Material Matters

MARKET PLACE

Fostering a meeting of minds

Dealing with medical technology advances is one of the most important issues in the health care market. Product innovation particularly concerns the companies that make up the dynamic and innovative German medical technology industry. German medical technology manufacturers achieve a good third of their business volume with products that are less than three years old. In this sector, the companies that do research invest on average nine per cent of their sales revenues in research and development.

It remains a great challenge to convince decision makers, with the help of studies and clear lines of argument, that innovations in the health care market should not only be debated in terms of cost. BVMed, the trade association for the industry, is working towards having the entire cost of a treatment assessed and evaluated, not merely the typically higher initial costs of a new procedure considered in isolation. To do so, improved data is required that is based on the use of medical technologies under “everyday conditions” in clinical practice and the doctor’s office.

The Association is soliciting new alliances to produce change and make advances in the health care market. Better cooperation is needed between policymakers, health insurance funds, hospitals, physicians and industry to ensure that high quality medical technology is employed and that innovations and medical progress reach patients quickly. It is active on behalf of joint projects between companies in the sector, the health insurance funds and physicians to stipulate criteria for developing quality standards and guidelines to measure success. The common objective on behalf of the patient must be to counteract the trend towards cheap medical care. One positive example is the set of quality standards that are being introduced governing the supply of technical aids. These products include woundcare, incontinence and ostomy products and those for enteral feeding and orthesis. The quality standards, which have been developed by the health insurance funds and industry associations, will be introduced in the coming months into the funds’ technical aids registers. More projects are required in hospital care to make quality measurable.

The German market in 2008

Health care spending (without capital goods) in Germany in the medical devices sector in 2007 amounted to more than e22 billion. Of this, approximately e11.5 billion was spent on medical technical aids, e9.5 billion on other medical supplies and e1 billion on medical dressings, which are classified as pharmaceuticals. Of this total, the share of statutory health insurance expenditure amounted to approximately e14 billion.

The German medical technology industry employs 95,000 people in approximately 1200 companies (relates to only those companies with more than 20 employees). In addition, there are approximately 10,000 small businesses working in the sector with 75,000 employees. Thus, overall the industry employs approximately 170,000 people in approximately 12,000 companies.

The total business volume of German medical technology manufacturing companies increased by 8.1 per cent to 15.9 billion in 2006. The domestic sales volume rose by 3.2 per cent to e5.7 billion and export sales by 11.1 per cent to e10.2 billion. In exports, Germany, with a world trade share of 14.6 per cent, is ranked second worldwide behind the United States (30.9 per cent) and distinctly ahead of Japan (5.5 per cent).

How to stay ahead

How can Germany’s leading market position in medical technology be preserved and expanded? How can general conditions be shaped to foster the industry? BVMed summarises here an appeal to policymakers, the self-governing health insurance funds and hospital and doctors’ associations in five areas:

• A closer relationship is required between the political spheres of the economy, research, finance and health to coordinate cooperation amongst all the responsible ministries. This will make the health economy more effective, essentially through better coordination of financial programmes.
• Thinking in health economics needs to be in terms of processes. An entire case must be considered, not merely isolated product costs. It is disturbing that innovations are often discussed only with regard to cost considerations. That point of view is too short term. It is misleading to look in isolation at the often higher initial costs of a new method/therapy. Therefore, the industry must work with hospitals and users to develop instruments for determining the benefits and costs over the full length of a particular treatment or disease. Faster adoption of innovations also usually offers economic advantages by leading to a reduction of sick days and shorter recovery times.
• To increase the capacity for innovation by hospitals and the industry, it is important to preserve the principle of “permission with the reservation of prohibition.” Currently, many medical technology innovations are first applied in hospitals. They are subject to reimbursement by statutory health insurance, but unless (and until) there is a negative decision by the Joint Federal Committee (JFC), the Gemeinsamer Bundesausschuss, the hospitals can continue to employ the product. There are proposals to stop this practice and apply the same principles to hospitals as those used in the outpatient sector, where proof of benefit must be established by the JFC before innovative products can be used/are accepted for reimbursement. If the proposal goes ahead, it would be detrimental to health care. The existing hospital practices must be maintained so that innovative medical technologies can be made available without delay to all patients who require them. Revision and simplification of the so-called innovation clause for hospitals is required so that they are free to introduce new products and procedures.
• Faster introduction of innovations is essential and for this the industry needs more flexible reimbursement schemes. These include flexible co-payment schemes and permission to self-insure. If the system is opened up, then the health insurance funds will compete for the rapid introduction of innovations. This also requires simpler processes: unambiguous procedures, deadlines and evaluation procedures for processes assessment, or revision of the Diagnosis Related Groups reimbursement model. With clear definitions, reimbursement as a whole can be faster.
• A particularly sensitive issue is the supply of technical aids. Health care reform has brought about a fundamental change in supply structures. Organisations that provide care (hospitals and outpatient and home care providers) must be contracted partners of the health insurance funds, and this is usually determined by competitive bidding. Legal clarification is urgently required to establish that health insurance funds are public bodies and that invitations to tender constitute public orders. Invitation to tender is not an adequate way to supply technical aids, which require customised manufacture or adjustment or involve a high portion of service. An alternative approach is needed to provide optimised, high quality care of extremely sick people who cannot look after themselves, and the chronically ill.

Commitment

If the industry promotes innovations, while taking greater consideration of quality aspects, then medical technology companies will remain the growth engine of the health economy for the benefit of patients in the future.

Joachim M. Schmitt is Director General and Member of the Board and Manfred Beeres is Communication Director at BVMed, the German medical technology association, Reinhardtstrasse 29 b, D-10117 Berlin, Germany, tel. +49 30 246 255 0, email: beeres@bvmed.de, www.bvmed.de