Examining confidential wholesale margin estimates in European countries for the price negotiation of patented drugs in Germany: a statistical model
Abstract Background Based on the legal framework laid down in section 130b (9) of Book V of the German Social Code, various criteria are relevant for the negotiated price for new patented drugs in Germany. European reference prices (ERPs) are one criterion. The ERP is based on the ex-factory prices...
| Main Authors: | , , , , , |
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| Format: | Article |
| Language: | English |
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BMC
2024-04-01
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| Series: | Health Economics Review |
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| Online Access: | https://doi.org/10.1186/s13561-024-00503-9 |
| _version_ | 1797209594963951616 |
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| author | Iris an der Heiden Guido Schiffhorst Laura Müller Martin Albrecht Arne Bartol Stefanie Wiberny |
| author_facet | Iris an der Heiden Guido Schiffhorst Laura Müller Martin Albrecht Arne Bartol Stefanie Wiberny |
| author_sort | Iris an der Heiden |
| collection | DOAJ |
| description | Abstract Background Based on the legal framework laid down in section 130b (9) of Book V of the German Social Code, various criteria are relevant for the negotiated price for new patented drugs in Germany. European reference prices (ERPs) are one criterion. The ERP is based on the ex-factory prices (EFPs) of the countries included in the European country basket. However, in some of these countries, the EFP is not published due to confidential wholesale margins. Wholesale margins must therefore be estimated and deducted from purchase prices. In this context literature-based estimates to date do not assume regressive margins with higher pharmaceutical prices. This assumption is questionable and can lead to systematically underestimated country prices, especially for high-priced drugs. Percentage wholesale margins in the majority of European countries develop to a comparable extent regressively with increasing prices. It should therefore be examined (1) whether statistical models can predict the margins of individual countries, in principle and especially for countries where margins are unknown and regressive trends are likely, and (2) to what extent the estimation of margins improves when regressive statistical models are used to estimate margins instead of cross-price averages published in the literature. Methods Qualitative preliminary research explores the basic wholesale pricing mechanisms in countries with confidential wholesale margins. Wholesale margins for reimbursable drugs were then modeled for regulated European countries. Estimation quality and impact of the model was compared to estimations based on average margins. Results In both regulated countries and in countries with confidential wholesale margins, percentage margins of wholesalers develop regressively as drug prices rise. Regressive courses of margins can be resiliently modeled for the regulated countries using a power distribution with significantly lower mean squared errors in a linear mixed model in comparison to literature-based estimations with country-specific cross-price averages. Conclusion If there is reason to believe that margins are regressive, confidential wholesale margins are expected to be better estimated by the power function based on margins of regulated countries than by the published country-specific average margins, reducing significantly inaccurate effects on margin estimations of high-price drugs. |
| first_indexed | 2024-04-24T09:57:11Z |
| format | Article |
| id | doaj.art-f9fcd91f3d1a4e0db374bd87ae824dc0 |
| institution | Directory Open Access Journal |
| issn | 2191-1991 |
| language | English |
| last_indexed | 2024-04-24T09:57:11Z |
| publishDate | 2024-04-01 |
| publisher | BMC |
| record_format | Article |
| series | Health Economics Review |
| spelling | doaj.art-f9fcd91f3d1a4e0db374bd87ae824dc02024-04-14T11:07:46ZengBMCHealth Economics Review2191-19912024-04-0114111310.1186/s13561-024-00503-9Examining confidential wholesale margin estimates in European countries for the price negotiation of patented drugs in Germany: a statistical modelIris an der Heiden0Guido Schiffhorst1Laura Müller2Martin Albrecht3Arne Bartol4Stefanie Wiberny5IGES Institute GmbHIGES Institute GmbHHealth Economics, Market Access & Reimbursement, Janssen-Cilag GmbH, Pharmaceutical Companies of Johnson & JohnsonIGES Institute GmbHHealth Economics, Market Access & Reimbursement, Janssen-Cilag GmbH, Pharmaceutical Companies of Johnson & JohnsonHealth Economics, Market Access & Reimbursement, Janssen-Cilag GmbH, Pharmaceutical Companies of Johnson & JohnsonAbstract Background Based on the legal framework laid down in section 130b (9) of Book V of the German Social Code, various criteria are relevant for the negotiated price for new patented drugs in Germany. European reference prices (ERPs) are one criterion. The ERP is based on the ex-factory prices (EFPs) of the countries included in the European country basket. However, in some of these countries, the EFP is not published due to confidential wholesale margins. Wholesale margins must therefore be estimated and deducted from purchase prices. In this context literature-based estimates to date do not assume regressive margins with higher pharmaceutical prices. This assumption is questionable and can lead to systematically underestimated country prices, especially for high-priced drugs. Percentage wholesale margins in the majority of European countries develop to a comparable extent regressively with increasing prices. It should therefore be examined (1) whether statistical models can predict the margins of individual countries, in principle and especially for countries where margins are unknown and regressive trends are likely, and (2) to what extent the estimation of margins improves when regressive statistical models are used to estimate margins instead of cross-price averages published in the literature. Methods Qualitative preliminary research explores the basic wholesale pricing mechanisms in countries with confidential wholesale margins. Wholesale margins for reimbursable drugs were then modeled for regulated European countries. Estimation quality and impact of the model was compared to estimations based on average margins. Results In both regulated countries and in countries with confidential wholesale margins, percentage margins of wholesalers develop regressively as drug prices rise. Regressive courses of margins can be resiliently modeled for the regulated countries using a power distribution with significantly lower mean squared errors in a linear mixed model in comparison to literature-based estimations with country-specific cross-price averages. Conclusion If there is reason to believe that margins are regressive, confidential wholesale margins are expected to be better estimated by the power function based on margins of regulated countries than by the published country-specific average margins, reducing significantly inaccurate effects on margin estimations of high-price drugs.https://doi.org/10.1186/s13561-024-00503-9DrugsWholesale marginsInternational reference pricingExternal reference pricingEx-factory pricesEuropean pharmaceutical prices |
| spellingShingle | Iris an der Heiden Guido Schiffhorst Laura Müller Martin Albrecht Arne Bartol Stefanie Wiberny Examining confidential wholesale margin estimates in European countries for the price negotiation of patented drugs in Germany: a statistical model Health Economics Review Drugs Wholesale margins International reference pricing External reference pricing Ex-factory prices European pharmaceutical prices |
| title | Examining confidential wholesale margin estimates in European countries for the price negotiation of patented drugs in Germany: a statistical model |
| title_full | Examining confidential wholesale margin estimates in European countries for the price negotiation of patented drugs in Germany: a statistical model |
| title_fullStr | Examining confidential wholesale margin estimates in European countries for the price negotiation of patented drugs in Germany: a statistical model |
| title_full_unstemmed | Examining confidential wholesale margin estimates in European countries for the price negotiation of patented drugs in Germany: a statistical model |
| title_short | Examining confidential wholesale margin estimates in European countries for the price negotiation of patented drugs in Germany: a statistical model |
| title_sort | examining confidential wholesale margin estimates in european countries for the price negotiation of patented drugs in germany a statistical model |
| topic | Drugs Wholesale margins International reference pricing External reference pricing Ex-factory prices European pharmaceutical prices |
| url | https://doi.org/10.1186/s13561-024-00503-9 |
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