Focus on "me too" drugs
For the national confederation of SHI's, this is a clear sign of the success of the new process, ratifying their premise that
many newly-marketed pharmaceuticals are only me-too products with scant benefit over established therapies. The sick funds
are eager to extend the new process beyond new medicines, which account for less than 2 percent of total healthcare expenditures.
Compiling a value dossier requires the management of interdisciplinary and complex processes.
Indeed, the sick funds see the greatest potential for savings from the assessment of drugs that are already established on
the market. "The sales volumes at issue in the current negotiations are too confined," Johann-Magnus von Stackelberg, vice
chairman of the SHI confederation, is quoted in press releases. "Significant savings can only be achieved when we start assessing drugs in the established market." On June 7, the sick funds
got their wish when the Federal Joint Committee (G-BA), which administers the AMNOG law, called for the assessment of eight
marketed diabetes products, including the Merck blockbuster Januvia. It is expected that new prices for these widely used
medicines will be set by the fourth quarter of 2013, and the worst case scenario anticipates an average drop of about 90 percent—equivalent
to the prices of a generic comparator.
The definition of a comparator product—specifically, whether this should include evaluating a patented innovative molecule
against a generic equivalent—is the greatest source of discord for Big Pharma. Under the new pricing system, the price of
the existing comparator is a key determinant of a new product's price. Because the price of the assessed drug is negotiated
on the assumption that it will carry some form of premium against the price of the comparator, the higher the price of the
comparator, the better the later-reimbursed price for the new entrant. Hence if the AMNOG law is viewed purely as an exercise
to lower the nation's drugs bill, the SHI and G-BA have an incentive to choose a comparator with a low price.
The choice of comparator thus poses a real dilemma to a pharmaceutical company seeking access to the German patient population
for a new product. By refusing to be evaluated against the comparator set by the G-BA, the drug's additional benefit will
not be recognized, and by complying, the price level can be minimal. This was the rationale for each of the four companies
that refused to enter price negotiations after a negative IQWiG evaluation and thus opted out of the German market. The prospect
of having to adhere to the G-BA comparator meant being compared to a generic drug with a cost of a few cents per day, a bridge
too far for most companies with a commitment to operating as a global business.
Modest adjustments in the works
It is not only the pharmaceutical industry that has expressed dissatisfaction with the new process. Pressure from patients
and politicians resulted in legislative action earlier this year for a transitional rule that would give companies under selected
conditions a second chance for an early benefit assessment. Boehringer Ingelheim and Eli Lilly are the first to make use of
this regulation with their Tradjenta medicine for diabetes.
The concession, however modest, shows that even after two years the new system has not secured a consensus among the social
partners, politicians, and individual companies. It is thus difficult to rate the long-term effects for the international
pharmaceutical industry. Although small alterations to the process are likely, the basic framework of evidence based prospective
and post approval price review is here to stay. Irrespective of size and business volume, pharmaceutical companies must continue
the work of setting up the structures, strategies, and expertise to receive positive results in the early benefit assessment—for
both newly-marketed or established drugs.