GermanyPosted 22/10/2013

The pharmaceutical industry in Germany is among the most powerful in developed countries and contributes significantly to the export market [2]. In 2004, pharmaceutical exports amounted to Euros 13.1 billion [3].

Germany has the third-highest healthcare expenditure among OECD countries [4]. Annual healthcare expenditure amounts to approximately Euros 245 billion or around 11% of the gross domestic product [5]. Therefore it is not surprising that in comparison with other Western European countries, Germany spends somewhat more on medicines. In 2008, a total of 15.1% of the total healthcare budget was spent on medicines compared to only 9.8% in The Netherlands and 7.7% in the UK [6].

In 2009, Euros 32.4 billion was spent on medicines by Germany, representing an increase of nearly Euros 5 billion on that in 2008 [7]. However, this was still less than that in 2005, when Euros 39.5 billion was spent on medicines by Germany [2].

Germany has the largest generics market in Europe [3], and, after the US and Japan, is the country with the largest share of generics in the world. The generics culture is strong in Germany [8]. Four years after launch, generics attain an average penetration of 45% compared to 35% in The Netherlands [9].

German physicians write around half of their prescriptions with generics, although the government has set a target of 70%. Germany’s reference pricing system, which removes the incentive to reduce prices, and a dearth of physician incentives to contain costs make the German generics market second only to the US in terms of value. Indeed, Germany is a relatively high price market even for generics [9].

In 2008 over 76% of prescriptions in Germany were dispensed as generics, accounting for 36.8% of the market value [10].

According to BKK Bundesverband, one of the organizations that funds German heath care, the generics discount is just 20–25% compared to the branded product following patent expiry [9].

The branded generics market is strong in Germany and most generics players already promote to physicians. This is a key advantage for generics firms already in the German market: promotion and detailing is expected to be crucial to success in the biosimilars market. High biologicals use, high prices, high growth and widespread acceptance of generics make Germany a very attractive market for biosimilars [9].

Germany has a high number of generics producers present in the market, making the generics segment of the pharmaceuticals market in Germany appear rather fragmented [10].

Key facts – contribution of generic medicines to Germany

• The German generics industry saves the statutory health insurance around Euros 5.7 billion per year [1].
• The generics industry supplies 76% of prescriptions at only 36.8% of the cost [11].
• The average cost of a branded medicine in Germany is Euros 1.73 [12]; the average cost of a generic drug is Euros 0.21 [13].
• Up to 70% can be saved by patients if they buy a generic drug instead of the originator medicine [1].
• In 2007, an estimated average of Euros 431 per head of population per year was spent on medicines in Germany compared to an average of Euros 382 in Western Europe [14].
• In 2008, the generics industry saved the German taxpayer Euros 621.5 million [15].
• An estimated Euros 3 billion of further savings could be realized by more efficient use of generics [1, 16].
• Market entry of generics benefits from a reference pricing system (RPS) that sets higher RPS in medicine groups with fewer generics competitors and that stimulates price competition, but still makes it possible for generics companies to earn profits [17].
• Demand for generics is driven by generics substitution by pharmacists and by physician budgets in combination with prescription targets and feedback on prescribing behaviour [17].

*A mature generics market is one where generics have been on the market for more than 10 years and where the market share of generics exceeds 40% [18].

References

1.  Deutscher Generikaverband. [FAQ for Patients]. FAQ für Patienten [FAQ for Patients] [homepage on the Internet]. Deutscher Generikaverband [cited 2013 Sep 26]. German. Available from: www.generika.de/?op=faq_patienten#WievieleGenerikaherstellergibtesinDeutschland

2.  European Commission. Pharmaceutical Pricing and Reimbursement Information project: Germany. May 2008.

3.  European Commission. Österreichisches Bundesinstitut für Gesundheitswesen (ÖBIG). Surveying, assessing and analysing the pharmaceutical sector in the 25 EU Member States [homepage on the Internet]. 2006 Jul [cited 2013 Sep 26]. Available from: http://ec.europa.eu/competition/mergers/studies_reports/oebig.pdf

4.  Schreyögg J, Grabka MM. Copayments for ambulatory care in Germany: A natural experiment using a difference-in-difference approach. Discussion Paper No. 777. Deutsches Institut fur Wirtschaftsforschung (DIW), Berlin. 2008.

5.  Facts and figures on Germany’s health care system [monograph on the Internet]. Bundesministerium für Gesundheit (BMG). 2010. [cited 2013 Sep 26]. Available from: http://www.bundesgesundheitsministerium.de/cln_151/nn_1493786/EN/Gesundheit/gesundheit__node.html?__nnn=true#doc1493940bodyText1

6.  Nefarma. [Facts and figures]. Feiten en cijfers [homepage on the Internet]. 2011 [cited 2013 Sep 26]. Dutch. Available from: www.nefarma.nl/feiten-en-cijfers

7.  Arzneiverordnungsreport 2010 – hohe Arzneimittelpreise belasten Kassen [page on the Internet]. Finanz-Ratgeber.de [cited 2013 Sep 26]. German. Available from: www.finanz-ratgeber.de/news/arzneiverordnungsreport-2010-hohe-arzneimittelpreise-belasten-kassen_2010-09-14.html

8.  Generika sorgen für Einsparungen [monograph on the Internet]. Germany, Krankenkassen Ratgeber; [cited 2013 Sep 26]. German. Available from: www.krankenkassenratgeber.de/medikamentenausgaben/generika-sorgen-fuer-einsparungen.html

9.  Pisani J, Bonduelle Y. Opportunities and barriers in the biosimilar market: evolution or revolution for generics companies? [monograph on the Internet]. Brussels, Belgium, European Generic medicines Association (EGA); 2006 [cited 2013 Sep 26].

10.  Glowicka E, Lorincz S, Pesaresi E, Sauri Romero L, Verouden V. Generic entry in prescription medicines in the EU: main characteristics, determinants and effects [homepage on the Internet]. 2009 Jul 8 [cited 2013 Sep 26].  Available from: www.ec.europa.eu/dgs/competition/economist/prescription_medicines.pdf

11.  Gesundheitsberichterstattung des bundes (gbe-bund). [Generic drugs that were prescribed at the expense of public health insurance]. Generikapräparate, die zu Lasten der gesetzlichen Krankenversicherung verordnet wurden [homepage on the Internet]. 2010 [cited 2013 Sep 26]. German. Available from: www.gbe-bund.de/oowa921-install/servlet/oowa/aw92/dboowasys921.xwdevkit/xwd_init?gbe.isgbetol/xs_start_neu/&p_aid=3&p_aid=79364523&nummer=356&p_sprache=D&p_indsp=-&p_aid=78195771

12.  Garattini L, Motterlini N, Cornago D. Prices and distribution margins of in-patent drugs in pharmacy: a comparison in seven European countries. Health Policy 2008;85(3):305-13.

13.  Simoens S. International comparison of generic medicine prices. Curr Med Res Opin. 2007;23(11):2647-54.

14.  ABPI. Did you know? Facts and figures about the pharmaceutical industry in the UK [homepage on the Internet].  London:  The Association of the British Pharmaceutical Industry; 2010 [cited 2013 Sep 26]. Available from: www.abpi.org.uk/our-work/library/industry/Documents/Did%20you%20know_Jan11.pdf

15.  Gesundheitsberichterstattung des Bundes (gbe-bund). [Savings potential of generic drugs in millions of euros].  Einsparpotentiale von Generika in Mio. Euro [homepage on the Internet]. 2010 [cited 2013 Sep 26]. German. Available from: www.gbe-bund.de/oowa921-install/servlet/oowa/aw92/dboowasys921.xwdevkit/xwd_init?gbe.isgbetol/xs_start_neu/&p_aid=i&p_aid=79364523&nummer=602&p_sprache=E&p_indsp=-&p_aid=97593504

16.  Schwabe U, Paffrath D. Arzneiverordnungs-Report 2010. Springer Berlin Heidelberg; 2010.

17.  Simoens S, De Coster S. Sustaining generic medicines markets in Europe [monograph on the Internet]. Brussels, Belgium, European Generic Medicines Association (EGA); 2006 [cited 2013 Sep 26]. Available from: www.egagenerics.com/doc/simoens-report_2006-04.pdf

18.  Simoens S. International comparison of generic medicine prices. Curr Med Res Opin. 2007;23(11):2647-54.