Management of cost and utilization of pharmaceuticals in Germany

The German health care system has had a series of reforms in its pharmaceutical sector, starting in 1988 with the introduction of a reference pricing scheme. A major new reform was introduced in 1993, which established a ceiling for all outpatient pharmaceutical expenditures along with substantial monetary sanctions for breeching that ceiling. A study of that reform, reported here, suggests that outpatient physicians may have responded to this ceiling by increasing their rate of patient referrals to hospitals. New health system reform measures should be constructed with an eye to their overall financial impact on the entire health system.