in this respect has continuously increased over the past 17 years.
Improved Substances save Money
Active ingredients whose molecular structure resembles substances that have already been released often realize therapeutic benefits, e.g. through improved pharmacokinetics or fewer side effects. After all, there is a reason why many of these products are part of the essential drug list of the World Health Organization (WHO), while the original product is not listed. In addition, molecular variations promote price competition between patented substances of a given substance class. The latest data of the Arzneiverordnungs-Report 2008 (p. 171) show that pharmaceuticals with a novel active ingredient or therapeutic principle cost an average of EUR 6.85 per daily dose while substances associated with the improvement of the pharmacological quality of previously known therapeutic principles cost about 41 percent less on average. As a result, they offer a greater benefit at a reduced price.
Health Care Expenditures and National Product
The service expenditures of the statutory health insurance funds have been stable for more than 12 years. Due to the various intervention measures by the legislature, the share of gross domestic product has actually decreased rather than increased. Pharmaceutical expenditures as a share of GDP is consistently below two percent. More than two-thirds of the expenses for pharmaceuticals are shouldered by the statutory health insurance funds. About one-fifth is financed directly by private households in the form of copayments and self-medication, and 12 percent are covered by other sponsoring institutions.
The Financing of the Statutory Health Insurance System (SHI)
For years, statutory health insurance (SHI) has been facing the problem of increasing expenditures and decreasing revenues. One important reason for the striking increase in SHI contribution rates is the weaker growth in employee wages, which represent the most important basis for the funding of statutory health insurance. Between 1992 and 2008, employee wages as a share of gross domestic product (GDP) decreased from 55.7 to about 49 percent. At the same time, the average SHI contribution rate increased from 12.7 to 14.9 percent. In 2004 and 2005, another increase in contribution rates was prevented only by transferring expenses to insured patients and service providers, especially pharmaceutical companies.
Expenditures in the Statutory Health Insurance System 2008
At EUR 52.6 billion, one-third of the total SHI expenditures in the amount of EUR 160.8 billion is spent on hospital care. Together, expenditures for office-based doctors’ care (EUR 24.3 billion; 15 percent) and pharmaceuticals (EUR 29.2 billion; 18 percent) represent another third. A total of EUR 8.3 billion (5.2 percent) was used to cover administrative costs. Due to the value-added tax increase, effective from January 1, 2007, expenditures in some service areas (notably pharmaceuticals) exhibited above-average growth. Expenditures for preventive medicine were also significantly higher. Of the overall expenditures of statutory health insurance, only four percent (EUR 6.4 billion) belong to the manufacturers of patented pharmaceuticals.
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