Lower Pharmacy Costs By Learning From Germany

Germans have a maximum out of pocket expense of about $10 USD for a prescription¹.  Yet, they spend about 40 billion euros per year² or $497 euros per person based on a population of 80.4 million people³.  In 2018, the United States filled 5.8 billion prescriptions with a total spend of about $520 billion⁴.  With an estimated population of 327.5 million people in 2018⁵, the total spend was $1587.79 per person.

How does Germany spend so much less per person than the US?  Simple, Germany implemented a law in 2011 that requires pharmaceutical manufacturers to prove their new medication is clinically superior prior to being able to negotiate the price.  If the medication is not clinically superior, it is included in the same pool as all other medications that are therapeutically equivalent.¹

Germany’s Institute of Quality and Efficiency in Healthcare studied all new drugs introduced in the marketplace from 2011-2017.  In this study, they found that more than half of the new medications did not provide a clinically superior outcome and became subject to price controls.⁶  The pharmaceutical industry noted this in 2012 by issuing a document about expecting lower income from drugs marketed in Germany².  Many of these medications are specialty drugs carrying an average cost of $1,000 per month or more in the US⁷.

The United States can learn a lot from Germany when it comes to prescription drug pricing.  If most of the prescription drugs introduced in the market are not any more effective than their less expensive counterparts, then we need to tell manufacturers that the price will not be tens of thousands of dollars.

One example of this pillaging of America’s healthcare system is two drugs.  Wellbutrin’s generic runs approximately $100 for 3 months while Aplenzin runs about $11,000 for the same supply.  The only difference between these two medications is the salt that the bupropion is bound to.  Wellbutrin is bupropion hydrochloride and Aplenzin is bupropion hydrobromide, they are essentially the same medication and work the same way.  The only clinical difference?  One costs $10,900 more than the other.

References

1.            Wenzl M, Paris V. Pharmaceutical-Reimbursement-and-Pricing-in-Germany.pdf. 2018. http://www.oecd.org/els/health-systems/Pharmaceutical-Reimbursement-and-Pricing-in-Germany.pdf. Accessed August 3, 2019.

2.            Jessop N. European Pharma Depressed by German Pricing. http://www.pharmexec.com/european-pharma-depressed-german-pricing. Published August 6, 2012. Accessed August 3, 2019.

3.            Population Pyramids of the World from 1950 to 2100. PopulationPyramid.net. https://www.populationpyramid.net/             germany/2012/. Accessed August 3, 2019.

4.            A Look at Drug Spending in the U.S. http://pew.org/2EWRs6q. Accessed August 3, 2019.

5.            Population Clock. https://www.census.gov/popclock/?#. Accessed August 3, 2019.

6.            Mezher M. German Study Finds Most New Drugs Fail to Improve on Standard of Care. https://www.raps.org/news-and-articles/news-articles/2019/7/german-study-finds-most-new-drugs-fail-to-improve. Published July 12, 2019. Accessed August 4, 2019.

7.            James D. Specialty Drug Spending Grows While Traditional Medicine Spending Drops. Specialty Pharmacy Times. https://www.specialtypharmacytimes.com/news/specialty-drug-spending-grows-while-traditional-medicine-spending-drops. Published April 26, 2018. Accessed August 4, 2019.