Germany's New Pricing Policy Loses Appeal with Pharma

Germany used to afford pharmaceutical companies the freedom to set their own prices for products. Recent healthcare reform, however, now means that new medicines must undergo a cost–benefit analysis, which has implications for their reimbursement.

Nathan Jessop

Under this new evaluation system, usually conducted by Germany’s Institute for Quality and Efficiency in Healthcare (IQWiG) under the directions of the Federal Joint Committee (G-BA), drugs are rated on their added therapeutic benefit using a six-stage scale ranging from “considerable added therapeutic benefit” to “no added benefit.” If the drug is deemed to show some benefit, then pricing negotiations take place between the pharmaceutical company and state health insurers. A drug rated as having shown no added benefit will be assigned a price under Germany’s reference pricing system, which could result in the drug being grouped with an old product and warranting a low price. Not only would this drive down revenue for the company, but also has implications for prices in European countries because many member states use Germany in their pricing analyses.

This year has been the first full year to have the system up and running—approximately 30 drugs have been assessed. The pharmaceutical industry was critical of the system when it was first outlined and some of the decisions made to date have only added to frustrations.

Comparator controversy

The use of comparators to demonstrate the benefits of a drug has been a particular point of contention, with several companies falling foul of IQWiG and G-BA’s views, despite having satisfied the European Medicines Agency (EMA) for regulatory approval.

Boehringer Ingelheim and its partner Eli Lilly have experienced similar issues with their diabetes treatment Trajenta (linagliptin). Despite gaining EU regulatory approval in August 2011, the G-BA decided that no added therapeutic benefit could be inferred from the Trajenta dossier they received, because the manufacturer had chosen a different comparator therapy to the one they specified. Based on the G-BA’s position in the subsequent negotiations held between the parties, the companies responded angrily and decided not to launch Trajenta in Germany because of the country’s pricing policy. However, since then Boehringer Ingelheim appears to have altered its position. In August 2012, the G-BA agreed an application from the company to submit a new dossier. Boehringer Ingelheim now has three months in which to submit the new information.

GlaxoSmithKline (GSK) encountered this problem with Benlysta (belimumab), which received EU marketing authorisation for systemic lupus erythematosus in July 2011. Upon assessment, the G-BA stated that the appropriate comparator therapy in the GSK dossier should have been an optimised standard therapy with various drugs that had been approved in Germany. They criticised the two main clinical studies in the dossier as having inappropriately restricted the possibilities for adapting the standard therapy, even though these studies had been acceptable for EMA regulatory approval. As a result, the G-BA concluded that added benefit had not been proven for Benlysta, which provoked a furious reaction from GSK. The company reportedly called the decision “inexplicable from a medical point of view” (1). GSK is now faced with a situation where a discount to Benlysta’s price in Germany may be forced upon them. To add to GSK’s woes, the UK’s cost–benefit assessment agency, the National Institute for Health and Clinical Excellence (NICE), also rejected the drug, which does not bode well for Benlysta’s commercial success in the European market as a whole.

Biogen’s multiple sclerosis drug Famypra (fampridine), which gained EU marketing authorisation in July 2011 had a slightly different issue with the G-BA. The body had specified physiotherapy as being the appropriate comparator therapy for the benefit assessment, but Biogen presented data on an indirect comparison (2). While it is technically acceptable to use an indirect comparison, the G-BA was critical of Biogen’s methodology. In addition, they remarked that the studies on physiotherapy included patients with a markedly lower grade of disability than patients in the Fampyra studies, and concluded that there was no proof of added benefit for the drug.

Despite the unpopularity of the G-BA’s views regarding comparators, pharmaceutical companies have been unable, to date, to overturn the negative decisions. However, the G-BA ran into problems when it directed IQWiG to assess InterMune’s Esbriet (pirfenidone), which had been approved as an orphan drug for mild to moderate idiopathic pulmonary fibrosis (IPF). The approval process for orphan drugs involves determining added medical value with respect to current treatments. When IQWiG concluded that there was no additional benefit of Esbriet in IPF, the company criticised the body for having overstepped its mandate because orphan drugs are exempt from their assessment (3). IQWiG disputed this opinion, stating that orphan drugs also required a dossier and that while such drugs may be approved on the basis of providing benefit, their role would be to establish the extent of the added benefit (4). However, under heavy pressure from pharmaceutical industry associations, physicians and patients, the G-BA, as final decision maker, relented and granted the additional benefit of Esbriet. InterMune will now enter price negotiations in Germany.

Another orphan drug that has squeezed through the system in 2012 was Pfizer’s Vyndaqel (tafamidis meglumine) for the treatment of transthyretin amyloidosis. Although stating that some statistically significant advantages or disadvantages of Vyndaqel compared with the comparator treatment were lacking in the company’s submitted dossier, IQWiG grudgingly described the drug as providing a “hint of a positive effect” on the disease (5). This was backed by the G-BA, meaning that Pfizer could progress to the pricing negotiations stage.

Complaints but compromise?

Based on the general problems that companies have run into with IQWiG and the G-BA during 2012, the pharmaceutical industry continues to be suspicious about the assessment process. In particular, the outcome of the next assessment for Trajenta will be important. Recently, the European Federation of Pharmaceutical Industry Associations (EFPIA) supported the German pharmaceutical industry association, the VFA, in calling on the German government for urgent action regarding the new pricing system (6). The industry associations complained that the rigid German system would force companies to delay launching their drugs in the German market, and that patients would lose out as a result. Furthermore, companies would have less of an incentive to invest in the German market.

Nevertheless, pharmaceutical companies have too much at stake to suddenly downgrade their operations in Germany and are hoping that pressure from industry associations and other stakeholders will lead to constructive dialogue with the authorities. Even Eli Lilly’s CEO was reported to have met with German officials to determine whether there was room for compromise. In addition, the pharmaceutical industry cannot ignore the fact that some companies have had positive experiences with the new German system. For example, in 2011, AstraZeneca’s Brilique (ticagrelor), for the treatment of acute coronary syndromes, was considered by the G-BA to have demonstrated an “important additional benefit” (7). This helped give AstraZeneca an important commercial boost for their drug which was predicted to be a rival to Sanofi’s top-selling Plavix (clopidogrel). Similarly, IQWiG was quite complimentary when it assessed BMS’s melanoma treatment Yervoy (ipilimumab), stating that it offered “considerable added benefit” (8).

In its first year of operation, the German government may have been trying to make a point to the pharmaceutical industry by taking a tough stance on pricing. However, over time, it may be forced to introduce some flexibility into the system to appease companies, particularly as the pharmaceutical sector remains an important contributor to the country’s economy. We will wait and see what 2013 brings.

References

1. Reuters website, “Germany Joins UK in Spurning GSK’s New Lupus Drug,” http://uk.reuters.com, accessed 14 Nov., 2012.

2. IQWiG website, “Added Benefit of Fampridine is Not Proven,”. www.iqwig.de, accessed 14 Nov., 2012.

3. Scrip Intelligence website, “Intermune’s Orphan Esbriet Escapes Reference Pricing in Germany,” www.scripintelligence.com, accessed 14 Nov., 2012.

4. IQWiG website, “Pirfenidone: Extent of Added Benefit,” www.iqwig.de, accessed 14 Nov., 2012.

5. IQWiG website,“Tafamidis: Approval Denotes Proven Added Benefit,” www.iqwig.de, accessed 14 Nov., 2012.

6. EFPIA website, “EU Pharmaceutical Industry Leaders Call for Revision of German Model for Assessment of New Medicines,” www.efpia.euaccessed 14 Nov., 2012.

7. AstraZeneca website, “G-BA Issues Positive Final Medical Benefit Assessment for BRILIQUE in Germany,” www.astrazeneca.com accessed 14 Nov., 2012.

8. IQWiG website, “Considerable Added Benefit of Ipilimumab in Advanced Melanoma,” www.iqwig.de accessed 14 Nov., 2012.