Sascha G. Wolf, Introduction in:

Sascha G. Wolf

Pharmaceutical Expenditure in Germany, page 17 - 18

Future Development, Political Influence and Economic Impact

1. Edition 2009, ISBN print: 978-3-8329-4164-2, ISBN online: 978-3-8452-2005-5

Series: Neue Studien zur Politischen Ökonomie, vol. 6

Bibliographic information
17 2. The Future Development of Pharmaceutical Expenditure in Germany 2.1. Introduction What happens with health care costs in an ageing society? The answer to this question seems to be simple: on average an eighty-year-old man causes eight times higher health care expenditure per year than a twenty-year-old. Should it not be plausible that an ageing population leads to a disproportionate increase in health care expenditure? The surprising response: not necessarily. Actually, since older people generate higher expenditure than younger people do, an increasing number of the elderly may causes rising health care disbursements – but, in fact, health care demand depends on a wider set of in? uences. In particular, technological progress leads to changes in medical therapies and treatments and affects morbidity as well as mortality. Consequently, age-speci? c health care expenditure is not ? xed, but varies over time. The way age-speci? c expenditure will change in the future has been widely discussed in literature. There are two competing main theses: cumulative consumption of health services due to higher life expectancy corresponds with the “medicalisation thesis” that traces back to Verbrugge (1984a). Hence, the ageing population will lead to a rapid increase in health care expenditure. In contrast, Fries’ “compression thesis” (Fries 1980) assumes that health care costs do not mainly rely on age, but on the distance of the expenditure event to death of the patient. After that, even declining disbursements in an ageing society could be possible. Up to now, empirical evidence for the two theses has not been found. The ongoing discussion about the medicalisation and the compression theses is the initial point for this chapter. Its aim is to establish an outlook for the future development of pharmaceutical expenditure within the German Statutory Health Insurance System (SHI) by considering the impact of age on drug disbursements. The analysis focuses exclusively on the pharmaceutical sector, which is one of the biggest costpools in the SHI and which has been repeatedly blamed for being the main cost-driver in the German health care system. From a political point of view, the impact of age on drug expenditure is a matter of particular interest. The analysis is based on panel data that have been gathered from the Pharmaceutical Index of the Scienti? c Institute of the Health Care Fund (WIdO).1 The comprehen- 1 I would like to thank Katrin Nink and Helmut Schröder from the WIdO for providing the dataset. To my knowledge, this chapter is the most comprehensive approach to ? nding evidence of the impact of age on SHI’s pharmaceutical expenditure in literature. Other surveys on the SHI commonly suffer from an inappropriate database or are constrained to data from the German Private Health Insurance. This is due to the fact that neither detailed cross-section nor long-term timeseries data from the SHI are available, although the data situation has improved since 1994 and the introduction of the Risk Compensation Scheme (“Risikostrukturausgleich”). 18 sive dataset enables separate examination of the single indication areas of the “Red List”, the pharmaceutical catalogue of the SHI. By means of grouping drugs whose members are characterised by common attributes, we will show that support for both the medicalisation and the compression theses can be found depending on what kind of disturbances of health are affected. Considering different evolutions of diverse disease patterns facilitates more sophisticated forecasting than can currently be found in literature. The chapter is organised as follows: since the research done on the pharmaceutical sector has been minimal, Section 2.2 gives an overview of the literature which is devoted to the prediction of total SHI health care expenditure. We will arrive at the conclusion that the results of the forecasts differ depending on the assumptions about the dynamic development of age-speci? c health care demand. Therefore, section 2.3 gives insights into the long-lasting discussion about the impact of age on expenditure and introduces the medicalisation and the compression theses. Afterwards, in section 2.4, we will start with the empirical analysis. By means of principal components and cluster analysis, groups of drugs with similar characteristics will be built and analysed due to their age-dependency. Based on these results, in section 2.5 an outlook on SHI’s future drug disbursements will be accomplished. Section 2.6 evaluates the predictions in respect to their political implications. Finally, section 2.7 draws the conclusions. 2.2. Forecasting Health Care Expenditure – Review of the Literature Forecasting SHI’s future expenditure development has been subject to numerous studies since the 1980s. A way of simplifying these surveys can be to divide them into those that consider only purely demographic impacts and those that additionally include the in? uence of technological progress. In general, “purely demographic impact” means that the prognoses rest upon the assumption that per capita age-related expenditure remains ? xed over time when the state of medical technology is controlled. In such a “status quo approach”, (Breyer and Felder 2004, p. 3) future expenditure changes arise solely from alterations in the demographic structure. Everything else, i.e. standards of diagnosis and therapies, quantity and quality of treatments, morbidity and mortality etc., are assumed to be constant and increasing disbursements are only due to an absolute increase in the number of the elderly. Recent surveys in particular state that this purely demographic impact will have only minor cost-driving in? uence and will lead to moderate increases in contribution rates of between 15 and 19 % by 2040 (? gure 2.1).2 However, as soon as technological progress is included, a far more dynamic expenditure development is being forecasted. 2 Studies which consider only demographic impact (selection): Schmähl (1983), Erbsland and Wille (1995), Knappe (1995), Oberdieck (1998), PROGNOS (1998), Buttler et al. (1999), Erbsland et al. (1999), Knappe and Optendrenk (1999), Hof (2001).

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Der Arzneimittelsektor der Gesetzlichen Krankenversicherung stand wiederholt im Fokus zahlreicher Gesundheitsreformen. Dennoch ist es bislang nicht gelungen, den Trend steigender Ausgaben nachhaltig zu bremsen. Die vorliegende Untersuchung leistet einen Beitrag dazu, die Ursachen dieser Entwicklung zu erklären und Lösungsansätze aufzuzeigen. Mittels Hauptkomponenten- und Cluster-Analyse wurden Gruppen von Arzneimitteln mit vergleichbaren Konsumeigenschaften gebildet. Jede Gruppe wurde auf den Einfluss der Altersabhängigkeit und des technologischen Fortschritts hin analysiert. Aufbauend auf diesen Ergebnissen wurde eine Prognose der zukünftigen Ausgabenentwicklung bis zum Jahr 2050 erstellt. Obwohl die Hauptkostenfaktoren exogen sind, steht der Gesetzgeber dem vorhergesagten ansteigenden Kostenpfad nicht hilflos gegenüber. Im Gegenteil: Anhand ökonometrischer Tests wird gezeigt, dass die Gesundheitspolitik in der Vergangenheit durch wahl- und klientelorientierte Interessendurchsetzung geprägt war. Mehr Effizienz in der Arzneimittelversorgung könnte durch die Einführung individueller Gesundheitssparkonten erzielt werden. Dies bestätigen die Resultate eines vertikal differenzierten Wettbewerbsmodells.