Health costs Bleeding Money

The medical industry is making billions with new bandages, despite a lack of evidence that they provide any significant benefit. Now the government is working on a law that could support this anomaly.
New wound coverings boast infusions of honey, alcohol and even antibiotics, but at what cost?

You need strong nerves to look at the kinds of wounds Ullrich Katz sees on a daily basis, including venous ulcers and bloody feet. But after years as the chief of medicine at a vascular clinic and now as the physician-in-chief at the AOK wound center in Berlin, he's used to it.

The only time Mr. Katz loses his cool is when he talks about how much money is wasted in his field. Hundreds of millions of euros are being spent on new, supposedly innovative, wound dressings though their benefit has never been demonstrated. He is convinced that this is a case of manufacturers making a lot of money while patients continue to suffer.

In fact, investigations conducted by Handelsblatt and Westpol, a political TV news program on Germany's public WDR network, show that the treatment of chronic wound patients has become a big business, costing health insurance companies a lot of money and still failing to improve the health of patients. And thanks to so-called wound managers, who control patient care in nursing homes, advanced wound dressings containing additional substances like honey, ibuprofen, moisture gels and even antibiotics are capturing a market worth billions. However, there is a lack of scientific studies to justify their use – at an annual cost to of €500 million, or $530 million, to Germany's health insurance system.

But instead of cutting off this money supply to the industry, Health Minister Hermann Gröhe, a member of Angela Merkel’s ruling Christian Democrat party, could actually be aiding manufacturers with a new law that would enforce this practice. The German parliament, the Bundestag, is debating Mr. Gröhe's plan today.

When it comes to defining what makes wound dressings reimbursable, the bill merely states that their “primary purpose must consist in covering body parts.” This opens the floodgates to secondary effects, such as including additives for wound treatment, which increase the cost.

“We now have a bill,” said Ann Marini of the Central Federal Association of Health Insurance Agencies (GKV), “under which health plans are expected to pay for everything, whether or not it works.”

We now have a bill under which health plans are expected to pay for everything, whether or not it works. Ann Marini, Central Federal Association of Health Insurance Agencies (GKV)

And health plans are paying plenty. Wound treatment is a lucrative source of income for the drug industry. According to public health insurer AOK, chronic wounds affect more than 4 million people in Germany and the number is rising. According to the 2014 medicine and adjuvant report by another public health insurer. Barmer GEK, this costs statutory health plans about €2 billion, or $2.1 billion, a year.

For Barmer, this situation has become one of the “economic challenges” of today's health care market. Thousands of wound dressings are coming onto the market for which Barmer has found “adequate studies on comparative efficacy.” Precisely comparative studies are necessary to reliably evaluate products.

Relevant guideline from medical professional associations, which provides doctors with recommendations on wound treatment, is clear: “On the basis of existing studies, no reliable statements can be made on the benefits.”

And yet the money continues to flow. Sales of the new wound dressings increased from €381 million in 2013 to €487 million in 2015. On average, they are six times more expensive as conventional products like classic gauze bandages.

But the benefit to patients is questionable. According to the Barmer report, compression therapy, a treatment with proven effectiveness, and one that Ullrich Katz has used for decades, is getting the short end of the stick. Using compression bandages and a special wrapping technique, Dr. Katz creates pressure on the blood vessels that directs blood flow away from the vascular wall and toward the heart instead. The only other materials used in compression therapy are cotton, alcohol spray and ointment.

So if compression therapy is so effective, why are dressing materials containing all kinds of additives being used? Some even contain antibiotics, which, as medications, are supposed to be subject to special scrutiny by drug authorities.

13 p26 Costs for Bandages on the Rise-01

The WDR and Handelsblatt investigations show that wound management falls within a regulatory gray area and is no longer under the control of doctors, but of so-called wound experts or wound managers. These are usually nurses or caregivers with additional training who work for nursing homes, hospitals and private providers. Wound managers are intended to support doctors in caring for patients – a good idea in theory.

In reality, however, many physicians no longer question their recommendations, usually for lack of time or because of their own lack of knowledge. In nursing homes with large numbers of patients, doctors are simply unable to provide individual care.

This means that whoever has influence over wound experts also controls what doctors prescribe – a fact that manufacturers and lobbying groups have apparently recognized. The Association of Statutory Health Insurance Physicians in the German state of  Hesse issued a warning that marketing was overriding scientific data.

Furthermore, many wound managers are trained at an institution with apparent close ties to manufacturers, the Chronic Wounds Initiative (ICW). According to ICW information, 30 supporting members that pay an annual fee of €1,250 include many manufacturers of advanced wound dressings, as well as their consulting firms. One of them, Wound Marketing Consulting, uses this advertises with: “We know the specialists, the market and the right partner to promote your company.”

But the ICW strongly denies exerting any influence over trainees. “The manufacturers do not pay us anything for the courses,” said Madeleine Gerber, head of the ICW business office. Besides, she added, the certification office of the German Association for Technical Inspection (TÜV) checks to ensure “that no specific products are promoted in the courses.”

However, a visit to the ICW training facility reveals a surprising detail. In the classroom, participants are asked to sign an ICW petition to support legislation that would require health plans to continue providing reimbursement for any wound dressings.

Ironically, the producers have found their biggest ally in the man whose job is to protect contributors from wasting money: Health Minister Gröhe. In addition to the rule up for debate today, Mr. Gröhe makes no effort to clearly regulate the role of wound experts, which allows them to run medical product stores, enabling them to monopolize prescriptions. He is also working rules that would prevent any scrutiny of wound dressings in terms of their benefits.

A look at his new proposition on the provision of drugs and medical devices show that the health ministry included a supervisory authority for wound dressings in the first draft. The draft bill envisioned that the Joint National Committee, which also inspects drugs, would take a close look at novel products containing additives.

But the plans were changed a short time later. Under the final bill, all of these products are eligible for reimbursement. Is this a victory for manufacturers and their supporters, to the detriment of patients and health plans?

“We suspect that special attention was paid to lobbying interests,” said Ms. Marini of GKV.

The health ministry's about-face is certainly noticeable. The Association of Medical Device Manufacturers known here as BVMed was unwilling to comment on the issue and, in fact, pointed that it has no jurisdiction over manufacturers of the novel wound dressings. But one of the larger manufacturers, B. Braun, said: “We suggest that you contact BVMed for an assessment.”

The health ministry, which was behind the change, was more direct in its statement: “Various associations had advocated taking further supplementary properties into account.” One of these associations was the Chronic Wounds Initiative.

This infuriates vascular specialist Dr. Katz, who offers impressive proof of the success of his treatment in Berlin – without special wound dressings. One of his patients, a 90-year-old man, is especially grateful. Until he came to see Dr. Katz, he had had venous ulcers for 50 years. Now his wounds are healing – with ordinary gauze bandages and the right amount of pressure.


Jan Keuchel is a Handelsblatt correspondent covering investigations and the German legal system. Christina Zühke is a reporter with WDR. To contact the author: [email protected]