Abstract
Germany has developed a model of social health insurance for financing healthcare. The basic characteristics of this model are compulsory membership, income-dependent contributions paid by employers and employees, a comprehensive package of healthcare entitlements, stringent government regulation and implementation by not-for-profit health insurers--the sickness funds--which operate under public law. Since the mid-1970s, when health care cost containment gradually evolved as a new issue in German healthcare policy-making, a long series of reform programmes have been initiated. Two recent development can be noted: the introduction of market competition in health insurance and the introduction of fixed budgets. Market competition in health insurance is now an explicit policy tool in Germany. This article analyses the German healthcare system, the history of healthcare reforms and the current healthcare acts. Special emphasis is given to the German drug market and its regulation. The paper describes the present cost-containment policy for pharmaceutical products, especially the global budget concept which was introduced for medicines and patients' copayments.
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