German pharmacists have publicly censured the discount contract system, which they claim is responsible for an increasing level of drug supply shortages in the country.
IHS Global Insight perspective | |
Significance | Pharmacists in Germany have expressed their dissatisfaction with the system of discount contracts between statutory health insurance funds and drug producers, which they blame for an increasing incidence of drug supply shortages. |
Implications | With discount contracts pushing down drug prices, the number of manufacturers of particular medicines is declining and often the only remaining producers are those in low-cost production markets. |
Outlook | Statutory health insurance funds will not welcome any major changes to the system, which has helped them make significant savings over recent years. However, lawmakers will have to prioritise measures to mitigate the supply shortages. It remains to be seen whether these opposing sides can agree to a compromise on this issue. |
Pharmacists critical of discount contracts
Problems with the supply of some prescription medicines are affecting pharmacists, who are critical of the discount contract system, under which statutory health insurance (SHI) funds sign contracts with one or more suppliers of a particular drug (usually a generic) in order to ensure a lower price than competitors. According to German pharmaceutical news provider Pharmazeutische Zeitung, the association of pharmacists in the German state of Hessen, the HAV, has reported a shortage of thyroid medicines, in particular combination medicines with iodine. The producer has reportedly explained this was because of a high demand for thyroid medicines, which it currently cannot meet. The HAV has also announced shortages of antibiotics and medicines that alleviate hypertension. Pharmacists in Hessen who responded to a survey by Pharmazeutische Zeitung have stated that they were experiencing problems with the supply of 50 different products. In particular, supplies from the German generics producer Betapharm are said to be affected.
Nationwide supply shortages
Such problems are not confined to Hessen, reports Pharmazeutische Zeitung, which mentions that influenza (flu) vaccines are also in short supply, as they were last year. Although it is too early to state whether there will be a comparable degree of shortages of flu vaccines, the source states, the pharmacists' wish that such vaccines would not be subject to exclusive discount contracts – i.e. contracts with just one supplier – has not been realised in many states. Swiss major Novartis is reportedly the exclusive supplier in many cases, as it was in 2012 when it had difficulties in production, which led to the supply shortages.
Downward price spiral leads to supply risk
Hans Rudolf Diefenbach, the deputy chairman of the HAV, holds the discount contracts responsible for the supply shortages, according to the source. The contracts have apparently caused a downward price spiral, which has prompted producers of certain drugs to withdraw from the market. Considering these companies are often based in low-cost production countries such as India or China, if there are problems with manufacture in these nations, a shortage of supply in Germany is inevitable. According to the source, the nationwide German Pharmacists' Association is also critical of the system, particularly of the restriction in the number of manufacturers supplying prescription medicines, which – although it might appear to increase efficiency – also increases the risk of supply shortages.
BfArM sets up register of drug shortages
Meanwhile, Germany's Federal Institute for Drugs and Medical Devices (BfArM) set up a register of drug supply shortages in April, with the objective of allowing doctors and pharmacists time to plan for alternative treatments in the event of a major shortage. The register can be accessed at the BfArM website here, in German. BfArM states that the register is currently only intended for prescription medicines used in the treatment of life-threatening or serious diseases, for which no alternatives exist – these are usually in the fields of oncology, antibiotics, emergency medicines or treatments used in connection with operations. BfArM defines a supply shortage as an interruption of supplies that exceeds two weeks in duration or a significantly increased demand for a drug that cannot be met.
The register relies on information voluntarily supplied by the marketing authorisation holder and data on supply bottlenecks is requested at least six months in advance.
Outlook and implications
Generics producers in Germany, represented by ProGenerika, have been highly critical of the discount contracts, which came into effect in earnest in 2007 and have helped SHI funds make considerable savings on mainly off-patent medicines in the past few years. ProGenerika has highlighted the negative impact of the contracts' concentration on the supply of important medicines, which is at the expense of smaller producers. It has also declared its disapproval of the power that the contracts give to the SHI funds, to the detriment of generics producers (see Germany: 21 February 2013: Ongoing negative impact of Germany's generic discount contracts highlighted by associations). Although certain SHI funds have stated their intention to move away from exclusive discount contracts – i.e. contracts with just one supplier – it would appear that these are still being signed.
By adding their voice to the general outcry against the discount contract system, pharmacists have increased the pressure on Germany's lawmakers to make adjustments in this area. The fact that BfArM has also seen fit to set up its register also testifies to the potential serious consequences of shortages of certain products. However, considering that the SHI funds are making large savings from the discount contracts, there is unlikely to be support from their side for any change to the system.