Dataset Information

Competition in the German pharmacy market: an empirical analysis.

ABSTRACT:

Background

Pharmaceutical products are an important component of expenditure on public health insurance in the Federal Republic of Germany. For years, German policy makers have regulated public pharmacies in order to limit the increase in costs. One reform has followed another, main objective being to increase competition in the pharmacy market. It is generally assumed that an increase in competition would reduce healthcare costs. However, there is a lack of empirical proof of a stronger orientation of German public pharmacies towards competition thus far.

Methods

This paper analyses the self-perceptions of owners of German public pharmacies and their orientation towards competition in the pharmacy markets. It is based on a cross-sectional survey (N?=?289) and distinguishes between successful and less successful pharmacies, the location of the pharmacies (e.g. West German States and East German States) and the gender of the pharmacy owner. The data are analysed descriptively by survey items and employing bivariate and structural equation modelling.

Results

The analysis reveals that the majority of owners of public pharmacies in Germany do not currently perceive very strong competitive pressure in the market. However, the innovativeness of the pharmacist is confirmed as most relevant for net revenue development and the profit margin. Some differences occur between regions, e.g. public pharmacies in West Germany have a significantly higher profit margin.

Conclusions

This study provides evidence that the German healthcare reforms aimed at increasing the competition between public pharmacies in Germany have not been completely successful. Many owners of public pharmacies disregard instruments of active customer-orientated management (such as customer loyalty or an offensive position and economies of scale), which could give them a competitive advantage. However, it is clear that those pharmacists who strive for systematic and innovative management and adopt an offensive and competitive stance are quite successful. Thus, pharmacists should change their attitude and develop a more professional business model.

SUBMITTER: Heinsohn JG

PROVIDER: S-EPMC3856528 | biostudies-literature | 2013 Oct

REPOSITORIES: biostudies-literature

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Publications

Competition in the German pharmacy market: an empirical analysis.

Heinsohn Jörg G JG Flessa Steffen S

BMC health services research 20131010

<h4>Background</h4>Pharmaceutical products are an important component of expenditure on public health insurance in the Federal Republic of Germany. For years, German policy makers have regulated public pharmacies in order to limit the increase in costs. One reform has followed another, main objective being to increase competition in the pharmacy market. It is generally assumed that an increase in competition would reduce healthcare costs. However, there is a lack of empirical proof of a stronger ...[more]

PMID: 24112461

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Project description:ImportanceDuring the last decade, increases in drug prices for commonly prescribed dermatologic medications have outpaced the rate of inflation, national health care growth, and reimbursements. Among nondermatologic medications, studies have shown a role for robust generic market competition in reducing drug prices. The association between competition and the costs of topical dermatologic generic drugs has not been evaluated.ObjectiveTo characterize the association between changes in drug price and the number of US Food and Drug Administration (FDA)-approved manufacturers among the most commonly used topical dermatologic generic products.Design, setting, and participantsThis retrospective cost analysis of the most commonly prescribed topical dermatologic generic drugs used cumulative annual claims data from the Medicare Part D Prescriber Public User File to identify 597 dermatologist-prescribed drugs with more than 10 claims. The number of manufacturers and the price per unit were identified from the FDA Orange Book and the National Average Drug Acquisition Cost (NADAC) database, respectively, for 2013 through 2016. Drugs that were nondermatologic, were not topically administered, were missing NADAC data, were lacking a generic formulation, or had fewer than 400 claims were excluded.Main outcomes and measuresPrimary outcomes included per-unit drug price and number of FDA-approved manufacturers. Pricing measures were adjusted for inflation and are reported in 2016 dollars.ResultsThe present analysis included 116 topical dermatologic generic formulations, representing 70.5% of the total Medicare Part D dermatologist-coded claims from 2015. Drug formulations with 1 to 2 manufacturers during the study period sustained a median percentage increase in price of 12.7%, whereas those with more than 6 manufacturers had a median percentage decrease in price of 20.5%. Formulations with 1 to 2 manufacturers had a 20.6%, 19.5%, and 33.2% higher percentage increase in price than those with 3 to 4 manufacturers, 5 to 6 manufacturers, and more than 6 manufacturers, respectively. There was a statistically significant inverse association between the percentage change in drug price and median number of manufacturers (Spearman correlation coefficient, -0.26; P = .005).Conclusions and relevanceThe negative association between the change in drug price and the median number of manufacturers of generic topical dermatologic drugs indicates a role for market competition in controlling the costs of generic drug prices within dermatology. These findings support policies that facilitate robust market competition among topical dermatologic generic drugs produced by a limited number of manufacturers.

Project description:The Medicare program insures >80% of patients with ESRD in the United States. An emphasis on reducing outpatient dialysis costs has motivated consolidation among dialysis providers, with two for-profit corporations now providing dialysis for >70% of patients. It is unknown whether industry consolidation has affected patients' ability to choose among competing dialysis providers. We identified patients receiving in-center hemodialysis at the start of 2001 and 2011 from the national ESRD registry and ascertained dialysis facility ownership. For each hospital service area, we determined the maximum distance within which 90% of patients traveled to receive dialysis in 2001. We compared the numbers of competing dialysis providers within that same distance between 2001 and 2011. Additionally, we examined the Herfindahl-Hirschman Index, a metric of market concentration ranging from near zero (perfect competition) to one (monopoly) for each hospital service area. Between 2001 and 2011, the number of different uniquely owned competing providers decreased 8%. However, increased facility entry into markets to meet rising demand for care offset the effect of provider consolidation on the number of choices available to patients. The number of dialysis facilities in the United States increased by 54%, and patients experienced an average 10% increase in the number of competing proximate facilities from which they could choose to receive dialysis (P<0.001). Local markets were highly concentrated in both 2001 and 2011 (mean Herfindahl-Hirschman Index =0.46; SD=0.2 for both years), but overall market concentration did not materially change. In summary, a decade of consolidation in the United States dialysis industry did not (on average) limit patient choice or result in more concentrated local markets. However, because dialysis markets remained highly concentrated, it will be important to understand whether market competition affects prices paid by private insurers, access to dialysis care, quality of care, and associated health outcomes.

Dataset Information

Competition in the German pharmacy market: an empirical analysis.

Background

Methods

Results

Conclusions

Publications

Competition in the German pharmacy market: an empirical analysis.

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