Update: Germany’s New Drug Reimbursement Law


Tuesday, September 28, 2010

Germany is about to introduce a new law regulating the reimbursement of drugs within the country’s statutory health care system, and after intense political debates during the second half of 2010, the amended bill (it has the bulky title of “Gesetz zur Neuordnung des Arzneimittelmarktes in der gesetzlichen Krankenversicherung”  - Arzneimittelmarktneuordnungsgesetz – AMNOG) will become effective January 1, 2011. In essence, it puts an end to the free pricing of innovative drugs and expands the reference price system with fixed prices to all drugs regarded as “me-toos”. The law will have consequences for generic producers and drugs already on the market as well, but for biotech companies developing innovative drugs the main challenges are as follows:

“Value”-dossier

Starting next year, companies introducing novel drugs to the German market will have to provide to the statutory health care system a cost-benefit dossier (“value dossier”) parallel to the market introduction, if they want to obtain reimbursement of the full price for the first year. For the dossier, the law requires them to coordinate with the decision-making body G-BA (Gemeinsamer Bundesausschuss) and Germany’s IQWiG, the Institute for Quality and Efficiency in Health Care. IQWiG examines the advantages and disadvantages of medical services for patients on behalf of G-BA and the Federal Ministry of Health (or on its own initiative).

But how to prove the benefit of a new drug? Since its inception, IQWiG is focusing on evidence-based medicine. Therefore, it will not be enough to demonstrate safety and efficacy. Instead, the focus is on evidence in terms of patient-relevant endpoints, i.e. morbidity, mortality, and quality of life. The law will require the company to provide a wealth of information: does its compound have additional benefits as compared to existing treatment strategies? Is there an alternative for treatment? Which patient (sub)groups will benefit in particular?  Are there special requirements for the treatment? How much will the annual treatment costs amount to? These and many more questions will have to be addressed in the value dossier.

The cost-benefit dossier will then be evaluated by G-BA and/or IQWiG to decide whether the new drug provides additional benefit for patients as compared to existing treatments or not, or whether the new medicine is a “soloist” without any competition.

Pricing

If the assessment comes to the conclusion that there is no proof of additional benefit (or if the company does not submit a value dossier in time), the drug will become subject to Germany’s reference price system. This system sets a price as the interval between the cheapest and the most expensive drug in the particular therapeutic group. If the drug is assessed as providing additional benefit to the patients, the drug maker has to negotiate a rebate on the original price, and this reduced price will be reimbursed after the first year of market introduction. The bill states that negotiations will have to consider international reference prices. There will be a board of arbitration to settle disputes on pricing.

Orphan drugs

As always, the devil is in the details, and procedure and requirements will be outlined only by January 31, 2011. One important point for many biotechs is orphan drugs. The first draft of the bill did not mention them so that they, too, would have been subject to cost-benefit analysis - although they are, by definition, “soloists” as orphan designation is only granted if there is a huge unmet medical need. G-BA stated in an official written comment about the bill dated September 22, 2010, that it opposed any exemptions for orphan drugs. It states that these drugs are granted orphan status solely based on the rareness of a disease, not on missing therapeutic options. “Therefore, approval as ‘orphan drug’ is often granted solely based on surrogate parameters without any reference to patient-relevant benefit,” it states. As examples for orphan drugs without any benefit in terms of patient survival the document mentions Nexavar sorafenib for renal cell carcinoma as well as Volibris ambrisentan, Tracleer bosentan, inhalable Ventavis iloprost, Revatio sildenafil and Thelin sitaxentan for pulmonary hypertension.

In response, BIO Deutschland, the German biotech industry organization  pointed out that orphan drug status in the EU is only granted if, among others, there is “no satisfactory method of diagnosis, prevention or treatment of the condition concerned … authorised, or, if such method exists, the medicinal product will be of significant benefit to those affected by the condition.” BIO Deutschland therefore proposed to except orphan drugs from additional, national benefit appraisals.

The German parliament now decided to except orphan drugs from an additional benefit analysis, provided they do not exceed sales of EUR50 million per year within Germany’s statutory health care system. According to BIO Deutschland, this figure equates to about EUR33 million in net sales.

Impact on clinical trials?

The main question for the design of future clinical trials will be how to demonstrate not only safety and efficacy, but also additional benefit as compared to existing treatments. Evidence-based medicine heavily relies on the evaluation of  long-term patient outcome and comparison studies – but how can a company provide these data at the date of approval? The bill vaguely raises the possibility that G-BA and/or IQWiG may demand additional studies.

The new legislation will also oblige companies to disclose to the authorities the results of all confirmatory clinical trials conducted with the drug, six months after approval at the latest. Publishing can be done in the internet or via linking to a publication, either in German or English language. Publications need to follow GCP-rules and will have to list all results as well as all changes in the study plan, halts, or abortion of trials. In the first draft of the bill it was demanded that companies publish these results.

Consequences

As a result of the new law, companies will have to make sure that they can start marketing their products as soon as they obtain approval in Germany in order to generate high revenue in the first 12 months of commercialization, when they are still free to set the price. After one year, the price will be capped, regardless of whether the drug is assessed as providing additional benefit to patients or not – the only difference is how much the price will be reduced. On a broader scale, the law will not only reduce the prices for innovative drugs in Germany, as Germany today is a reference country for most European states and therefore first-choice market for many biopharmaceutical companies introducing new drugs.

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