New Government Could Increase Pricing Pressures In Germany

Alexander Natz, secretary general of EUCOPE, warns that changes to a pricing and reimbursement system that has so far worked well, particularly for orphans, could dissuade advanced therapy medicinal products manufacturers from launching in Germany.

Germany’s new government is expected to take measures to ensure the health care system is more sustainable, including policies to reduce pharmaceutical spending through action on pricing. However, Alexander Natz, secretary general of EUCOPE, warns that changes to a pricing and reimbursement system that has so far worked well, particularly for orphans, could dissuade ATMP manufacturers from launching in Germany. EUCOPE is Europe’s trade body for small to medium-sized innovative companies working in the field of pharmaceuticals and medical technologies.

As this article was published talks were underway between the center-left Social Democrats (SPD), the Greens and the liberal pro-business Free Democrats (FDP) on what form Germany’s new government will take. Olaf Scholz, leader of the SPD party will likely become chancellor after his party won the biggest share of the vote.

The SPD victory was something of a surprise and marks a shift to the left after 15 years of government led by Angela Merkel of the center-right Christian Democrats. However, according to Natz, the FDP will ensure some pro-business policies are adopted.

Natz does not believe that any drastic revision of the AMNOG pricing and reimbursement system introduced in 2011 is likely, particularly if the FDP has any influence over health policy. Natz points out that it was an FDP health minister, Philipp Rösler, who introduced the AMNOG system. The AMNOG system limits free pricing of pharmaceuticals to 12 months and has introduced benefit assessments to determine pricing based on how well a new drug performs compared to treatments already on the market.

AMNOG Pricing And Reimbursement System

The AMNOG health care reform act came into effect in 2011. It allows new medicinal products to be freely priced for the first 12 months following launch. Over the course of that year, they are evaluated to assess the additional benefits they offer compared with treatments already available. The drug is then awarded a rating based on the additional benefit it is deemed to offer. This rating informs price negotiations between the manufacturer and the association of statutory sickness funds, the GKV-SV. If an agreement cannot be reached, the price is determined by an arbitration board.

However, the system is more flexible for orphan drugs and automatically acknowledges that such products offer some benefit, as long as annual sales to statutory insurers do not exceed €50m in Germany. These products are automatically awarded a positive benefit rating of at least “unquantifiable benefit.” They do not have to undergo a full benefit assessment and the manufacturer does not have to provide any comparative data, although this changes if annual sales exceed €50m.

Under a full assessment, the possible ratings are major benefit, considerable benefit, minor benefit, unquantifiable benefit, no benefit and less benefit.

Orphan And Combination Drug Pricing Could Be Targeted

“Overall people are happy with the AMNOG,” said Natz. He added that major change to the benefit assessments would be unlikely until EU-wide joint clinical assessments have been properly introduced. However, he does expect that there will be some policies aimed at lowering pharmaceutical spending by curbing prices. Orphan drugs and combination products are most likely to come under the spotlight as there has been a lot of discussion on how to ensure such products offer value for money.

A number of influential stakeholders have already voiced support for action on pricing. For example, the G-BA, the body in charge of the pricing and reimbursement system, has called for the period of free pricing to be slashed from 12 months to six months. The G-BA reasoned that six months would be a better time frame because this is the point at which the results of the AMNOG benefit assessments are known.

The body suggested that new prices would be applied retrospectively after companies have agreed the final price with the GKV-SV, the association that represents statutory insurers.  This would save money for health insurers, particularly where medicines that are found to offer no additional benefit are concerned and the freely set price is rejected, according to the G-BA.

The method used to retrospectively apply prices would need to be regulated in order to give prescribers and companies more certainty, the GB-A said.

Meanwhile, insurers have also made it plain that they would like to see reforms to pharmaceutical pricing.

The GKV-SV said in a position paper that reimbursed prices should “follow the evidence” so that prices are in line with the available evidence. The association said manufacturers that generate meaningful data would be rewarded by such a system. It added that an interim price based on what a competitor charges for high-priced products and those that that have undergone an accelerated approval should be applied from the time of market entry.

In addition, the small but influential insurer group GWQ has suggested that orphan drugs should undergo a full benefit assessment when they generate €20m in annual sales in Germany. Currently orphans only need undergo a full assessment when they generate more than €50m.

Two recent G-BA decisions on gene therapies have demonstrated the impact of the €50m threshold for pricing. On 4 November, the body announced ratings for Novartis AG’s Zolgensma (onasemnogene abeparvovec) and Orchard Therapeutics Limited’ Libmeldy (atidarsagene autotemcel).

Limeldy underwent an abridged assessment under the orphan flexibilities for drugs that generate less than €50m a year, which meant that Orchard did not have to provide data comparing its gene therapy to an active comparator.  The G-BA awarded it a rating of considerable additional benefit.

In contrast, Zolgensma underwent a full benefit assessment after an initial orphan benefit assessment was terminated when Zolgensma sales exceeded that threshold within six months of the product’s launch. Novartis was required to prove additional benefit over Biogen, Inc.’s Spinraza (nusinersen).

The G-BA concluded that the manufacturer was unable to show additional benefit. Although it is not rare for orphan drugs to be awarded no additional benefit ratings, it is the first time this rating has been awarded to a gene therapy. ATMP manufacturers will be paying close attention to how pricing talks proceed and to what extent the price of the comparator, Spinraza, is used as a cap.

Funding Gap

Such cost containment measures could prove interesting to the new government, which commentators point out will have to address the financial sustainability of the health care system – including high pharmaceutical spending. In June, the GKV-SV warned that the statutory health insurance system was facing an €18bn funding gap in 2022.

Natz warned that the new government should think carefully before tinkering with a system that has worked well for over 10 years. He pointed to orphan drugs. “Look at what we have actually achieved, over the past 11 years in Germany we have all orphan drugs available on the market except for two, for Translarna and Zynteglo – that is a great success.”

The German system has accepted a smaller evidence base for orphan drugs and to change this to award lower prices for products with immature data sets, as the GKV-SV proposes, is risky, Natz fears. “You have to give companies time to generate data. We should maintain this, if we don’t I fear there will be opt outs from the Germany market.”

“Industry is more than happy to generate the evidence post-approval and we are doing that, but we must also recognize the data isn’t falling from heaven, it takes time to generate,” he said. He added that companies want to close any data gap but emphasized that payers must recognize that this is much harder for orphan drugs than for the former blockbuster drugs that were designed for large patient populations in big disease areas.

Natz also said the new government should ensure that the generation of real-world evidence was more highly valued in Germany: “It is important that registries are aligned at the EU level as otherwise we will end up in a big patchwork,” he said.

Hospitals

And when it comes to advanced therapies Natz would like to see the new government introduce some changes to the way hospitals acquire cell and gene therapies. Under the current system, hospitals have to pre-finance these therapies and then claim the costs of treatment back from insurers. As Natz explains, this puts hospitals in a difficult position as they potentially have to pay out large sums with no 100% guarantee that the insurers will reimburse them.

The situation is impacting uptake of advanced therapies and Natz suggests it may be better to have a system that, for example, allows direct payments between the payer and the manufacturer, including pay for performance deals.