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EurohealthVolume 14 Number 3, 2008RESEARCH • DEBATE • POLICY • NEWS

e-Health in Canada • Community pharmacy in the 21st Century • Development of a case mix system in JapanOTC pharmaceutical market – policy and practice • Cancer control in Europe • Health Insurance in Moldova

Procurement of medical devices inEngland: application to wound care

Reference pricing for medicaldevices in Germany

Financing medical devices in Italy:cardiovascular technologies

Medical devices:exploiting the potential in Europe

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Eurohealth is a quarterly publication that provides a forumfor researchers, experts and policymakers to express theirviews on health policy issues and so contribute to aconstructive debate on health policy in Europe.

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ISSN 1356-1030

Medical devices: exploiting thepotential

Medical devices, large and small, that are vital to thefunctioning of health care systems, are the focus ofmuch of this issue of Eurohealth. These devices are alsosignificant to the European economy: in 2005 alonethe European medical technology industry generatedsales of more than €63.6 billion, while investing morethan €3.5 billion in research and development andemploying 435,000 skilled workers. In their overviewarticle, Elio Borgonovi, Reinhard Busse and PanosKanavos argue that much more can be done tooptimise the value, effectiveness and efficiency ofmedical devices in Europe. They call for furtherevidence to demonstrate the numerous benefits arisingfrom investments in such technology, and, in parallel,to look at how the dynamics of coverage, procure-ment, reimbursement, and diffusion operate acrossdifferent health systems and regulatory environments.Contributions looking at different approaches andexperience in Italy, Germany and England also featurein this issue.

We are also delighted to publish an article by Delia-Marina Alexe and colleagues on the challenges posedby cancer in Europe today and the on measuresavailable to tackle this problem. They call for a muchmore integrated approach to cancer control, includingthe development of national coordinated cancer plans,as well as investment in effective cancer informationsystems including screening registries. At an EU levelthe authors note that the Data Protection Directivemay impede the effective operation of cancer registriesand requires reform, while further steps can be takento tackle health inequalities and promote strategies tocombat aspects of unhealthy lifestyles such as tobacco,alcohol and poor nutrition that are risk factors forcancer.

Among other contributions to the issue are twoperspectives on aspects of health reform from outsideEurope. One looks at the use of e-Health in Canadaand may be of significant interest to Europeancountries considering how best to expand their owne-Health systems. The second describes the challengeof introducing a case mix system to Japan, illustratingthe extent to which experience in Europe has helped toshape health policy in the country.

David McDaid EditorSherry Merkur Deputy EditorPhilipa MladovskyDeputy Editor

MENT

EurohealthCOM

Contents EurohealthVolume 14 Number 3

Tit Albrecht is Researcher in Health Services, Institute ofPublic Health, Ljubljana, Slovenia.

Delia-Marina Alexe is Clinical Research Fellow, HealthServices Research Unit, LSHTM, UK.

Michael Bäumler is Research Fellow, Berlin University ofTechnology, Germany.

Elio Borgonovi is Professor of Public Management,Bocconi University, Italy.

Christine Bond is Professor of Primary Care (Pharmacy),Centre of Academic Primary Care, Aberdeen, Scotland.

Reinhard Busse is Professor for Healthcare Manage-ment, Berlin University of Technology, Germany.

Giulia Cappellaro is Research Fellow, Centre forResearch on Health and Social Care Management,Bocconi University, Italy.

Michel Coleman is Professor of Epidemiology & VitalStatistics, Health Services Research Unit, LSHTM, UK.

Kenji Fujimori is based at the Division of MedicalManagement, Hokkaido University Hospital, Japan.

Kiyohide Fushimi is based at the Department of HealthPolicy and Informatics, Tokyo Medical and DentalUniversity Graduate School of Medicine, Japan.

Kohichi B Ishikawa is based at the Statistics and CancerControl Division, National Cancer Center, Japan.

Hideki Hashimoto is based at the Department of HealthEconomics and Epidemiology Research, TokyoUniversity, Japan.

Panos Kanavos is Senior Lecturer in International HealthPolicy, Department of Social Policy, LSE, UK.

Kazuaki Kuwabara is based at the Department ofHealth Care Administration and Management, KyushuUniversity, Japan.

Shinya Matsuda is based at the Department ofPreventive Medicine and Community Health, Universityof Occupational and Environmental Health, Japan.

Martin McKee is Professor of European Public Health,Health Services Research Unit, LSHTM, UK.

Sabine Meissner is Research Fellow, Berlin University ofTechnology, Germany.

Ricard Meneu is based at the Research Centre onHealth and Economics, Universitat Pompeu Fabra,Spain.

Denis Protti is Professor, School of Health InformationScience, University of Victoria, Canada.

Erica Richardson is Research Officer, European Obser-vatory on Health Systems and Policies, LSHTM, UK.

Jonas Schreyögg is Assistant Professor for Economicsand Management of Health Technologies, BerlinUniversity of Technology, Germany.

Ad Schuurman is Head of the Reimbursement Depart-ment, Dutch Health Care Insurance Board, Amsterdam.

Corinna Sorenson is Research Officer, LSE Health, LSE,UK.

Aleksandra Torbica is Assistant Professor in Public andHealth Care Management, Bocconi University, Italy.

Public Health Perspectives12 Cancer control in Europe today: challenges and policy options

Delia-Marina Alexe, Tit Albreht, Martin McKee, Michel Coleman

Medical Devices1 Financing medical devices in Europe: Current trends and

perspectives for researchElio Borgonovi, Reinhard Busse, Panos Kanavos

4 The procurement landscape for medical devices in England:Recent developments and applications to wound careCorinna Sorenson

7 Financing medical devices: The case of implantable cardioverterdefibrillators and coronary stents in ItalyGiulia Cappellaro, Aleksandra Torbica

9 Reference pricing for outpatient medical aids in GermanyMichael Bäumler, Jonas Schreyögg, Sabine Meissner,Reinhard Busse

Health Policy Developments16 Lampedusa and pharmaceutical distribution: community

pharmacy in the 21st centuryRicard Meneu

19 The over-the-counter pharmaceutical market – policy and practiceChristine Bond

25 Development and use of the Japanese case-mix systemShinya Matsuda, Kohichi B Ishikawa, Kazuaki Kuwabara,Kenji Fujimori, Kiyohide Fushimi, Hideki Hashimoto

30 e-Health in Canada: Lessons for European health systemsDenis Protti

European Snapshots33 Assessment for reimbursement: Collaboration at EU-level, the

MEDEV-experimentAd Schuurman

34 Moldova: Using social health insurance to reduce out-of-pocketpayments and improve equityErica Richardson

Evidence-informed Decision Making36 “Risk in Perspective” Ozone and mortality – an update

39 “Bandolier” Pharmacy care in older patients

Monitor41 Publications

42 Web Watch

43 News from around Europe

Identifying the optimal allocation ofavailable resources in order to maximisepopulation health gains has been andcontinues to be a key challenge for healthcare systems. One of the main perceiveddrivers of rising health care expenditureshas been the rapid pace of innovation inmedical technology.1 While medical tech-nology is not always cost increasing andthere are significant opportunities toreduce overall costs by adopting new tech-nologies, efficiency savings are frequentlyrealised with a significant time lag. Ascontinued advances in research areexpected to produce an ever-increasingnumber of alternatives for the detection,prevention and treatment of disease, newproducts will exert increasing pressure onhealth care policy makers to adoptmeasures to regulate the medical tech-nology market with regards to access,quality and public funding.

In order to be effective, such actionsshould take into consideration several‘biases’ historically applied to the medicaltechnology sector. The first bias concernsaccess to innovative technologies. Earlierstudies in health economics in the 1950sand 1960s showed that when new devicesbecame widely available there was ageneral overuse compared to initial calcu-lations or predictions based on approvedindications, suggesting potential inappro-priate use. These phenomena encouragednotably strict policies, signalling to policy-makers that they should be careful in theirdecisions regarding the financing of tech-nologies, especially the most expensive.

The second bias is related to the fact that,to date, policy measures applied to medicaltechnology have been in some wayconsidered similar to those pertaining topharmaceuticals. This is particularlyrelevant to cost containment policies

applied in the pharmaceutical sector, suchas reference pricing, price controls, andprice caps, among others.

Medical devices and pharmaceuticals:distant cousins, not twins!The second bias deserves particularattention. This is especially important in anera in which policy-makers have started toimplement measures to ensure the effec-tiveness and cost-effectiveness, often basedon health technology assessments (HTA),of medical devices. HTA and relatedstrategies are often founded on notions ofevidence-based medicine (EBM), wherebya range of evidence (for example, costs,efficacy, cost-effectiveness, equity)regarding a given technology is requiredby decision-makers to support adoption.However, EBM principles in general andHTA in particular, have principallyfocused on pharmaceuticals. Conse-quently, experiences with the pharmaceu-tical sector in this regard are oftenconsidered in the development of suchmethods and processes for medical devices.

However, is this ‘export’ of pharmaceuticalpolicies justified? The medical technologyindustry is largely, if not completely,different from drugs. There are severalreasons for this departure. First, in terms

Eurohealth Vol 14 No 31

MEDICAL DEVICES

Financing medical devices inEurope:Current trends and perspectives for research

Elio Borgonovi, Reinhard Busse and Panos Kanavos

Summary: Medical technologies offer numerous benefits, in both health andeconomic terms. However, there is concern and a general lack of understandingabout how to best realise their ultimate value, effectiveness and efficiency inhealth care. The establishment of the European Health Technology Institutefor Socio-Economic Research (EHTI) aims to create a platform for researchand debate around these key issues, bringing together academia, industry, andpolicy-makers. This article discusses current trends and considerations in theregulation and financing of medical devices in Europe, outlines the principalobjectives of the Institute, and reflects upon the first year of research, whichfocused on the coverage, procurement, and reimbursement of selected medicaltechnologies in six EU countries.

Key Words: Medical Technology, Regulation, Financing, Health Care Systems

Elio Borgonovi is Full Professor of Public Management, Bocconi University, Milan, Italy.

Reinhard Busse is Professor and Department Head for Healthcare Management, andDean of the Faculty of Economics and Management, Technische UniversitätBerlin,Germany.

Panos Kanavos, is Senior Lecturer in International Health Policy, Department of SocialPolicy and Merck Fellow in Pharmaceutical Economics at LSE Health, London School ofEconomics and Political Science, United Kingdom. Email: [email protected]

of its structure, the medical technologyindustry is much more fragmented. Eventhough there are big multi-nationalcorporations, there are many moremedium and small companies in operationand it is true that the development of newmedical devices frequently takes place insmaller entrepreneurial companies. Thismay be a reflection of differences in thetwo industries in terms of risk perceptionand regulations, particularly in connectionwith the clinical development programme(extent, uncertainty and intensity offinancial resources) in the pharmaceuticalsector compared with medical devices.

Second, the significance of patents asincentives for innovation is influenced bythe different nature of Research andDevel-opment (R&D) in the pharmaceutical andmedical device industries.2 In pharmaceu-ticals, it is very difficult to design amolecule that simulates all the efficaciesand side effects of another drug; even if thiswere possible, patentability for twovirtually identical molecules would benearly impossible. However, this is not thecase with medical devices. A furtherdifference between drug and medicaldevice patents lies in which aspects of theinnovation lead to patentable claims. Inmedical devices, the basic principle can bepatentable, but specific devices usually arenot. In the pharmaceutical industry, it isoften just the opposite. Generallyspeaking, it is possible to design a newdevice for a specific application in anumber of different ways. The innovationoften lies in the underlying principle beingused in the particular application.

Third, the innovation process differssignificantly between pharmaceuticals andmedical devices. For the pharmaceuticalindustry, the key issue is to discover amolecule that, when demonstratedeffective for a certain illness, may immedi-ately become a blockbuster in terms of thereturn on investments made. The R&Dprocess is very long (approximately twelveyears), with the overall costs reachingseveral hundred million euros permarketed drug. The ‘me too’ phenomenon(i.e. the marketing of drugs with slightlymodified molecules, but similar effec-tiveness), is present but, in general, it haslimited effects on product development orwithin-product differentiation. Bycontrast, the innovation process formedical technology is incremental.Although there are some cases of break-through innovation, it is more typical toiteratively improve existing products in

their performance and safety. Moreover,medical devices often require ‘lead users’for their success (for example, operatingequipment needs to be accepted and usedby certain surgeons); the partnershipbetween technology producers/suppliersand health service delivery organisationsassumes an integral role in this process.

Fourth, and building upon the previouspoints, a further important differencebetween pharmaceuticals and devices liesin the ability and propensity to makechanges in the device product duringclinical evaluation and after it has beenmarketed.2 A pharmaceutical product isusually in its completed form prior tomarketing and is described by its chemicalformula; in most cases, dosage remainsstable during the life of the product. Incontrast, devices are constantly beingmodified to remove defects, improveperformance and add features throughoutthe product lifecycle. These changes occurfrequently and fuel competition amongmanufacturers, with a view to offeringbetter product performance and features.

As a result of the continuous productchanges that devices undergo, as well as thedifferences in the R&D process, it is hardlysurprising that the product life cycle in themedical device industry is much shorterthan that in the pharmaceutical industry,rendering individual medical devicesobsolete within a few years, comparedwith the statutory patent term (twentyyears) and marketing exclusivity periods(up to ten years) that apply to pharmaceu-ticals. For all of the above, there are goodreasons to believe that the ‘regulatoryapproach’ applied to the medical tech-nology sector should be different from thatemployed in the pharmaceutical sector.High-quality scientific research on theeffects of policy instruments transferredfrom the pharmaceutical sector willprovide the necessary evidence to policymakers to understand relevant differences.

The European Health Technology Institutefor Socio-Economic ResearchBased on this rationale, the EuropeanHealth Technology Institute for Socio-Economic Research (EHTI) was estab-lished in 2007.3 The idea of the EHTI wasbased on the aim of forming a collaborativenetwork of highly reputable academicinstitutions, Bocconi University (BU),Milan, Technical University (TU) ofBerlin, London School of Economics andPolitical Science (LSE), industry and thepolicy-making community. This is an

innovative model with several tangibleadvantages, including: (1) creation ofsynergistic effects between all partnersparticipating in the research process, (2)consideration of policy-makers’ needs and,(3) generation of evidence based on robustmethodology that may be useful tomultiple stakeholders and the researchcommunity. The Institute aims to becomeone of the principal actors in the Europeanhealth policy arena, leading the debatearound key issues affecting the viabilityand sustainability of the medical tech-nology sector and its link to societal healthand wealth.4 In this respect, it also aims tofill an important gap relating to the under-standing of medical technology, the impor-tance of R&D and the benefits accruing toboth patients and society.

Research objectivesFrom a research perspective, EHTI focuseson conducting and supporting high-quality empirical research on a range oftopics relevant to medical technology,including the value of innovation, qualityof life, quality of care, productivity,financing and reimbursement. In the firstyear of activity, the three universities havefocused their research on the financingmechanisms for, and access to, medicaltechnology in European countries.

Regulatory policies in general, andfinancing measures in particular, areconsidered important factors impacting onthe availability of, and access to, medicaldevices. It is therefore essential to addressthe issue of how medical devices arecurrently regulated and financed acrossdifferent health care settings in Europe, aswell as understanding who benefits frominvestments in medical technology. To thatend, the ultimate aim is to providesystematic, comparative evidence onregulatory policies across countries andtechnologies and to generate data on theimpact of adopted policies in terms oftechnology uptake and diffusion. Thisresearch fulfils an important role as theexisting literature has not yet sufficientlyaddressed these issues in a systematic way.

Since the early 1990s, market access formedical devices in Europe has been regu-lated through several EU directives. Thesedirectives must be transposed into nationallaw in each EU Member State. The EUdirectives specify the conditions that aproduct must meet in order to obtain theCE mark. With the CE mark a productmay be marketed in all EUMember States.The directives speed up the adoption

Eurohealth Vol 14 No 3 2

MEDICAL DEVICES

process per se and, at the same time,provide a uniform definition for medicaldevices in the European Union. Againstthis background of European regulation,actual adoption and use in individualMember States depends mainly onwhether the medical devices are coveredby the (public) benefit baskets and howfinancial arrangements provide incentives(or otherwise) for their use.

Therefore, initial research by EHTIfocused on key issues relating to (a)coverage, (b) procurement and (c) reim-bursement of selected medical technologiesin six EU countries (Germany, Poland,Italy, Spain, the UK and France), repre-senting both the largest countries and amixture of North and South, tax-financedand insurance-based, decentralised andcentralised systems. The technologiesexamined were knee endoprostheses,implantable cardiac defibrillators (ICDs),coronary stents, laparoscopic colorectalsurgery, urinary incontinence pads and newwound care products (for example,negative pressure therapy).

The technologies were selected torepresent three sets of principle marketsfor medical devices:

1. Medical aids which are mainly given toand used by patients directly, (for example,incontinence products). These tech-nologies potentially constitute health carebenefits in their own right;

2. Medical devices which need to beimplanted into a patient (for example,stents, ICDs, or endoprostheses). Thesetechnologies entail only one component ofhealth care benefit (with hospital or ambu-latory services making up the othercomponents); and

3. Medical devices which are used toprovide services by physicians or otherhealth care providers (for example, laparo-scopic procedures). These are technologieswhere the service, not the device, repre-sents the health care benefit.

This distinction was developed in order toanalyse the key issues of coverage,procurement and reimbursement ofdevices beyond the peculiarities of the sixtechnologies. In terms of coverage, severalissues were investigated: whether the tech-nology was explicitly included in thenational/regional benefit basket orstatutory insurance schemes; the maindecision criteria for the inclusion/exclusion of the technology – separately oras part of a broader service; and, if and how

frequently the inclusion has been updatedfollowing progress with the technology.

Financing mechanisms were analysedalong two distinct dimensions: procure-ment and reimbursement. Procurement isconcerned with the ‘price’ of technologiesestablished between the producers andproviders of health care services (mainly inthe cases of 2 and 3 above) and the mainareas of investigation were: level of pricesetting and negotiation (centralised vs.decentralised procurement); existence of‘reference’ prices to be used in tendernegotiations; and criteria used in pricenegotiation. Finally, analysis of reim-bursement systems across countriesexamined different funding systems (tariff-based versus global budgets) and thedecision-making actors and level(s) atwhich funding is established (nationalversus regional level).

ResultsThe accompanying country case studyarticles present some of the results obtainedin this phase of research. One examines thefinancing of ICDs and coronary stents inItaly, while another explores recent devel-opments in the procurement landscape formedical devices in the UK, with a focus ontheir applications to wound care. Finally,the use of reference pricing – a typicalinstrument taken from pharmaceuticalpolicies – is assessed for outpatient medicalaids in Germany.

Conclusions and next stepsTechnological innovation is perceived tobe at the root of the recent cost escalationin health care. However, existing evidencesuggests that, on average, increases inmedical spending since 1960 and develop-ments in technology have provided value,leading to significant improvements inpatients’ quality of life, and reductions indisability levels and mortality rates.5,6 Yet,such benefits and the beneficiaries of tech-nological innovation, most notably inrelation to medical devices, have not beenadequately studied. As a result, evidence isneeded to demonstrate the numerousbenefits arising from investments inmedical technology and, in parallel, howthe dynamics of coverage, procurement,reimbursement, and diffusion of medicaltechnology operate across different healthsystems and regulatory environments.

With regards to the beneficiaries ofmedical technologies, it is important tobear in mind that a wider group, beyondpatients or health professionals, benefit

from medical technology and that thishealth gain is translated into economicsocietal gain.7 While it is clear thatinnovation, in general, contributes toeconomic development and welfareimprovements, the process wherebytechnological innovation in medicaltechnologies leads to growth and welfaregains is not well understood and wouldbenefit from empirical research. Indeed,the social and economic value of medicaltechnology is the current focus of a secondstream of research carried out by BU, theLSE and TU Berlin and which, in its initialphase, is aiming to produce a review basedon published and unpublished studies andreports made available within Europe andelsewhere in recent years.

It is hoped that EHTI’s research willexpand the existing knowledge baseregarding the effective uptake and use of, aswell as access to, medical technologies.Further, through its efforts, it is hoped thatstakeholders – academia, industry, andpolicy-makers – will collaboratively engagein debate and discussion on the key issueshighlighted throughout this article. Indeed,the unique contributions of medicaldevices, in both health and economic terms,need to be further understood, with theultimate aim of improving patient lives andsupporting continued medical innovation.

REFERENCES

1. Fuchs V, Sox H. Physicians’ views of therelative importance of thirty medical inno-vations. Health Affairs 2001;20(5):30–42.

2. Gelijns AC, Halm EA (eds). TheChanging Economics of MedicalTechnology. Washington DC: NationalAcademy Press, 1991.

3. The European Health TechnologyInstitute for Socio-Economic Research(EHTI) (2007). Available athttp://www.together4healthinnovation.eu

4. Suhrcke M, McKee M, Sauto Arce R,Tsolova S, Mortensen J. The Contributionof Health to the Economy in the EuropeanUnion. Brussels: Commission of theEuropean Communities, 2005.

5. Cutler DM, Rosen A, Vijan S. The valueof medical spending in the United States,1960–2000. New England Journal ofMedicine 2006:355;920-927.

6. Cutler DM. The lifetime costs andbenefits of medical technology. Journal ofHealth Economics 2007;26(6):1081–100.

7. Gandjour A. The economic value ofmedical technology. Health Affairs2002;21(1):275–76.


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MEDICAL DEVICES

Numerous programme and policy initia-tives have been introduced in Englandsince the late 1990s to support the effectiveuse of National Health Service (NHS)funding in providing accessible and inno-vative health care. As the 2002 WanlessReport1 highlighted, investments in inno-vative medical technology are an importantcomponent of NHS planning to maintainan efficient and high-quality health serviceand drive socioeconomic benefits. Conse-quently, the process by which the NHSpurchases and introduces innovation intoits system of hospitals and GP practices iscrucial to realising the numerous benefitsafforded by medical technologies.

In particular, several actions have beenrecently instituted into the procurementlandscape for medical devices in the NHS.Such change was arguably first initiated bythe development of the Supply ChainExcellence Programme (SCEP), whichsought to improve methods of bothnational and regional procurementthrough various mechanisms, such as

collaborative ‘procurement hubs’,National Contracts Procurement (NCP),and reorganisation of the role of the NHSPurchasing and Supply Agency (PaSA).The latter now has responsibility fordevice evaluation and outsourcing of NHSLogistics – a ‘joined-up’ effort deemed theNHS Supply Chain, which serves as theprimary purchasing agent for the NHS.Other changes to the governance structurewere realised, with the multi-nationalcompany, DHL, and US-based purchasingorganisation, Novation, overseeing oper-ation of the Supply Chain, in collaborationwith the NHS Business Services Authority(NHSBSA). The SCEP was recentlysucceeded by the NHS Sourcing andSupply Chain Improvement Programme(NSSCIP), which aims to continue manyof the SCEP’s key objectives (for example,use of purchasing hubs).2

The legacy of SCEP and associated devel-opments on NHS procurement isuncertain. With a greater commercialorientation, the Programme increased thefocus on bulk purchasing and a compet-itive tendering process. While such prac-tices can have positive implications forefficiency gains and reduced prices, thishas lead, in some cases, to the purchase of

cheaper and often older equipment fromlarge suppliers, who can more easilyaccommodate NHS demands for lowprices and high volume. This can providedisincentives for innovative products to bedeveloped and available to patients andproviders, in addition to disproportion-ately orienting objectives towards short-term cost-savings, rather than long-termbenefits and costs.3 While costcontainment is certainly a key objective ofany health care system, procurement deci-sions and practices should be grounded inproviding greatest benefits to patients andproviding the best value for money for the£15 billion spent each year by the NHS ongoods and services.

Evidence-based purchasingTo help meet this objective, recent changesencompassed the development of a newdevice evaluation service, the Centre forEvidence-Based Purchasing (CEP), withinNHS PaSA. The Centre was established toprovide evidence to underpin purchasingdecisions and, more broadly, to supportthe uptake of effective, safe and innovativeproducts and related procedures in healthcare. While evaluation of medical tech-nology has historically rested on evidence

The procurement landscape formedical devices in England:Recent developments and applications to wound care

Corinna Sorenson

Summary: The process by which the English National Health Service (NHS)purchases and introduces innovation into its system of hospitals and generalpractitioner practices is crucial to realising the numerous benefits afforded bymedical technologies. Several actions have recently been instituted into theprocurement landscape for medical devices in England, including developmentof collaborative ‘procurement hubs’, National Contracts Procurement and reor-ganisation of the roles of key purchasing bodies, all principally under the auspicesof the Supply Chain Excellence Programme. While most of these initiativesgenerally focus(ed) on short-term cost containment and efficacy gains, it hasbeen argued that procurement decisions and practices should be increasinglygrounded in providing greatest benefits to patients and providing the best valuefor money for the £15 billion spent each year by the NHS on goods and services.

Key words: Health Care Financing, Medical Devices, England, Wound Care

Corinna Sorenson is Research Officer,LSE Health, London School of Economicsand Political Science, UK.Email: [email protected]


MEDICAL DEVICES

of performance and safety, the CEP and itsprogrammes, such as theMultidisciplinaryAssessment of Technology Centre forHealthcare (MATCH)* , aim to incor-porate considerations of costs, patientoutcomes and clinical opinion into aprocurement framework. As promulgatedby these initiatives, such evidence could beused to inform procurement contractagreements and determine appropriatepricing bands for applicable tariffs.

While the principal objectives of evidence-based purchasing (EBP) are laudable andincreasingly needed to support value formoney in the NHS, it is still in anembryonic stage of development.Moreover, similar to other procurementdevelopments, EBP presents challenges forhighly innovative or new technologies inthe early stages of commercialisation. Inparticular, the data or evidence required forthe evaluation of medical devices are oftenunavailable, as unlike pharmaceuticals,randomised controlled trials are notrequired for market approval. Even in caseswhere data are available for early evalu-ation, evidence is unlikely to appropriately

account for the incremental developmentof most medical technologies. Indeed,devices are typically developed through adynamic, iterative process, whereby theirfunctionality is constantly improved uponby user feedback and further research. Thisresults in the evolution of new generationsof the initial device, leading to differentcharacteristics, outcomes and costestimates with each progressive iteration.To this point, evaluation prior toprocurement, either at first generation orbefore user feedback can be assessed, maynot fully or accurately capture the truevalue of a given technology.

Application to wound careRecent innovations in wound care, partic-ularly Vacuum-Assisted Closure (VAC)therapy**, provide a helpful example toillustrate some of the opportunities andchallenges associated with application ofEBP in the NHS. VAC therapy is a rela-tively immature and highly innovativeintervention that applies negative pressureto accelerate wound healing. It employselectrically-powered vacuum pumps,

collection canisters, connection tubes andspecialised dressings to drain wounds ofexudate (i.e. excess fluid and cells) andinfluence growth of surface tissues. Todate, VAC therapy is primarily used foracute (e.g. skin grafts) and chronic (e.g. legulcers) wounds of variable size andcomplexity, and is employed in bothhospital and community care settings.While still an early product, the benefits ofVAC therapy for wound care patients areconsidered high, in terms of woundhealing, cost-effectiveness, and reducedlength of stay. Currently in the NHS,purchasing activity for VAC therapy ispredominated by NHS Trusts (devices)and the NHS Supply Chain (consum-ables). Procurement decisions areprimarily comprised of two main choices,purchase or rent, which is mainly deter-mined by specialist nurses and clinicians.Figure 1 maps the procurement landscaperelated to VAC therapy.

Increased demand and its innovativenature have placed VAC therapy on theprocurement agenda in the NHS.However, decision-makers are often

*TheMATCHprogramme constitutes a research collaboration between various UK academic institutions and a group of industry partners.Beyond its scientific aims, MATCH seeks to strengthen key networks and engagement between regulators, industry, and patients – allwith their own important perspectives regarding medical technologies.

** Included in general category of Negative Pressure Therapy for wound care.

Figure 1: Procurement mapping of Vacuum Assisted Closure (VAC) therapy

Acute Trust/Hospital

ABHI

PCT

Patient

DistrictNurse

Directorof Nursing

ConsultantsGeneral& ServiceManagers

Royal Collegeof Nursing

Head ofProcurement

NHS SupplyChain

Evaluation Centre

WoundHealingResearchUnit

Variousspecialistnurses

SHA

ManufacturerCollaborative

Procurement Hub

DOH

NICE

PaSA

CEP

grounding purchasing activity on mixed orlimited evidence. This is principally due toconsiderations regarding data availabilityfor new and notably innovative therapiesand, perhaps, as a result of insufficientresources allocated to adequately assess theexisting evidence on the costs and benefitsof VAC therapy. Wound care itself alsointroduces challenges that can impact ontheir evaluation and, subsequently, EBP.For instance, wound care is highly variableacross wound type and characteristics,frequency of dressing changes andduration of treatment. Moreover, there arefew ‘standard’ or ‘conventional’ productsin this therapeutic area, as evidenced by thevariety of innovative wound treatments onthe market and the presence of inconsistentlocal clinical guidelines on use in patientcare.

Outstanding issuesIn order to address some of the issuesrelated to VAC therapy and facilitate theeffective use of EBP, especially in highlyinnovative therapies, there are a number ofoutstanding issues that need to beaddressed. Firstly, systematic review ofavailable evidence and/or economicanalyses, including modelling, needs to bepursued. Given it is a fairly immaturetherapy, there may be limited data and,where evidence is available, methodologicalissues (for example, small sample sizes,variation in outcomemeasurement) may bepresent. This may be exacerbated by thelack of clarification as to what constitutesstandard wound care. Such challenges mustbe acknowledged and addressed throughadditional evidence and consideration ofnew data as it becomes available. MATCHis addressing some of these methodologicalissues by incorporating different analyticalapproaches, for example, Bayesian tech-niques, into value-assessment methods forthe purposes of procurement.

Secondly, as demonstrated by the exampleof VAC therapy, there are a vast range ofactors involved in the procurementprocess. To ensure national and local rele-vance and cross-stakeholder engagement,collaboration is needed amongst key stake-holders, including industry, the Associ-ation of British Healthcare Industries(ABHI), the Department of Health(including the National Institute forHealth and Clinical Excellence – NICE),procurement actors (for example, collabo-rative procurement hubs, Trust Managers,Directors of Nursing) and users of thetechnology. These key stakeholders shouldbe involved in lending valuable multiple

perspectives, in addition to pure cost-minimisation considerations, whichcurrently tend to dominate purchasingdecision-making. In particular, stake-holders both inside and outside the NHScould contribute input regarding how:(a) different elements of procurementinteract, (b) patient needs can be achieved,(c) innovation can be better integrated intothe NHS, and (d) industry can berewarded for high-value products. Interms of NICE in particular, it will proveimportant to carefully assess howevidence-based purchasing decisions (and,evaluative processes) may coincide withthe Institute’s decisions and guidance. Theinformation provided through interactiveand iterative communication routes facili-tates parallel benefits for improvedpurchasing decisions, continuous devicedevelopment and enhanced managementof wound care in the NHS.

Thirdly, as the concept and use of EBPdevelops in England, the unique consider-ations of innovative devices must be takeninto account, many of which have beenhighlighted throughout this article. Theseinclude, but are not limited to, the method-ological challenges associated with earlyevidence and technologies intended forsmall patient populations; the iterativedevelopment curve; and the high cost andresource needs of distribution and usertraining and education. To that end,devices, as compared to pharmaceuticals,require a significant level of userinvolvement, which ultimately has impli-cations for the performance (i.e. effec-tiveness, safety) of the product. Themedical technology industry is typified bysmall companies, who may lack thenecessary resources to amass the infor-mation required by CEP or other relevantEBP bodies. Fourthly, similar to any eval-uative process for determining the value ofnew health technologies, the transparencyof EBP-based procurement decisions must

be upheld. As NHS procurement assumesa commercial element and often involves avast array of transactions, an open processis necessitated.

The procurement landscape in England hasundergone notable transformations, intro-ducing various policies and mechanisms toenhance the value for money achieved inNHS purchasing. EBP, marked by theestablishment of the CEP, is one particularstrategy to meet this aim. While EBP mayhelp shift focus from short-term gains tosustainable cost and outcomes in NHSpurchasing, adequately accounting forinnovation and differences between tech-nologies (i.e. devices vs. pharmaceuticals)in its practices and methods is crucial.Furthermore, requisite resources should beinvested in the CEP to ensure an effectiveand robust process and, importantly, onewith an impact on procurement. Indeed,purchasing practices and policies shouldultimately support the founding principlesof the NHS – providing patients withhigh-quality, effective, and affordablehealth care.

REFERENCES

1. Wanless D. Securing Our Future Health:Taking A Long-Term View. London: TheStationery Office, 2002. Available athttp://www.hm-treasury.gov.uk/Consultations_and_Legislation/wanless/consult_wanless_final.cfm

2. NHS Purchasing and Supply Agency.Business Plan 2007/2008. Reading: NHSPaSa. Available athttp://www.pasa.nhs.uk/PASAWeb/NHSprocurement/AboutNHSPASA/Publications/Corporatepublications.htm

3. Department of Trade and Industry.Competing in the Global Economy: TheInnovation Challenge. DTI: InnovationReport. London: Department of Trade andIndustry. Available at:http://www.berr.gov.uk/files/file12093.pdf


MEDICAL DEVICES

Conference: Bridging Knowledge in Long Term Care and Support

La Pedrera de Caixa Catalunya, Barcelona 5–7 March 2009

In Europe over 15 million people with disabilities will soon enter old age, while a similarnumber of older people will become disabled. This conference will explore methods andsystems for long-term care and support, in particular looking at how to integrate andtransfer knowledge and experience between the ageing and disability sectors.

Supported by the European Commission, it will feature a mix of keynote speeches byinternational experts and parallel symposia.

Early registration closes on 15 December 2008. Further information on the conferenceprogramme, abstract submission and registration at:http://obrasocial.caixacatalunya.es/osocial/main.html?idioma=3


MEDICAL DEVICES

The financing of medical devices has onlybecome an important agenda item forItalian health policy makers in the last fewyears. In fact, with the exception of severallaws adopted to simply transpose EUdirectives on market access regulation, nosignificant policy measures were takenuntil 2002. The main reason for theincreased attention is undoubtedly linkedto the economic and financial sustain-ability of the system. Medical deviceexpenditure accounts for almost 6% ofoverall health care expenditure in Italy, oraround € 4 billion per annum.1 Further-more, the rapid pace of innovation in thisarea has raised the level of debate over thebest ways in which to guarantee equalaccess to new medical devices and at thesame time ensure the long-term financialsustainability of the Italian NationalHealth Service (NHS).

Among several policy measures adopted

between 2002 and 2008, three merit specialattention: the creation of the MedicalDevice Committee, development of anational database of medical devices andthe implementation of a system ofreference pricing. The 2003 Financing Lawestablished the Medical DevicesCommittee (Commissione Unica suiDispositivi Medici-CUD). Its main objec-tives were to create a national database ofmedical devices currently available on themarket (Repertorio Nazionale) and tosubsequently update this on a regular basistaking account of clinical and economiccriteria. This national database becamefunctional in May 2007 and, from January2009, only devices described therein maybe purchased, used or distributed withinthe Italian NHS. The 2007 Financing Lawalso introduced reference prices for a listof selected medical devices that should beused in procurement arrangementsbetween medical device producers andhealth service providers. A MinisterialDecree on 11 October 2007 defined thefirst medical devices to be affected byreference pricing and includes, forexample, coronary stents and hip endo-prostheses components.

Following this short overview of recentpolicy measures, we now investigatecurrent procedures for the procurement

and reimbursement of medical devices inItaly. To achieve this we focus on two tech-nologies: implantable-cardioverter defib-rillators (ICDs), used for the prevention ofsudden death due to arrhythmia in patientswith acute myocardial infarctions, andcoronary stents used in percutaneouscoronary interventions (PCI) for patientswith ischemic hearth disease. Theprevention and treatment of cardiovasculardiseases is the most important clinical areato consider, both in terms of impact onoverall health care expenditure and the rateof innovation in medical devices used fortreatment and diagnosis.

Diffusion of ICDs and coronary stentsEmpirical data suggest that the use of bothof these technologies has significantlyincreased in recent years. The recentlyestablished National Registry for ICDsrevealed that approximately 10,400 ICDSwere implanted in 2005, almost 60%morethan in 2004.2 This equates of a ratio of 179implants per million population; acrossEurope this ranges from 67 per million inPortugal to 262 per million population inGermany.3 The significant increase in Italyshould be interpreted with caution due todifferences in data. It can only partially beexplained by the larger use of ICDs inprimary prevention. Different types of

Financing medical devices:The case of implantable cardioverterdefibrillators and coronary stents in Italy

Giulia Cappellaro and Aleksandra Torbica

Summary: In the recent years, the financing of medical devices has gainedincreasing attention from health policy makers in Italy at both regional andnational level. The article investigates the current modalities of procurementand reimbursement of cardiovascular medical devices in Italy, as well astheir diffusion across the country. Both implantable cardioverter defibril-lators and coronary stents are purchased by health care providers throughopen public tenders and are prospectively reimbursed using DiagnosisRelated Group tariffs. Empirical data suggest that these technologies haveincreasingly been used in recent years in Italy.

Key words: Health Care Financing, Medical Devices, Reimbursement, Italy

Giulia Cappellaro is Research Fellow atthe Centre for Research on Health andSocial Care Management, BocconiUniversity, Milan, Italy. AleksandraTorbica, is Assistant Professor in Publicand Health Care Management, BocconiUniversity, Milan, Italy.Email: [email protected]

ICDs can be used, they can vary by thetype of pulse generators they use. Lookingat first implants and replacement interven-tions tri-chamber ICDs account for 37%of all implantations compared to 32%using dual chamber and 30% singlechamber ICDs.

Turning to coronary stents, data on activityin catheter laboratories in Italy4 highlightthe significant increase in the total numberof PCI procedures from approximately65,000 in 2001 to 125,000 in 2006 (Figure1). This increase can partially be explainedby improvements in both diagnostic andtherapeutic procedures that have expandedthe number of patients eligible for theprocedure. Technological innovation (i.e.the introduction of coronary stents) isundoubtedly one key factor. In fact, theincrease in PCI procedures with coronarystents has grown faster than the number oftotal PCIs (with and without stents) duringthe same period increasing from 81.6% ofall PCIs (53,411 procedures) in 2001 to92.5% in 2006 (114,799 procedures). There

are several types of stents, for example,drug eluting stents (DES) and bare metalstents (BMS). DES now account for 56%of all stent procedures compared with 18%in 2003 when they were first introducedonto the Italian market.

Procurement – financial arrangementsbetween producers and providersBoth ICDs and stents are purchased byhealth care providers through open publictenders. Negotiations take place atprovider level, even though centralisedprocurement strategies have been enactedat both regional and inter provincial level.Public tenders are usually assessed on thebasis of cost; with the price/quality criteriaratio varying from 40/60 to 50/50. Giventhe rapid pace of innovation in thiscategory of devices, quality criteria areusually based not only on the technicalevaluation of the device, but also on theresults of clinical studies, research anddevelopment programmes and, in case ofselected innovative products, the quality ofsamples provided by the manufacturer.

Before the recent introduction of referenceprices, aimed to put a cap on the cost ofbids in public tenders, price negotiationswere free. Even though both technologies,ICDS and stents, will eventually beaffected by this measure, only coronarystents were included in the initial list ofdevices with reference prices (Table 1).

Reimbursement measuresIn Italy, given that all medical devices areimplanted on an inpatient basis, ICDs andstents are prospectively reimbursedthroughDRG tariffs. From 1 January 2006a newDRG classification system (Grouper19) was adopted nationwide. This changehas influenced the reimbursement of bothICDs and coronary stents, since it definedthree new DRGs specific to these devices.ICDs are currently reimbursed throughDRGs 514 and 515 – cardiac defibrillatorimplant with/without cardiac catheteri-sation. Coronary stents are included inDRG 517 – percutaneous interventions forthe cardiovascular systemwith insertion ofstent in the coronary artery withoutinternal mammary artery.

The different Italian regions are entitled toadopt different policy measures to regulatereimbursement mechanisms for medicaldevices.5 The variability of regional reim-bursement systems plays a significant rolein the use of cardiovascular implantabletechnologies. Some regions reimburse apercentage of the cost of the device(Lombardy, for instance, recognises 30%of the average weighted regional costs ofICDs and 50% of DES) or on the basis ofthe specific list price such as in Puglia,whereas other regions, mainly Campaniaor Sardinia, provide a fixed top-up toDRG tariffs for devices.

Discussion and future perspectivesIn recent years, the financing of medicaldevices has gained increasing attentionfrom health policy makers in Italy at bothregional and national level. From themeasures adopted, it appears that nationalpolicy makers have focused their attentionon cost containment policies by estab-lishing the maximum prices for devicesthat can be used in tender negotiations. Itis still too early, however, to quantify theeffects of the introduction of nationalreference prices in Italy. Furthermore, thegovernment has recently recognised thetemporary nature of reference prices andthe need to identify complementary cost-containment alternatives; nevertheless noofficial policy measures have, to date, beenadopted.


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0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2001 2002 2003 2004 2005 200680%

82%

84%

86%

88%

90%

92%

94%

96%

98%

100%

% PCI with stent / total PCI

Total PCI

PCI with stent

Figure 1: Diffusion of PCI procedures and coronary stents in Italy

Source: Calculations, based on data of GISE (www.gise.it)

Table 1: Reference prices for coronary stents

Description Technical specification Reference price (€)

Nude coronary stents Stainless steel 505

Nude coronary stents Chrome or cobalt-chrome 572

Covered coronary stents Carbon 557

Drug eluting coronary stents – 1,486

Source: Ministerial Decree 11 October 2007

The regional health authorities, on theother hand, have mainly concentrated ondefining different reimbursement policiesto control costs. Even though significantprogress has been made in the recent years,the current classification system does notallow for differentiation between differenttypes of ICD or coronary stent that couldpotentially hinder the diffusion of inno-vative devices. Data highlight regionalvariability in the diffusion of both tech-nologies, but the hypothesis that this is dueto different reimbursement schemes stillneeds to be tested empirically.

Given the increasing attention of Italianpolicy makers to the definition of policiesin the medical device sector, newmeasuresare likely to follow. The effectiveness ofthese policies will greatly depend on thesuccess of coordination between thenational government and the regions, sincethe major critical feature of the ItalianNHS remains the distribution of powersbetween the two levels.

REFERENCES

1. Directorate General for Drugs andMedical Devices. Dispositivi Medici. AspettiRegolatori e Operativi [Medical Devices:Regulatory and Operational Factors]. A curadella Direzione generale dei Farmaci eDispositivi Medici del Ministero dellaSalute. Rome: Ministry of Health, 2007.

2. Associazione Italiana di Aritmologia eCardiostimolazione. Registro Italiano Pace-maker e Defibrillatori. Bollettino Periodico2005. [Italian Registry of Pacemakers andDefibrillators. Bulletin 2005] GiornaleItaliano di Artimologia e Cardiostimo-lazione 2006;9(3).

3. Peinado R, Torrecilla E, Ormaetxe J,Alvarez M. Registro Espanol de desfibri-lador automatico implantable. III InformeOficial del Grupo de Trabajo de Desfibri-lador Automatico Implantable de laSociedad Espanola de Cardiologia. [SpanishICD Registry. Third official report of theSpanish Society of Cardiology WorkingGroup on ICDs]. Revista Espanola deCardiologia 2006;60(12):1290–301.

4. Societa Italiana di Cardiologia Invasiva.Attività dei Laboratori Italiani di Emodi-namica. I dati delle attività – 2003, 2004,2005, 2006. [Annual activity of Italian hemo-dynamic laboratories 2003–2006] Availableat http://www.gise.it/

5. Fattore G, Torbica, A. Inpatient reim-bursement system in Italy: how do tariffsrelate to costs? Health Care ManagementScience 2006;9:251–58.

Contributions to German Social HealthInsurance (SHI) are paid in equal part byemployers and employees as a proportionof salary. As the employers’ payments arethought to be one of the reasons for highunemployment rates in Germany,endeavours to lower these costs, or at leastto fix them at their current level, have beenmade. In the ambulatory and hospital caresectors, expenditures have generally beencontained by tying changes in reim-bursement to changes in contributoryincome. For the cost containment of phar-maceutical expenditure, a range of moreand less successful instruments, includingregional and physician-specific prescrip-tion caps as well as reference prices (since1989), have been used.

Thus, the temptation was great to also usethis reimbursement system in the marketfor medical aids (i.e. medical devicesprescribed in ambulatory care for use by

patients), as the ‘sector’ medical aids and‘services by non-physicians’ (for example,physiotherapy) was one of the fewremaining sectors with visible expenditureincreases – nota bene, in official statisticson SHI expenditure, the two groups arealways given together so that the overalldevelopment was extrapolated to both.

We aimed to analyse if there is evidencethat the introduction of nationwidereference prices for certain groups ofmedical devices led to decreasing SHIexpenditure, in comparison to whathappened in the pharmaceutical marketwhere we judged this to be quitesuccessful.1 To do this we examined asample of administrative data on spendingon medical aids.2–5 of the GmünderErsatzKasse (GEK). This is one ofGermany’s largest sickness funds whichinsures about 1.65 million people.

Definition of reference prices inGermanyThe German reference price system doesnot set fixed prices but instead limits whatmay be reimbursed by the sickness funds.For products with prices higher than thereference price, the insured individual hasto pay the difference between the referenceprice and the price set for manufacturer/distributor reimbursement. The reference

Reference pricing foroutpatient medical aids inGermany

Michael Bäumler, Jonas Schreyögg, Sabine Meissner andReinhard Busse

Summary: German reference prices define a limit for reimbursement by sicknessfunds for certain categories of products. In 2005 a nation-wide reference pricesystem for six of thirty-three categories of medical aids was introduced. Prior tothis, reference prices had only existed for these categories in some of the GermanLänder. A data sample provided by a large German sickness fund indicateddecreasing expenditure in five categories after the introduction of the new systemwhile expenditures for one category increased. However, a judgement on theefficacy of reference prices seems to be difficult as there were both different startingpoints for reference prices in the Länder and other factors influencing expenditure.

Keywords: Reference Prices; Medical Aids; Germany; Expenditure

Michael Bäumler and Sabine Meissner areResearch Fellows, Jonas Schreyögg isAssistant Professor for Economics andManagement of Health Technologies andReinhard Busse is Professor for HealthCare Management all based at BerlinUniversity of Technology, Germany.

Email: [email protected]


MEDICAL DEVICES

prices include value added tax and all costsarising from the delivery of medical aids.

Reference prices for medical devicesdemand the same requirements as pharma-ceuticals. They have to guarantee a suffi-cient, appropriate and efficient, as well asquality-assured provision of medicaldevices. Reference prices aim in principleto mobilise efficiency reserves and stim-ulate effective price competition.Therefore, the price should preferably beorientated towards reasonably pricedgoods and services. Sickness funds arerequested to make use of public tenders inrespect of medical devices that are notsubject to reference-pricing.

Introduction of reference prices formedical devicesReference prices for medical devices werefirst established under the 1989 HealthCare ReformAct.6 Visual and hearing aidswere reference-priced in all federal states(Länder), whereas devices for decubitus,arch supports, incontinence aids andostomy procedures only received referenceprices in some of them. The prices itselfwere defined by the different regionalassociations of the sickness funds.7

When the SHI Modernisation Act (GMG)came into effect in 2004, the federal associ-ations of the sickness funds were requiredto set nationwide reference prices for thefirst time. The first came into effect on 1January 2005 for the following six (of atotal of thirty-three) categories of themedical aids catalogue: arch supports, tech-nical aids for compression therapy, visualand hearing aids, absorbing and drainingincontinence aids and ostomy procedures.

The setting of reference pricesIn a first step, reference price groups areformed by the federal associations ofsickness funds for products of homoge-neous and equivalent functionality on thebasis of the classification of the respectiveproduct groups within each category in thecatalogue of medical aids.6 This is clearlyan important precondition as groups withheterogeneous products of different func-tionality would have a clear potential forinappropriately steering the usage of oneproduct over the other. Forming groupswith the aim of calculating reference pricesis therefore confined to groups wherehomogeneity can be reasonably safelyevaluated or assumed.

In a second step, reference prices are set foreach group by the associations of sicknessfunds. Manufacturers and organisations

representing people with disabilities thenhave the opportunity to issue statementsthat have to be taken in consideration inthe process of grouping aids for referencepricing and in the process of setting pricelevels. These reference prices are thenassessed at least once a year and adjustedas appropriate to take account of marketconditions.8 It is important to note thatcategories may encompass a large numberof product groups, i.e. a reference price isnot set for a whole category but for eachindividual product group: for example,ostomy currently encompass thirty-oneproduct groups, with reference pricesranging from €111.47 to just €0.04.

ImpactFigure 1 illustrates relative expenditure perinsured person in the GEK between 2003and 2006 inclusive, i.e. before and afternation-wide reference prices were intro-duced in 2005, with 2004 as the index year.These expenditures decreased dramaticallyfrom €9.27 per insured individual in 2003and €3.81 in 2004 to only €0.91 and €0.81in 2005 and 2006 respectively.

The expenditures for all categories withreference prices (with the exception ofvisual aids which are not included in theanalysis as reference pricing already existedon a nationwide basis) increased in 2004 bybetween 10% (hearing aids) and 5% (archsupports). After the introduction ofreference prices, expenditure fell both in2005 and 2006, save for incontinence aids,a category for which reference prices wereinitially not set for all product groups

(Table 1). In contrast, while expenditure onother medical aids not falling under thereference price scheme decreased between2003 and 2004, it again increased in 2005.As Figure 1 illustrates while there was a fallin 2006, this group continued to havehigher levels of per capita expenditurecompared with medical aids in thereference pricing groups.

Conclusion and perspectivesIt is difficult to judge the success of theintroduction of nationwide referencepricing in Germany, since (1) results arenot unambiguous, (2) the number ofprescribed medical aids switches betweenproducts within a group, and actual pricesare currently impossible to disentangle andtherefore (3) it is not possible toadequately assess the impact on issues suchas patients’ equity of access, appropri-ateness and quality of care and the level ofinnovation of the industry. We thereforeconcentrate on expenditure per capita data.

With the exception of incontinenceproducts, expenditure per capita decreasedfor all categories of medical aid with areference price. The greatest fall in expen-diture was observed in those categories ofmedical aid that had rarely made prior useof reference pricing. In the case of hearingaids, where reference pricing had existedbefore 2005, only a small decrease inexpenditures could be observed.

Compared with all non reference-pricecategories, which increased after 2004, it isstriking that expenditures for categoriesgrouped using reference prices decreased


MEDICAL DEVICES

Figure 1: Expenditures per insured per year (with expenditures of 2004 as the index year)

Source: Calculations, based on data of GEK Heil- und Hilfsmittelreport 2004–2007.2–5


MEDICAL DEVICES

within two years to 91% of their 2004expenditure levels. Nevertheless, thesedecreases are much less pronounced thanthose seen after the introduction ofreference prices for pharmaceuticals.1,9

It should however be noted that thedemand for medical aids is influenced bymany other factors that are difficult tocontrol. Price elasticities for co-paymentsmay vary between categories and thus maycause expenditure change. Distribution ofmarket power may also influence the levelsat which reference prices are set. In cate-gories where manufacturers have strongmarket power, the reference price could beset rather high, whilst in other categoriesthe strong influence of the sickness fundsmay lead to markedly low prices and thusto lower expenditures. Moreover, we havenot been able to incorporate epidemio-logical factors, such as change in theincidence of disease associated with certainmedical aids, into this analysis.

Looking at our results from a macrosystem-perspective, one overall conclusionat this stage is that while the reference pricesystem has contained expenditure withinthe SHI system, it cannot automatically beequated to increased efficiency as thiswould require more detailed analysis of theprecise changes in product price and use.Even if such data were to become available,careful analysis of the impacts on popu-lation health, appropriateness and equityof care, as well as efficiency, would requiremore of the types of data that arecommonly used within the health techno-logical assessment of pharmaceuticals.

It may be that because of these difficulties,Germany is already experimenting in newways of organising both access to andfinancing of medical aids, such as through

public tenders. Under this policy, intro-duced in 2007, sickness funds are requiredto use public procurement procedures.They invite tenders from distributors (notmanufacturers unlike the situation forpharmaceuticals) for providing certainmedical aids to their insured populations ina specified area. Taking a closer look at theresults of this new instrument will be wellmerited as soon as they become available.

REFERENCES

1. Busse R, Schreyögg J, Henke KD. Regu-lation of pharmaceutical markets inGermany: improving efficiency andcontrolling expenditures? InternationalJournal of Health Planning andManagement 2005;20:329–49.

2. Scharnetzky E, Deitermann B, Michel C,Glaeske G. GEK-Heil- und Hilfsmittel-Report 2004: Auswertungsergebnisse derGEK-Heil- und Hilfsmitteldaten aus demJahre 2003 [GEK remedies and aids report2004: Outcomes of data evaluation from2003]. Sankt Augustin: Asgard-Verlag,2004. Available at http://media.gek.de/downloads/magazine/Edition31-Heilmittel_Report_ 04.pdf

3. Scharnetzky E, Deitermann B, HoffmanF, Glaeske G. GEK-Heil- und Hilfsmittel-Report 2005: Auswertungsergebnisse derGEK-Heil- und Hilfsmitteldaten aus demJahre 2003 und 2004 [GEK remedies andaids report 2005: Outcomes of dataevaluation from 2003 and 2004]. SanktAugustin: Asgard-Verlag, 2005. Availableat https://www.gek. de/x-medien/dateien/magazine/Heil_und_Hilfsmittel_Report_2005.pdf

4. Deitermann B, Kemper C, Hoffmann F,Glaeske G. GEK-Heil- und Hilfsmittel-Report 2005: Auswertungsergebnisse derGEK-Heil- und Hilfsmitteldaten aus dem

Jahre 2004 und 2005 [GEK remedies andaids report 2005: Outcomes of data evalu-ation from 2004 and 2005]. Sankt Augustin:Asgard-Verlag, 2005. Available athttp://media.gek.de/downloads/magazine/Heil-und-Hilfsmittel-Report-2006.pdf

5. Deitermann B, Kemper C, Glaeske G.GEK-Heil- und Hilfsmittel-Report 2007:Auswertungsergebnisse der GEK-Heil- undHilfsmitteldaten aus dem Jahre 2005 und2006. [GEK remedies and aids report 2007:Outcomes of data evaluation from 2005and 2006]. Sankt Augustin: Asgard-Verlag,2005. Available at http://media.gek.de/downloads/magazine/Heil-und-Hilfsmittel-Report-2007.pdf

6. Nahnhauer A, Kaesbach W. Reim-bursement of medical devices in Germany.Health Economics in Prevention and Care2000;1:140–45.

7. Brose B, Felder S. 2006. Stärkung desVertragswettbewerbs? Die gesetzlichenRegelungen bei den Hilfsmitteln auf demPrüfstand. [Strengthening the contract-competition? The statutory regulations formedical devices put to test]. Essen: BKKBundesverband, 2006. Available athttp://www.bkk.de/bkk/powerslave,id,1026,nodeid,.html

8. Deutsche Krankenhaus Gesellschaft.Gutachten 2005 des Sachverständigenrateszur Begutachtung der Entwicklung imGesundheitswesen [Report 2005,Coordination and Quality in the HealthCare System]. Berlin: 2005. Available athttp://www.dkgev.de/dkg.php/cat/35/aid/2711/title/Gutachten_2005_des_Sachverstaendigenrates_zur_Begutachtung_der_Entwicklung_im_Gesundheitswesen

9. IKK Bundesverband. Übersicht überFestbetragsgruppen für Hilfsmittel vor 2005[Summary of Reference Price Groups forMedical Devices before 2005].Unpublished document.

Table 1: Overview of changes in expenditure for different categories of medical aids

Category Expenditure per insuredindividual 2004 (€)

% of total expenditure formedical aids per insured

individual 2004

Reference pricesin X of 16 Länder

in 2004

Expendituredevelopment in 2005

(index year 2004)

Expendituredevelopment in 2006

(index year 2004)

Hearing aids 3.71 8.32% 16 99% 95%

Incontinence aids 2.16 4.85% 10 109% 115%

Arch supports 3.89 8.73% 7 88% 86%

Ostomy products 1.79 4.02% 2 97% 91%

Compression therapy aids 2.66 5.97% 2 91% 74%

Source: Calculations, based on data of GEK Heil- und Hilfsmittelreport 2004–2007.


PUBLIC HEALTH PERSPECTIVES

IntroductionCancer has been known and researchedsince antiquity, but substantial progress incancer control has only been made in thelast few decades. Greater understanding ofthe causes of cancer has had a major impacton both primary and secondary preventionof cancer, as well as on treatment andrehabilitation. In terms of reducing humanexposure to cancer risk factors, one of themost important discoveries of the twen-tieth century was the role of tobaccosmoking as a cause of cancers of the lungand various other organs.1 The outcome ofanti-smoking measures is now becomingvisible. Lung cancer incidence and deathrates among men are decreasing steadilywhere they have been effectively imple-mented, such as in western and northernEuropean countries.2

A more recent achievement in primaryprevention is the identification of theHuman Papilloma Virus (HPV) as thecause of cervical cancer, and the devel-opment of vaccines against carcinogenictypes of HPV; some vaccines were licensedin 2006 in the European Union.

Secondary prevention, and specificallyearly diagnosis of breast and cervicalcancers through organised mass-screeningprogrammes, has led to a reduction incancer mortality and an overallimprovement of the quality of life ofcancer patients. A more recent oppor-tunity for cancer control is faecal occultblood testing, which has been shown toreduce mortality from colorectal cancer.3

Although pharmacological treatment isresponsible for a small proportion of curesin patients with cancer overall, its contri-bution in tackling some types of cancer(testicular and breast cancer, leukaemia andHodgkin’s disease) has led to an impressiveincrease in survival from these cancers anda significant reduction in the number ofdeaths.4 All these developments, along withmajor innovations in imaging, surgery, andradiotherapy, have radically changed theperception and management of cancer.Some cancers can now be cured, whileothers are increasingly seen as a ‘chronic’condition rather than a fatal disease, whichmeans that a patient is more likely to diewith a cancer, rather than of it. Advances ingenetics and in genetic epidemiology and

the Human Genome Project(http://www.genome.gov) now offer newperspectives for diagnosis, treatment, andsoon maybe prevention, of many diseases,including cancer.

Life expectancy has increased dramatically.A century ago, life expectancy in Europewas less than forty-five years and the maincauses of death were infectious diseasesand diseases related to poor nutrition. Thecontrol of infant mortality in westerncountries produced the first significantgains in life expectancy; then, the intro-duction of penicillin, sulfa drugs and strep-tomycin yielded another significantreduction, this time in adult mortality.From the 1960s onwards, an increasingarray of drugs has made it possible tocontrol a growing number of chronicconditions, such as hypertension andasthma. The result has been a downwardtrend in morbidity and disability.5

However, these impressive gains havecoincided with, and indirectly contributedto, an increase in the burden of diseaseattributable to cancer. In the WHOEuropean Region, only 5% of cancerdeaths occur in people less than forty-fiveyears of age. The majority of deaths fromcancer occur after this age, three-quartersof which are in people aged sixty years andolder.6 The inevitable consequence ofageing and population growth in Europehas been a very large increase in the burdenof cancer.

Cancer control in Europe today:challenges and policy options

Delia-Marina Alexe, Tit Albreht, Martin McKee and Michel P Coleman

Summary: In spite of the advances in cancer control, cancer remains ahuge problem in Europe, in terms of both morbidity and mortality. Thisarticle summarises the challenges posed by cancer in Europe today andthe measures available to tackle them. It is based on ‘Responding to theChallenge of Cancer in Europe’, a collaboration between internationallyrecognised public health institutes in the European Union, under theumbrella Fighting Against Cancer Today (FACT).

Keywords: Cancer, Cancer Control, Inequalities, Prevention, Policy

Delia-Marina Alexe is Clinical ResearchFellow,

Michel Coleman is Professor of Epidemi-ology and Vital Statistics, Non-Communi-cable Disease Epidemiology Unit, and

Martin McKee is Professor of EuropeanPublic Health, Health Services ResearchUnit, all at the London School of Hygieneand Tropical Medicine, London, UnitedKingdom.

Tit Albrecht is Researcher in HealthServices at the Institute of Public Health,Ljubljana, Slovenia.

Email: [email protected]

For these reasons, in spite of the advancesin cancer control, cancer remains a hugeproblem in Europe, in terms of bothmorbidity and mortality. This articlesummarises the challenges posed by cancerin Europe today and the measures designedto tackle them. It is based on ‘Respondingto the Challenge of Cancer in Europe’, acollaboration between internationallyrecognised public health institutes in theEuropean Union, under the umbrellaFighting Against Cancer Today (FACT).*FACT is co-funded by the Government ofSlovenia and the European Commission’sHealth and Consumer Protection Direc-torate. Participating institutions include theNational Institute of Public Health ofSlovenia as the co-ordinators, the LondonSchool of Hygiene and Tropical Medicine,the Institute of Oncology in Ljubljana andthe European Observatory on HealthSystems and Policies.

Cancer: current challenges and cancercontrol

The burden of cancer

Worldwide, about ten million people arediagnosed with cancer each year. A sharpincrease of 50% in the incidence of cancerhas been predicted by 2020, mainly due toageing populations in both developing anddeveloped countries, but also as a result ofcurrent trends in smoking prevalence andthe growing adoption of unhealthylifestyles.7 One-third of the global burdenof cancer is recorded in Europe: in 2006,there were 3.2 million new cases of cancerand about 1.7 million cancer deaths. In the25 EU Member States (EU25 – pre-2007),one out of four deaths was attributed tocancer. Most cases and most cancer deathsare due to four common cancers, those ofbreast, prostate, lung and large bowel.8

The number of new cases and cancerdeaths in Europe has increased and is likelyto rise further. The accompanyingimprovement in survival has led to an evengreater increase in prevalence. Projectionsof future cancer incidence indicate thateven if the risk of getting cancer at each agedoes not change, the number of new cancerpatients diagnosed each year in the pre-2007 EU25 Member States will rise by20% in the eighteen years between 2002and 2020, simply due to populationgrowth and ageing. Incidence rates wouldhave to fall by more than 1% every yearover that period in order to counterbalance

the upward pressure of these demographicchanges on the numbers of new patientsthat health systems will have to manage.2

Cancer patients will be older than today,and many will have several co-existingillnesses, so the health needs of cancerpatients will become even more complex.This upward demographic pressure on thecancer burden is one of the biggestchallenges in cancer control.

Implementation of effective strategies forcancer control is essential to counteractthese trends. These measures must includeprimary, secondary and tertiaryprevention. In particular, measures areneeded to tackle tobacco smoking, themost preventable cause of cancer; topromote mass (population-based)screening programmes for cancers of thecervix, breast and large bowel (colon andrectum), and to extend the adoption andaccessibility of effective treatments to allpatients within an ‘integrated care’ system.Lastly, adequate provision for greaternumbers of cancers among older people isessential.

Inequalities in cancer in Europe

Europe has some of the richest countriesin the world, but also some of the poorest.In 2002, 168 million people were livingbelow the poverty line, about 46% of theEuropean population.9 These socio-economic differences are reflected insignificant health gaps not only betweenand within the countries of the Europeanregion, including the European Union.They are seen in both the burden of cancerand the range of survival. Differences inthe burden of cancer result mainly frominternational differences in exposure tocancer risk factors (for example, prevalenceof smoking, unhealthy diet, obesity) andsocioeconomic characteristics; however,they are also an indicator of the overalldelivery of services for the prevention andtreatment of cancer, including organisedscreening programmes, the existence andaccessibility of health care facilities andtechnological infrastructure, and the avail-ability of human, financial and materialresources for health and economic devel-opment. A survey by the EuropeanSociety of Clinical Oncology, designed toassess the status of medical oncology inEurope (MOSES, Medical OncologyStatus in Europe Survey, www.esmo.org/resources/surveys/mosesII_survey/?get_resource=241), has found significantdiscrepancies in the provision of cancercare throughout Europe, including accessto surgery, radiotherapy and cancer drugs.

Progress in cancer control can be seen inmost countries, but in some, cancer controlis still in its infancy. Efforts to tackle cancerin northern and western European coun-tries during recent decades have resulted indecreasing mortality and increasingsurvival from those cancers that areamenable to either primary or secondaryprevention (for example, lung cancer,breast and cervical cancers). By contrast, insome countries that have joined the EUsince 2004, the lack of financial and humanresources, along with uncoordinatedefforts in the organisation of cancercontrol, has been associated with anincrease in mortality and a poor prognosisfor cancers that could have been prevented,or detected in an early phase. Furthermore,at the population level, a lack of cancerawareness in central and eastern Europeancountries has been described, especially inregard to prevention as a means of cancercontrol.10

A dramatic contrast in mortality fromcervical cancer has been described betweenEUMember States in western Europe andthose in central and eastern Europe. Deathfrom cervical cancer is now relativelyuncommon in western European coun-tries, but in Latvia, Bulgaria, Lithuania andRomania there is a continuing increase incervical cancer mortality. In Romania,mortality from cervical cancer has reachedlevels that have never been seen before inEurope.10 In the late 1990s, there was agreater than tenfold difference between thehighest cervical cancer death rate, inRomania, with no organised mass-screening programme, and the lowestdeath rates in Finland and Sweden, wherepopulation coverage of cervical cancerscreening is almost 100%.11 The treatmentenvironment for cancer patients is alsoextremely difficult in Romania, as theconcept of integrated care is non-existent.Another dire example is that of Estonia,where population-based medical registriesand epidemiological research are still seri-ously hampered by data protection legis-lation that omits any of the exemptionsprovided under the EU Directive for theprocessing of personal data for historical,statistical or scientific purposes. This hascompletely disabled surveillance of trendsin cancer incidence and survival.12

Health inequalities between ‘old’ (pre2004) and the twelve ‘new’ EU MemberStates merit particular attention from boththe health authorities of the countriesconcerned and the EU as a whole. Cancercontrol must be a priority for the


PUBLIC HEALTH PERSPECTIVES

* website http://www.projectfact.eu

European Commission, both now and infuture action plans. There is a particularneed to support the most severely affectedMember States, and scope for this isoffered by the Commission’s StructuralFunds. Exchange of best practices incancer control across the EU, backed upby substantial funding in countries wherethe health care system is in ‘transition’ andcancer control measures are under devel-opment, could also substantially reducethese inequalities in cancer outcomes.

Within countries, adequate political andfinancial support is needed to enable thecreation and operation of population-based screening programmes and cancerregistries. This should include an appro-priate legislative framework and stablelong-term funding. National educationprogrammes should be implemented tochange attitudes towards cancer and cancerprevention, building upon initiatives suchas the European Code Against Cancer.

Key risk factors for cancer and preventionpolicies

Some lifestyle factors, such as tobaccosmoking, alcohol consumption, unhealthydiets and lack of physical exercise, orexcessive exposure to sun, play animportant role in the causation of cancer.The biggest challenge in primaryprevention remains tobacco smoking,linked to between 80–90% of lung cancersand between 40–60% of cancers of theoesophagus, larynx and oral cavity.13

Despite the significant impact of anti-smoking interventions implemented insome countries since the early 1980s, lungcancer is still the leading cause of cancerdeath in Europe. Importantly, althoughlung cancer rates in males have stabilisedor have been decreasing in northern andwestern European countries, lung cancermortality among women is still rising inmany European countries, in particular insouthern and eastern European countries.2

While some European countries havemade impressive progress in tobaccocontrol, others still have much to do. It isremarkable that many countries still allowsmoking in public places.

Another challenge in cancer prevention isthe excessive consumption of alcohol,twice as high in Europe as the worldaverage. Alcohol is a cause of severalcancers, such as those of the upperdigestive and respiratory tract, andprimary liver cancer.13.14 When alcoholconsumption is combined with tobaccosmoking, cancer risk increases exponen-

tially.14 Although the role of diet in cancercausation is still relatively under-explored,it has been estimated that about one-thirdof all cancer mortality may be related tounhealthy diets,15 while a diet low in freshfruit and vegetables seems to increase therisk of cancer in those exposed to othercarcinogens.16 There is also evidencesupporting the role of obesity as a cause ofsome cancers.13,14 Preventing skin cancerremains equally important, because theincidence of melanoma of the skin inEurope has doubled since the 1960s.

Viruses such as HPV and the hepatitis Band C viruses cause more than 20% ofcancers in developing countries but onlyabout 8% of all malignancies in developedcountries.7 This gap is also apparent inEurope, where cervical cancer is a majorproblem in central and eastern Europeancountries.10

A broad policy framework is needed forcancer control in Europe. Policy will needto harness some essential tools for theprevention of tobacco smoking andalcohol consumption, such as the WHOFramework Convention on TobaccoControl and the Framework for AlcoholPolicy in the WHO European Region.Effective strategies to reduce tobacco andalcohol consumption include pricingpolicies, policies to reduce the harm causedby exposure to environmental tobaccosmoke and harmful drinking of alcohol,policies to reduce demand and limit access(in particular the locations and times whenalcohol can be purchased), and by theavoidance of internal market policies thatpromote consumption.13,17 Unfortunately,both the tobacco and alcohol industrieshave been successful in preventing effectiveaction in many countries, often promotingcampaigns to undermine the evidenceabout effective health policies.

Another tool is the European CodeAgainst Cancer, an integrated instrumentfor cancer prevention. It focuses onpromoting the adoption by individuals ofhealthy lifestyles, including participationin screening programmes.14 It provides animportant basis for health promotion byhealth care professionals and non-govern-mental organisations.

Most countries in Europe have seen a rapidincrease in the prevalence of obesity inrecent years: tackling this epidemic shouldbecome a priority in the EU.13 The GlobalStrategy on Diet and Physical Activityprovides a solid basis for action.Promoting physical activity would help in

reducing average body weight, but it hasalso been linked to a reduction in the riskof cancers of the breast, body of the uterusand prostate, independently of weightcontrol.14

Interventions to tackle cervical cancershould be tailored to the particular situ-ation of each country. For example, HPVvaccination would provide a new approachto preventing cervical cancer, particularlyin countries with a high incidence of thedisease and inadequate screening.18 Toprevent infection with hepatitis B virus inEurope, systematic vaccination is neededas a part of national immunisationprogrammes. No vaccine is yet available toprevent infection with hepatitis C virus.

Costs of diagnostic and treatment services

Early diagnosis and optimal treatment ofcancer is complex. It requires education,prevention, diagnosis, treatment andpalliative care. One of the most importantchallenges in cancer control is to coor-dinate national plans and services to coverall aspects of the management of cancer.

During the last decade, the diagnosis andtreatment of cancer have become increas-ingly expensive, as a result of rapidadvances in technology and drug devel-opment. Pressure from the pharmaceuticalindustry has led to the prioritisation ofdrugs over other treatment modalities. Theoncology drug market is expected to growsteadily as a result of the ageing popu-lation, the development of new treatmentsand advances in cancer genetics. Develop-ments in molecular pathology, imaging,radiotherapy and surgery are at least asimportant in the management of cancer,and should also be strongly encouraged bythe EU, along with long-term investmentin the training of staff and the acquisitionand/or renewal of equipment.17

New and expensive drugs that offer nosubstantial advantage over existing treat-ments are being promoted. This places afurther burden on national health services,insurers and cancer patients. For example,one cycle of temozolomide, used intreating some brain tumours, is 350 timesmore expensive than the reference drugprocarbazine, although these two arelargely equivalent in terms of efficacy andsafety.4

The increase in the cost of cancer care, andin the cost of drugs in particular, is likely toprevent equal access to optimal care to allpatie

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