Healthcare Reform and Expenditure on Drugs

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Abstract
Germany is in a period of transition with regard to healthcare reform. The number and intensity of cost control interventions increased during the last decade in an attempt to contain healthcare expenditure. The German legislature has implemented long term macroeconomic measures such as contribution rate stability and global budgeting. The mid-term goal is to reduce the structural deficits of the current system. This paper argues that reference prices, introduced in the 1989 Healthcare Reform Act, did not produce the expected savings. An analysis of the effects of the 1993 Healthcare Structure Act on pharmaceutical expenditure is also presented. Compared with the implementation of the reference price system, the introduction of global budgeting in 1993 has had a more effective and lasting cost-containment impact. The paper concludes with a review of the main aspects of the current reform discussion.

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