Pricing Controversy in Germany

Germany used to be a golden market for the pharma industry in Europe because the country allowed global pharmaceutical companies to set their own prices for new medicines. However, all good things must come to an end…

In Germany, healthcare reform (known as AMNOG – Arzneimittelmarkt-Neuordnungsgesetz) that came into effect in January 2011 introduced stringent new pricing measures that linked the price of a medicine to its perceived therapeutic benefit. Eighteen months from the reform and the full effects have been realised. Although successful in cutting costs (a primary goal of the legislation), the change has resulted in a number of global companies delaying or refusing to market their drugs in Germany. It’s a testament to the fact that Germany has historically been one of the first markets in Europe to receive innovative new drugs.

The European Federation of Pharmaceutical Industries and Associations (EFPIA) recently asked the German government to take “urgent action” concerning the pricing assessment of new medicines. In a statement, Richard Bergström, director-general of EFPIA, said, “It is absolutely appropriate that Germany manages its healthcare budget carefully and assesses medicines to ensure that they are priced at a level that reflects the value they deliver. However, early experience with AMNOG is very disappointing.”

EFPIA is not the only organisation to have expressed concern about AMNOG. Understandably, the pharmaceutical manufacturers have also spoken out, including Boehringer Ingelheim and Eli Lilly. One of the main issues highlighted by companies and the media seems to be the types of comparisons that are used to evaluate therapeutic benefit. Indeed, in 2011, the use of indirect comparators to assess innovativeness in Germany was noted at the ISPOR Congress held in Madrid, Spain.

EFPIA members companies say they have found that the choice of a comparator often differs from that chosen for their development program after consultation with EMA. Eli Lilly and Boehringer Ingelheim submitted their jointly developed diabetes drug, Trajenta, for review. However, Germany’s Institute for Quality and Efficiency in Health Care (IQWiG) requested that the product be evaluated against a different class of drug to the one provided by the company. It has also been reported that Eisai’s breast cancer drug eribulin was initially compared with a drug used in the first phase of illness, even though eribulin was to be administered when an initial therapy no longer worked.

Generic products have also featured in comparator assessments to direct the prices of new medicines closer to generic prices or prices of older medicines.

Another highly controversial decision in the healthcare reform was to include Greece in the group of countries (Belgium, Denmark, Finland, France, Greece, UK, Ireland, Italy, Netherlands, Austria, Portugal, Sweden, Slovakia, Spain and the Czech Republic) used as a reference for pricing negotiations. Greece is in the midst of a severe debt crisis. Although some pharmaceutical companies have withdrawn products from the markets, others continue to supply products at lower prices for the benefit of patients. It’s a charitable action, but these lower cost medicines, however, will impact assessments made using Greece as a reference market.

Although cheap medicines and lower healthcare costs are desirable by all countries, I’m sure most people will agree that many European countries do not need the same type of charity that Greece is currently in need of.