Drug shortages: Lauterbach’s prescription for shortages

Pharmacists who open empty drug drawers – that will soon be a thing of the past. At least when it comes to Health Minister Lauterbach’s plans, which he is presenting in Berlin today. What do these look like exactly?

the initial situation

Parents who are frantically trying to get fever juice for their sick children: It was conditions like this that put Federal Health Minister Karl Lauterbach under pressure in December. This was followed by a hectic key issues paper on drug shortages. Today the minister wants to put his plans in concrete terms with a draft law.

How extensive is the drug shortage?

According to the Federal Institute for Drugs and Medical Devices (BfArM), there are currently delivery bottlenecks for 467 medicines. The number of bottlenecks has increased significantly in recent years. Affected are, among other things, drugs for the treatment of cancer and antibiotics, but also asthma and cortisone preparations. The interest group Pro Generika also mentions cardiovascular drugs, painkillers and antidepressants, which are becoming increasingly scarce.

According to the Federal Ministry of Health, the situation with fever juices for children has “moderately eased”. The Ministry also points out that most of the medicines affected can be replaced, so that patient care is not jeopardized. For the pharmacies, however, this is associated with a great deal of effort. And the substitutes are not always the drugs that patients are prepared for and tolerate best.

What are the causes of the delivery bottlenecks?

The causes are manifold. This includes strong cost pressure in the manufacture of off-patent medicines, which has led to a large-scale relocation of production to China and India. The concentration on a few production locations and possible quality problems in production lead to further delivery uncertainties. Sudden sharp increases in demand can acutely exacerbate the problem. For example, when children had to deal with infections in droves last winter and fever juices became scarce.

The strong cost pressure on manufacturers of patent-free medicines, so-called generics, is homemade. Instruments have been anchored in the healthcare system to limit the health insurance company’s expenditure on medicines. For example through fixed amounts. These are maximum amounts that are set for the reimbursement of certain medicines. This instrument was introduced in 1989 under the leadership of the then Federal Labor and Social Affairs Minister Norbert Blüm (CDU) with the Health Care Reform Act.

Since 2003, health insurance companies have also been able to enter into discount agreements on medicines with pharmaceutical companies. The providers who offer the cheapest price are therefore awarded the contract. This was regulated in the Contribution Rate Securing Act, which was introduced by the then Federal Health Minister Ulla Schmidt (SPD). Since 2007, pharmacists have also been obliged to issue a prescription with the exact same active ingredient for which the patient’s health insurance company has concluded a discount agreement. The savings for the healthcare system amount to several billion euros per year.

What is Lauterbach planning?

Federal Health Minister Lauterbach (SPD) wants to reduce the cost pressure in the production of certain off-patent medicines, namely antibiotics or medicines to treat cancer. His goal is to strengthen the production of active ingredients in the EU. For this reason, health insurance companies should give more consideration to companies that produce active ingredients in the EU in tenders in the future. In addition to the award based on the cheapest price, they should award a contract based on the criterion of active ingredient production in the EU.

In future, there will no longer be any fixed prices or discount agreements for medicines for children. For off-patent, discounted medicines, storage for several months should generally become obligatory. There should be additional financial incentives for patent-protected drugs to promote the development of reserve antibiotics. Specifically, the higher prices for recognized reserve antibiotics with new active ingredients should apply longer when they are launched.

Lauterbach wants to expand the options for drug exchange for pharmacies. In the future, they should be able to exchange all prescription drugs that cannot be delivered within a reasonable time for an available drug with the same active ingredient. And in order to identify supply bottlenecks at an early stage in the future, the BfArM should set up an early warning system that identifies imminent supply bottlenecks for medicinal products.

How promising are the planned measures?

Experts largely agree that there is a need for action and that the measures are at least a start. Lowering the cost pressure on generics, i.e. copies of drugs that are no longer patent-protected, is definitely a good idea, says pharmaceutical expert Jasmina Kirchhoff from the German Economic Institute (IW). She speaks of a “ruinous price war for generic drugs”. A rethink is long overdue.

The fact that some discount agreements should no longer just be about the lowest price, but that European productions, which are more expensive compared to locations, should also be given a chance and that fixed price groups for pediatric medicines should be dissolved and discount agreements abolished, is a first step in the right direction, says Kirchhoff.

A rapid improvement in the situation and a prompt relocation of production to the EU is not to be expected from this. “We will not be able to find a European manufacturer for every drug by a long shot,” says pharmacy professor Ulrike Holzgrabe. The development of buying everything in China has been going on for years. That can also “not be turned back so ad hoc”. The professor expects a time horizon of at least ten years to set the relocation in motion.

Drug expert Wolfgang Becker-Brüser, editor of the independent journal “Arznei-Telegramm”, is also skeptical. Production in Europe has been reduced in large areas. A relocation is not possible in the short term.

The sometimes vague wording in the draft law also leaves question marks. For example, there is talk that the discount agreements should be advertised by the health insurance companies in such a way that manufacturers who produce the corresponding active ingredient in Europe “should” also be taken into account. There is nothing about “must” there, criticizes Becker-Brüser. In principle, this is only a declaration of intent and not an instruction to act.

Where does the bill fall short?

A major point of criticism relates to the fact that Lauterbach focuses on two groups of drugs when diversifying the supply chains: antibiotics and drugs to treat cancer. From the point of view of Bork Bretthauer from the Pro Generika association, this is incomprehensible. These drug groups would account for only one percent of all drugs (in daily therapy doses). This law will not solve the bottleneck problem, says Bretthauer.

The pharmaceutical expert Becker-Brüser sees it similarly. It is a fundamental problem – for example with painkillers, antihypertensives and many other drugs. In order to really improve the situation fundamentally, it would be necessary for at least essential medicines to be produced again in Europe, says Becker-Brüser.

Pharmaceutical expert Kirchhoff also criticizes that easing the pressure to save only for individual areas will not be enough to solve the fundamental problem in supply. In addition, from their point of view, strengthening Europe as a production location is not enough. Manufacturers should also be rewarded for making their supply chains broad enough, i.e. investing in additional suppliers or production sites, in order to be able to guarantee security of supply. From an economic point of view, it is less relevant where the suppliers and production sites are, but how many and how well distributed they are on the global market.

Who should bear the rising costs of medicines?

After hospital treatment and medical treatment, pharmaceuticals make up a significant expenditure item for health insurance companies. The costs have been rising for years, most recently to almost 49 billion euros last year. However, only a small part of this is generics, while the prescription share of generics in the entire pharmaceutical market is around 80 percent.

The “relevant cost drivers” are the patent-protected drugs, says drug expert Becker-Brüser. However, politicians are finding it difficult to intervene to regulate this. The argument that companies could otherwise withdraw from research on new drugs in Germany quickly comes up.

However, Becker-Brüser sees a lever: He recommends, for example, obliging companies to declare the costs actually incurred for research and development in a comprehensible manner and to make them transparent. Transparency is an important prerequisite for serious and understandable prices. In any case, you would have to spend a lot of money for the relocation of generics production. It’s about costs in the range of many billions of euros, says Becker-Brüser.

This is probably one of the reasons why the health insurance companies, who want to keep the contributors’ money together, are critical of Lauterbach’s plans. Stefanie Stoff-Ahnis from the Central Association of Health Insurance Funds (GKV Central Association) speaks in relation to discount contracts and fixed amounts of proven tools that would protect contributors from billions of dollars in additional costs each year. If these mechanisms are simply leveraged, the wallets of the contributors would be additionally burdened.

Pharmaceutical expert Kirchhoff advocates fundamental consideration of how the healthcare system can be set up to be future-proof. Looking every year to make provision for the financial hole in the statutory health insurance system is not a strategy.