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July 17, 2012 10:41 pm

Germany’s new drug reimbursement process picks up industry resistance, potential for minor alleviation by authorities

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This article is provided to FT.com readers by BioPharm Insight—a news service focused on providing insight into the most price sensitive issues in the global pharmaceutical market. www.biopharminsight.com

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Germany’s revamped reimbursement system has elicited drug industry outcry that has pushed the German government to reconsider its implementation, reimbursement experts told Biopharm Insight. They added that there may be changes in the near future.

The negative sentiments boiled over in a recent private meeting between the Federal Joint Committee (G-BA), the German Association of Research-based Pharmaceutical Companies (VFA), the German Pharmaceutical Industry Association (BPI) and various other industry associations, said Olaf Pirk, market access and pricing advisor at Olaf Pirk Consult. Representatives from the German Federal Ministry of Health, and regulatory and review bodies were also present, he added.

Meeting delegates in particular criticized how the German government, when considering a drug’s economic value, assesses an investigational drug by comparing it to the least expensive drug comparator on the market rather than the treatment comparator used in the trial, Joerg Burkowitz, the director at Boston Healthcare’s Germany branch said.

The different comparators can lead to lower-than-expected drug prices and reimbursement, Burkowitz added, noting that this can then influence other countries that look to Germany for reference pricing.

The new pricing system stems from the German 2011 healthcare reform legislation, Arzneimittelmarkt-Neuordnungsgesetz (AMNOG), which saw the end of free drug pricing in Germany. AMNOG enforced a series of drug reviews based on cost benefit compared to current treatments before treatments can be successfully reimbursed by the national providers. The Institute for Quality and Efficiency in Healthcare (IQWiG) first reviews the new drug dossier and provides a recommendation to G-BA, which makes the final reimbursement decision.

Thomas Ilka, the permanent state secretary in the Federal Ministry of Health, Germany, has said there will no major alterations to AMNOG but has implied there could be minor changes, Burkowitz said. The controversy on comparators could be clarified in coming months, he added, noting the drug industry is asking for additional G-BA guidance on how to navigate the drug development process, Burkowitz said. G-BA has steered companies to pre-filing meetings, he added.

There have been many meetings and congresses over the last couple of months, where the pricing discussions have been more prevalent and representatives of the G-BA and IQWiG have been active in the discussion, said Katharina Scholz, head of the Pharmaceutical and Health Care Compliance Division, Osborne Clarke, Germany. The G-BA and IQWiG have a general awareness that the new review process is an ongoing industry concern, Scholz said.

Government officials “might try and ease things up,” said Brian Lovatt, CEO and reimbursement expert, Vision Healthcare Consultancy, UK. Germany has already bowed to industry and made concessions, said Jutta Schnirring, managing director, Dr. Regenold regulatory consultancy, Germany. She explained that the G-BA is now allowing for companies to file a second dossier when they are unhappy with the negative benefit assessment.

Pirk said this change to the law, which was passed in parliament (Bundestag) on 28 June, means companies do not have to wait a whole year before they can resubmit. It is indicative that the government acknowledges the system is going through a learning curve and has room for improvements, Pirk said.

Germany’s federal elections in September 2013 will limit the time needed for major AMNOG changes, said Burkowitz. In addition, since G-BA received a new director this month, there is an expected adjustment period that would likely preclude major changes, he added.

Government involvement

BPI attendees discussed how they would steer away from German drug launches to avoid the country’s expected low price and the reimbursement affect on reference pricing, Burkowitz said. Government officials thus have incentive to make changes to the current system to offset companies choosing to not launch new drugs in Germany and hurt the German economy, noted Brian Lovatt, CEO and reimbursement expert, Vision Healthcare Consultancy, UK.

The recent industry pushback resistance comes on the back of several negative reimbursement outcomes for newly approved drugs, noted Lovatt. Drugs have either failed the reimbursement review or attained significantly lower prices than expected, he noted. This news service recently wrote on the hurdles of Human Genome Sciences (NASDAQ:HGSI)/GlaxosmithKline’s (LON:GSK) Benlysta for the treatment of lupus, in which it recently received a negative IQWiG review.

AstraZeneca’s (LON:AZN) Brilique for acute coronary syndrome is one of the few drugs to have a successful price negotiation, Burkowitz noted, attributing the result to a small patient pool that restricted the comparator range.

The comparator issue is problematic when review bodies choose a different comparator to that which companies have studied in clinical trials, Scholz said.

Another big point of discussion and criticism on the process is whether negotiated drug prices should be kept confidential so as to not serve as a reference price for the rest of the European market, said Scholz. Companies want to build changes into the law to keep prices unpublished, and this was in fact written into the draft amendment but later removed from the final law, said Pirk.

Germany is a signaling market for other countries in terms of price, said Lovatt. If every country references Germany’s low drug price, then other countries drop by much more and this could impact where these companies choose to launch, he added.

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