AOK’s successful strategy 2011 – contracts of procurement ... · AOK’s successful strategy 2011 – contracts of procurement, generics, on-patent drugs . Dr. Christopher Hermann

AOK Baden-Württemberg

European Healthcare Seminar | “Identifying Healthcare Investment Opportunities” July 01, 2011, London

AOK’s successful strategy 2011 – contracts of procurement, generics, on-patent drugs

Dr. Christopher Hermann Deputy CEO AOK Baden-Württemberg AOK’s Chief negotiator discount contracts with pharmaceutical companies

AOK Baden-Württemberg July 01, 2011 Dr. Christopher Hermann | European Healthcare Seminar 2

Agenda

Statutory health insurance system in Germany and AOK group 1

What is the issue? 2

AOK’s tender 2011-2013 (AOK VI) – generics 3

AOK’s tenders – generics: up to the present 4

New AOK tender (AOK VII) – generics 5

Contracts to on-patent drugs and vaccines 6

Conclusion 7


Agenda




AOK’s tenders generics: up to the present 4



Conclusion 7



• AOK i.e. local general health insurance fund

• AOK group: biggest nationwide h.i.f. in Germany

• 12 h.i.f. all over Germany

• approx. 25 m. insurants

• market share 35%

• s.h.i. system: traditional – anti-competitive – structures are changing step by step


Agenda







Conclusion 7



Source: AOK’s scientific institute (WIdO) according to Ministry of Health (KJ1 und KV45) and AOK’s data of medical prescription (§ 300 SGB V )

0

2

4

6

8

10

12

14

0

10

20

30

40

50

60

70 19

98

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

AOK’s expenditures in billion EUR

AOK’s turnover in pharmaceuticals in billion EUR

Total expenditures

Med. products’ turnover

Generic drugs market


What is the issue? Market development 2

Source: ABDA

Producers’ significance in value adding chain of pharmaceuticals

Savings by discount contracts are supplied by pharma-ceutical industry

bn EUR

0

2

4

6

8

10

12

14

16

18

20

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Pharmaceutical industries’ added value and advanced services

Pharmacies’ added value by phamaceutical service

Value added tax

Pharmaceutical wholesalers’ added value

4.57

1.14

4.46

18.39


Agenda







Conclusion 7


AOK’s tender 2011-2013 (AOK VI) Basic elements (I) 3

• EU-wide public tender closely follows the formal contracting laws

• New regulation 01/01/2011: drug market reorganization act (AMNOG): cartel law, civil jurisdiction

• Regional lots: 7 lots of coherent AOKs with different number of insurants:

AOK Bavaria (4.3 m. insured) AOK HE, PLUS (4.2 m. insured) AOK BW (3.8 m. insured) AOK NW (2.7 m. insured) AOK RH-HH, RP, SL (4.0 m. insured) AOK Bremen, LoSa, SAN (3.4 m. insured) AOK NO (1.8 m. insured)

– offers allowed to all regional lots –


AOK’s tender 2011-2013 (AOK VI) Basic elements (II) 3

7 regional lots

Source: AOK media service

AOK Bavaria


AOK Hesse AOK PLUS

AOK Rhineland/Hamburg AOK Rhineland-Palatinate AOK Saarland

AOK Northwest

AOK Northeast

AOK Saxony-Anhalt AOK Bremen/Bremerhaven AOK Lower Saxony

Regional lot 1

Regional lot 2

Regional lot 3

Regional lot 4

Regional lot 5

Regional lot 6

Regional lot 7


AOK’s tender 2011-2013 (AOK VI) Basic elements (III) 3

• Prescription – only drugs of 80 off-patent active substances/ substance combinations (lots for areas)

• AOK’s total expenditure so far 2.0 billion EUR p.a.

• New insertion of drugs permitted until contract period starts

• Contracting per area or regional lot only to one tenderer/ one consortium of tenderers

• Contract period: 2 years (June/01/2011 - May/31/2013)


Agenda







Conclusion 7


AOK’s tenders: up to the present Attacks 4

Legal proceedings against AOK’s tenders

active pharmaceutical companies

orders/ court orders

9

30

tender II 2008

22

60

tender III 2009

tender V 2010

1

1

tender IV 2010

6

9

tender VI 2011

16

29

2

4

tender I 2007


AOK’s tenders: up to the present Results 4

AOK’s total expenditure so far 3.5 billion EUR p.a.

1,020 contracts concluded with 49 pharmaceutical companies

» one tenderer got all acceptance nationwide for more than two-thirds of the substances

» two tenderers share the regional lots of 17 substances » in case of one substances, three tenderers share the regional lots

acceptance active substance 1 154 2 17 3 1

regional lots:



Discount volume and saving potential p.a. of the tendered substances

334 m. EUR Discount volume AOK group 2007-2009

436 m. EUR Discount volume AOK group 2010

600 - 700 m. EUR Saving potential AOK group 2011

1.4 bn. EUR Total discount volume 2007-2011



Discount contracts with pharmaceutical companies …

… take effect on those who are in charge of pricing: the pharmaceutical companies

… disclose significant gains of efficiency in spite of continuing, binding prices of drugs

… optimise the continual supply of identical drugs during the 2-year contract period

… simplify the stockkeeping of pharmacies with more of casual customers


Agenda







Conclusion 7



New nationwide tender in preparation

• Public tender planned for 9/2011 • 100 off-patent active substances (lots for areas) • 7 regional lots = 700 contracts planned • AOKs` total expenditure so far 2.02 bn. EUR p.a. • contract period 2 years: planned April/01/2012 - March/31/2014

Advance information will be published by the Publications Office of the European Union TED (tenders electronic daily): online version

of the Supplement of the Official Journal of the European Union http://ted.europa.eu


Agenda







Conclusion 7



On-patent drugs 1. New regulation 1.1.2011: drug market reorganisation act (AMNOG)

Older on-patent drugs: legal uncertainty EU-wide public tender required or not, no AOK group procedure, diverse contracts already signed

New on-patent drugs: • New legal situation without additional benefit and fixed amount category

= fixed amount • with additional benefit or

without additional benefit and without fixed amount category 1st step: Nationwide contract head association of h.i.f. – pharmaceutical companies or arbitation decision 2nd step: Contract between h.i.f. and the pharmaceutical company = additional or compensating contract documents, freedom of scope (arrangement with doctors about preferential order)



Vaccines 2. • exclusive contract between h.i.f. and pharmaceutical company possible • procedure comparable to generics


Agenda







Conclusion 7


Conclusion 7

Reaching legal certainty for realisation of discount contracts for generics

Increasing the security of supply of AOK insured

Ensuring suppliers’ plurality by 1,020 contracts with 49 tenderers / pharmaceutical companies

Developing significant savings to stabilize h.i.f. expenditure

„Much ado about much!“ 4 Big Points


European Healthcare Seminar | “Identifying Healthcare Investment Opportunities” July 01, 2011, London

Thank you for your attention

Dr. Christopher Hermann Deputy CEO AOK Baden-Württemberg AOK’s Chief negotiator discount contracts with pharmaceutical companies

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AOK’s successful strategy 2011 – contracts of procurement ... · AOK’s successful strategy 2011 – contracts of procurement, generics, on-patent drugs . Dr. Christopher Hermann