Pharmaceutical companies are not non-profit organizations. This sounds quite banal, but sometimes gets lost in the discussion about drug shortages. For the sake of their own permanent existence, companies have to make a profit. They invest, pay wages and taxes. If a product only makes a loss in the long run, it will be discontinued. Every manufacturer of cars and handbags does it that way. No one suffers or dies from it.
It’s different with medicines. People who are ill or who have to endure how their loved ones suffer rightly expect that the state will ensure that medicines do not run out and that there are enough doctors and nurses in the hospitals. But the state is less and less successful, through the rules it sets, in reconciling the claim to cover such existential basic human needs with the goals of companies that are responsible for their practical fulfillment.
Healthcare costs are rising, but nothing is getting better
Healthcare costs are going up and up, but many people feel it’s not getting any better. It would now be wrong to blame the morbidity of the system solely on the incumbent Federal Minister of Health, Karl Lauterbach. It is an organ failure that has built up over many decades. There was a lot of doctoring and not enough daring, also because there is considerable resistance in the system, for example from the statutory health insurance companies.
The supply of generics, which are drugs that are no longer patent protected, is a good example of collective failure. The prices for some products are pathetic. A children’s fever drink costs less than a movie ticket or a simple breakfast on the way to the office. All state control instruments – from the fixed amounts to the discount system and the price moratorium – currently only serve one purpose: to keep prices down. They have led to a competition to the bottom and manufacturers sourcing many active ingredients from China and India in the quest for profit. You could make money that way for a while, but now that doesn’t work anymore either.
Fixed prices and a non-transparent haggling about discounts are not good enough to ensure the supply of essential goods. Health Minister Karl Lauterbach wants to change that. The guiding principle of any reform must be to ensure supply and not to achieve the lowest price. The fact that the fixed prices and discount agreements for children’s medicines are to be dropped is a good first step, because the production of suppositories and juices is more expensive and the volumes are smaller. Why not the same for all medicines?
The production risk must be spread – even if the drugs then become more expensive
There must be new criteria for the tenders of the statutory health insurance companies that spread the risk and avoid dependencies. Several manufacturers from different regions of the world should always be involved in the delivery of a finished medicinal product. And it must be ensured that these also have several suppliers for active ingredients and other ingredients. It is of no use if four manufacturers from Italy, Germany, Israel and Poland are awarded the contract for a finished medicinal product, but they obtain their active ingredients from the same supplier in India. If it fails, the supply is at risk. Unfortunately, this is not a theoretical example. The same standards must apply to suppliers. If you don’t have to worry about the environment in India, you can deliver unbeatably cheaply.
But even if such new rules come, the bottlenecks will not disappear quickly because value chains have to be re-established and investments in new capacities take time. To do this, companies also need planning security beyond legislative periods.
It is very possible that such control mechanisms will increase the prices for generics. It’s worth it for a reliable supply. After all, there are certainly ways in the healthcare system to save costs elsewhere, for example through better digitization such as electronic patient files. It doesn’t hurt, or only a little, because some people find it difficult to share sensitive data about their own health. It’s not life-threatening.