December 17, 2012 9:03 pm
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
Merck (NYSE:MRK), Bristol-Myers Squibb (NYSE:BMY), AstraZeneca (LON:AZN) and Novartis (VTX:NOVN) are facing price cuts in Germany for their dipeptidyl peptidase-4 (DPP-4) inhibitors in diabetes, experts told BioPharm Insight.
Merck’s Januvia (sitagliptin), BMS/AZ’s Onglyza (saxagliptin) and Novartis’ Galvus (vildagliptin) have an upcoming pricing review by The Federal Joint Committee (G-BA), the German reimbursement regulatory body. These oral diabetes drugs were all approved prior to the new AMNOG law (German Act on the Reform of the Market for Medicinal Products), passed in January 2011. The law is to regulate the pricing of newly approved drugs relative to their benefit over already existing therapies and clamp down on potentially inflated drug prices set by drug companies back in Germany’s “free pricing” era.
In 2011, Merck reported global sales of USD 3.3bn for Januvia, BMS/AZ reported global sales of USD 684m for Onglyza, and Novartis reported global sales of USD 677m for Galvus.
All DPP-4s (gliptins) including combinations with generics are required to offer dossiers for an additional benefit assessment, a G-BA spokesperson said. The evaluation will begin on 1 January 2013. The combinations include generic metformin with Januvia and Galvus, according to a G-BA press release. The dossier submission is mandatory for all manufacturers, the G-BA spokesperson noted.
A spokesperson on behalf of BMS and AstraZeneca said the companies will not comment on competitor activity or pricing speculation. Novartis and Merck did not respond to request for comment.
The DPP-4 drug class to treat type 2 diabetes is the first of the “established market” products to be assessed on their existing cost-benefit merits, according to a German reimbursement expert. Some experts said this review of established diabetes products was triggered by Boehringer Ingelheim’s newly approved DPP-4 linagliptin, which failed to reach a successful pricing and reimbursement outcome through the new system.
Linagliptin was approved in 2011, and Boehringer submitted its first pricing dossier with no comparison to the G-BA’s appropriate comparator (i.e. sulfonylurea plus metformin), said the G-BA spokesperson. Because Boehringer was unable to reach a favourable pricing agreement for linagliptin, the company decided not to introduce it onto the German market. On 3 December, Germany’s Institute for Quality and Efficiency in Health Care (IQWIG) issued a second negative review for linagliptin’s benefit over existing therapies after Boehringer submitted only placebo-controlled data.
A second dossier from Boehringer for linagliptin is currently in the assessment process, with a final G-BA decision - guided by this independent IQWIG review - expected in March 2013, said the spokesperson.
Other drug companies with marketed DPP-4s have until the end of the year to submit documents to the G-BA, reimbursement experts said. Any price premiums and how much companies can charge over existing therapies (many of which are generic) will be dependent on the outcome of the G-BA’s additional benefit assessment, experts noted.
Price slash threat
Current pricing for DPP-4 inhibitors could drop significantly after the negotiations, perhaps by 25%-40% from the current EUR 2/daily dose, one German endocrinologist estimated. It could potentially drop as low as EUR 1.50-1.20, the endocrinologist noted.
It is difficult to estimate the final pricing of these drugs without seeing the overall effects versus other products, said Stefan Walzer, a pricing and reimbursement adviser at MArS Market Access & Pricing Strategy, Germany. EUR 1.50 is a good estimation for the price drop, he noted.
One executive at a pharma firm involved with DPP-4 development said “I would expect a drop in price,” although, he added, the degree is difficult to gauge and may not be as dramatic as EUR 1.20.
Boehringer offered EUR 1.20 for its DPP-4 linagliptin, the German reimbursement expert noted. Yet, the GKV-Spitzenverband, the federal association of statutory health insurance, only offered pricing similar to generic sulfonylurea, which is a “low two-digit cent price,” the expert said.
If no additional benefit is proven, then the new price automatically may not be any higher than that of the specific appropriate comparable therapy, said Hans-Holger Bless, Division Manager Health Service Research and Pharmacist, IGES Institut, Berlin. In this constellation, a mixed price derived from generic metformin, sulfonylurea and human insulin will be the result, Bless added.
Drugs without any additional benefit are by law fixed to a maximum price of the appropriate comparator, noted the G-BA spokesperson.
If any additional benefit is recognized, the reimbursement amount will be created in negotiations and cannot be predicted at this time, Bless said.
The actual price for gliptins in the German market come from a pre-AMNOG era and is reflective of free-pricing from the industry, said the G-BA spokesperson. The clear intent of AMNOG is to substitute this free-pricing by the industry with valid and rational assessments of additional benefits, followed by fair price negotiations on this basis, he added.
The assessment of established gliptins will include a three-month dossier assessment, followed by three-month statements and resolution procedure by the G-BA, said the G-BA spokesperson. This will lead to a six-month price-negotiation process similar to newly approved drugs.
The G-BA resolutions are expected by mid-2013 and on this basis, price negotiations between companies and umbrella organization of statutory health insurance funds will begin in 2H13 until year-end, said the spokesperson. If there is no consent, an arbitration board will decide on the price within three months, the spokesperson added.
“What is happening because of AMNOG is an earthshaking process that will lead to a knock-on effect for all diabetes medicines in Germany and have a knock-on effect for other countries too,” said the German endocrinologist.
AMNOG is hitting the industry hard, although diabetes will not be singled out, added a European reimbursement expert. Many drugs on the market simply do not have the necessary evidence to show a cost-benefit, he added.
The G-BA will announce a schedule for the assessment of other drugs in the existing market around January or February 2013, the spokesperson confirmed.
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