Reimbursement policies and their challenges in France, Germany and the UK

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© Shutterstock

In a volatile economic environment where cutting costs and controlling expenses becomes a priority, the healthcare sector is put under a magnifying glass as its expenditures are commencing to trigger alarm signals in terms of financial sustainability.

With a total healthcare expenditure that absorbs up to 11.6% of the GDP (Gross Domestic Product), France has one of the highest levels of pharmaceutical consumption. As illustrated in Fig. 1, France is closely followed by Germany with 11.2%, while UK keeps its healthcare costs closer to the ninth percentile.

 

Healthcare Expenditure 2012

Fig.1 illustrates the total healthcare expenditures (public and private) as percentage of the gross domestic product (%GDP) registered by France, Germany and UK, in 2012.

 

France secures the headlines for expenses covered by public funds, being amongst the states that pay the most for healthcare access. While private expenditures, as percentage of GDP, are equivalent in France and Germany (2.6%), UK’ private funds represent 1.5% of its GDP. Moreover, in the past 10 years healthcare expenditures have known an ascending path in all three countries reaching the highest peak in 2009 with a constant gap between UK and the two neighbours (France and Germany) that keep their scores close (Fig. 2).

 

Total expenditure growth

Fig.2 depicts France’s, Germany’s and UK’s growth in total healthcare expenditure over a 10-years-period (from 2003 till 2012).

 

As far as regulation goes, in order for a drug to be reimbursed in France, it is evaluated based on Therapeutic Value (TV: I-important, II-major, III-moderate, IV-low) and Added Therapeutic Value (ATV). The latter serves to benchmark the proposed drug against the standard of care (I-major progress, II-important improvement, III-moderate improvement, IV-minor improvement, V-no improvement).

 

Though therapeutic value level does not influence prices, it does condition the reimbursement rate: TV I-100%, TV II-65%, TV III-35%. ATV V drugs can be on the list only if they facilitate savings to the social security budget.

Once the reimbursement rate established, price negotiation with the Economic Committee on Healthcare Products (ECHP) follows.  Negotiations are based on a 5-year-sales forecast and the proposed price, which must be in accordance with the minimum price of the UK, Germany, Italy and Spain markets. The agreed price is fixed for 5 years. If the sales exceed the previsions for the first 4 years, a rebate is perceived based on the ATV level and the share of increase in expenditure.

Unlike France, UK’s and Germany’s lists state what is not eligible for reimbursement such as OTCs, drugs for minor health problems, non-economic drugs etc. For instance, in UK a cancer drug that improves life quality but is not sensed to increase life expectancy shall not be reimbursed. Following the same logic, in Germany, drugs that prove only an enhancement in quality of life are excluded from reimbursement.

Even though drug prices in Germany, are being set freely, a cost-benefit assessment is required. In contrast with UK’s similar approach, Germany does not use the incremental cost-effectiveness ratio but the efficiency frontier. As cost-control measures, Germany classifies and groups drugs by therapeutic areas to which it attributes a covered reference price. All that exceeds the reference price is susceptible to co-payment. Innovative drugs on the other hand, are fully reimbursed. UK takes its toll on profits generated by pharma companies as they have to reimburse the surplus or lower their prices.

Furthermore, physicians have either a limit on prescription in Germany, so that all that exceeds the imposed target without justification implies repayment, or a limited budget in UK. No such limitations are perceived in France. Hence, as around 90% of doctor-patient appointments end with a prescription, French physicians are labelled as heavy prescribers.

It appears that high prescription rate together with high coverage convey the message of “free-of-charge” drugs and encouraged self-medication accountable for more than 15% of expenditures in France and Germany and 30% in UK.

Patients and prescribers should become more aware of pharmaceutical consumption and its financial impact. UK’s and Germany’s prescription limit, which discourages unjustified prescription, price reference and non-reimbursement for OTCs and some acute diseases are examples of cost reducing measures. For chronic and invalidating diseases France’s approach of full reimbursement could end up less expensive than UK’s life expectancy rule, as a higher life quality might ensure more autonomy to patients thus, maintain their activity and contribution to society.

 

Healthcare Regulation in France, Germany and UK

Table 1 : Healthcare Regulation in France, Germany and UK The table summarizes the healthcare regulation of France, Germany and UK in terms of reimbursement lists, prescription budget constraints and price control.

 

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