Germany: Europe’s Go-To Market Changes Rules For High-Risk And Promising Devices

Several recent changes to the German health care system will significantly influence the market access climate for medical device companies working in Europe’s largest market. Do they represent an opportunity or a threat for manufacturers accessing the market?

• Germany’s NUB program that allows usage of innovative products under a one-year pass-through has been amended for “especially invasive” products, which must undergo an HTA process at the G-BA, the health care reimbursement authority.
• The Trial Regulation – on coverage with evidence development – for promising products in the outpatient sector had a promising start, before quietly coming to a stop. But now it seems to have resumed.
• IQTiG is the latest institute to measure and promote quality in the inpatient sector in Germany. It is early days for the new body, but more quality indicators and some P4P structures are on the horizon, meaning this is definitely something for industry to watch.

The medtech industry in Germany is in the midst of the heaviest period of national health care legislation for two decades. Much of it has been spurred by health minister Hermann Gröhe, the CDU and ex-cabinet office minister who assumed the health portfolio at the start of Angela Merkel’s third term as chancellor in 2013.

At the same time, the industry across Europe is holding its breath as the proposed Medical Device Regulation (MDR) is hammered into its final shape. This process was made all the more interesting last fall when Germany stood alone in officially objecting to the EU MDR proposal, as reworked by the Council of the EU, based on the lack of consistent standards for notified bodies across the EU. Whatever is decided there will likely come into effect in 2019, as things stand at present.

However, of more immediate concern to companies vying for a share of the German medtech market, which expanded by 4.3% in 2014, is the raft of new health and nursing care legislation that came into effect on January 1, 2016, including: a hospital structure reform law, on access to care and inpatient nursing staff; an e-health law, which signals the start of better integration of IT-driven health care; and the final medtech-related piece of the Care Provision Strengthening Act (GKV-VSG), which is described below.

Quick Facts About The German Domestic Market

The April 2014 German federal statistics office (Statistische Bundesamt) report on health care spending noted:

• Spending in Germany on medtech products (excluding investment goods and dental implants, but including trade markups) in 2012 totaled €29 billion.
• Medtech aids accounted for the largest share (€15.2 billion). Other medtech products totaled €12.8 billion, and wound care €1 billion.

Industry association BVMed says there are some 12,000 medtech companies in Germany, of which 10% have more than 20 staff. They employ 195,000 staff in all. The production value of German-based medtech companies in 2013 was €22.8 billion, up 2.2% on 2012. Domestic sales of medtech products totaled €7.3 billion, and overseas sales €15.5 billion.

Revision Of The Innovation-Friendly NUB Program

For the last decade, Germany has had a very innovation-friendly inpatient reimbursement scheme for premium health care products: the NUB (Neue Untersuchungs- und Behandlungsmethoden) pass-through payments system. Every year, in October, hospitals have been entitled to apply for NUB payments for CE-marked technologies that are underpaid within the DRG system, without having to file high-quality clinical data.

The DRG Institute, InEK, has had the task of assessing these NUB applications, and has approved them based on cost versus reimbursement considerations – for the most part relying on the CE-marking for safety and efficacy of medical devices. NUB payments are usually available until the product has been integrated into the system of regular DRG payments.

Medical devices have regularly been launched on the German market with data from CE-marking clinical trials, which are often uncontrolled or small-scale. Because in general this is sufficient to trigger the NUB application process, the German hospital sector has been seen as an attractive early “go-to” market. The additional NUB reimbursement allows for market-penetration before the full DRG payments kick in. The time is used for generation of further clinical data until full coverage is secured.

Then, in June 2015, the German parliament adopted the GKV-VSG (see above). This amended the NUB process by among other things introducing an early benefit assessment for “especially invasive” medical devices (under paragraph 137h of the SGB V – Social Law Book V). This legislation links the approval and negotiation of NUBs to the outcome of an official and mandatory rapid health technology assessment (HTA) carried out by the Federal Joint Committee (G-BA, Gemeinsamer Bundesausschuss).

“Less invasive” medical devices and pharmaceuticals/biopharmaceuticals will not be affected by this new legislation, and the NUB process for those products will remain unchanged.

The TAVR Experience

Before we elaborate further on the new NUB process, let us take a real-world look at the market access situation for transcatheter aortic valve replacement (TAVR) products, by way of example.

Edwards Lifesciences Corp.’s Sapien device received CE-marking late in 2007 with unique procedure coding already available in Germany upon launch as well as NUB pass-through payments for ten hospitals. Other products followed and were able to use the existing procedure coding and reimbursement. These were based on CE-marking data alone (presumably a small cohort study). Since 2007, we have seen a massive increase in the total number of implanting centers and the volume of procedures performed annually, jumping from ten to almost 50 in 2008, and to 80 in 2009. Since, then the number has remained relatively stable at around 90.

In the early years, annual TAVR procedures in Germany saw growth rates of 100% and above. Starting with a couple of hundred procedures in 2007, the total volume had already reached the 1,500 mark in 2008 – a year that saw a significant increase of implanting centers and successful NUB negotiations. The total amount of procedures grew constantly, surpassing 3,000 in 2009 and reaching 6,000 in 2010 – the year when TAVR reimbursement was integrated into a standard DRG.

All that was based on the CE-marking. After 2010, German TAVR market growth cooled somewhat, but annual growth rates have remained healthy, and mostly above 25%. In 2014, German hospitals performed a total of 13,445 TAVR procedures – a rate of 16.56 TAVR procedures per 100,000 population.

The CE-marking regulatory approval pathway, the different local reimbursement mechanisms around Europe and the differences between EU and US regulatory approvals and reimbursement pathways are themes for further articles.

But all other European markets have been significantly slower at adopting and reimbursing TAVR despite the same regulatory approval pathway. And in the US, it took until November 2011, after solid clinical data from the PARTNER trial, to achieve FDA clearance for the first TAVR device in the narrow indication of inoperable patients (Edwards Lifesciences).

In 2012, the FDA broadened the indication to high-risk patients. The total number of procedures in the US amounted to 26,414 in 2014, according to the US Transcatheter Valve Therapy Registry, roughly 8.28 per 100,000 population (precisely half the rate in Germany; see above).

The history of TAVR’s route to uptake in the market may have done much to prompt the introduction of the amended NUB process.

To gain control over the TAVR market in Germany, the G-BA issued a directive (under §137 SGB V) setting strict quality standards for implanting centers. This has seldom happened in the past, and may be interpreted as a final attempt to restrict the indication and the range of providers who are allowed to use TAVR. The directive came into effect in 2015, with a transition phase until June 2016. Indeed, the history of TAVR’s route to uptake in the market may have done much to prompt the introduction of the amended NUB process, which involves the G-BA and its executive arm, the Institute for Quality and Efficiency in Healthcare (IQWiG), and features a more rigorous assessment of clinical data for new technologies.

Which Devices Are Affected?

There has been much debate about which medical devices should be affected by the new NUB process. The final version of the law mentions Class IIb and III medical devices, as well as active implantable devices that are of a particularly invasive nature. A lower-level directive from the health ministry, the MeMBV (Medizinproduktemethodenbewertungsverordnung), published in December 2015, details which devices will be affected. They are:

• Active implantable medical devices;
• Class III (if the mode of action constitutes a significant intervention to the function of organs or the organ system, especially heart, central circulatory system, central nervous system). An intervention is “significant” if there is long-term modification or replacement of the function of an organ (or organ system), or if the medical device has direct contact with the heart, central circulatory system or central nervous system;
• Class IIb (if the mode of action is based on influencing organs – especially the heart, central circulatory system, central nervous system – by transmission of energy and/or releasing radioactive substances).

The G-BA is currently updating its rules of procedure to address its new responsibilities. Publication of the update is expected within the coming months. A public discussion to shed further light on the issue was scheduled for March 17.

New NUB Processing Details

As to what is known about the updated NUB process, starting October 2016, first-time applications for NUB payments will require timely submission of a value dossier to the G-BA. While the InEK will remain responsible for economic aspects, the G-BA will conduct a rapid health technology assessment and evaluate available clinical evidence.

It is likely that “benefit approved” will be granted only if data are available from high-quality, randomized clinical trials (RCTs) against an active comparator. In the case of suspected bias, the G-BA often downgrades the level of evidence. Given that the generation of this level of evidence may not be possible with certain devices. expect to see further discussion around this area.

Medical devices with CE-marking data only may be classified as having “potential benefit.” For those procedures, access to (additional) reimbursement under the updated NUB scheme will require further evaluation according to the Trial Regulation, Germany’s coverage with evidence development program.

For technologies with potential benefit, the G-BA will commission an impartial scientific institute to plan and conduct an evaluation. Manufacturers and/or distributors will have to cover the overhead costs of the scientific evaluation and its project management, whereas provision of the method including costs for the medical device, are reimbursed through NUB payments. To be eligible to receive a NUB, hospitals must participate in the coverage with evidence development program.

There is an ongoing debate as to whether hospitals may choose to either participate in the core trial, which will likely be an RCT, or in an additional registry.

After the trial phase is completed, G-BA assesses the clinical data produced, publishes the findings and comes to a final decision about whether the benefit of the new method is approved or rejected.

The Trial Regulation – A Tool For Outpatient Innovation

Although the industry was concerned that this legislation would introduce another market access hurdle in the outpatient sector, we had high hopes that the Trial Regulation would offer a shortcut to reimbursement for promising new treatment concepts.

Before the Trial Regulation was available, manufacturers had hardly any opportunity to apply directly for outpatient reimbursement of their technologies.

Basically, the Trial Regulation can be seen as somewhat complementing the inpatient NUB program, but in the outpatient sector and in the form of coverage with evidence development. For the first time, this program allowed manufacturers of medical devices to request assessments of innovative outpatient methods. Before the Trial Regulation was available, manufacturers had hardly any opportunity to apply directly for outpatient reimbursement of their technologies.

So, under the Trial Regulation, manufacturers are entitled to request an assessment of new and innovative methods that rely on the use of a medical device and are performed mainly in the outpatient sector. The term “new method” in this context refers to methods that are not yet reimbursed within the German statutory health insurance (SHI) system. The system is not expressly time sensitive either, which means that the time since invention or introduction into the market are not of critical importance.

Upon submission of a value dossier by the manufacturer, the G-BA conducts an initial appraisal and decides if the method under scrutiny has the “potential” to become an alternative to the standard of care.

“Potential” refers to a variety of outcomes, like greater efficacy/effectiveness, better cost-effectiveness, fewer side effects or better medical care. At the end of each year, the G-BA selects which of the methods with potential benefit will actually make it to the trial phase. Following studies, the G-BA decides whether or not to include the new technology in the German catalogue of reimbursable procedures and products for the outpatient sector (the EBM). To date, the G-BA has selected just five technologies in seven indications. Expect the next batch in the coming weeks.

IVD Example

In 2013, the first year that the Trial Regulation was in full effect, my company supported the manufacturer of an innovative IVD through the process. Here is some insight into what happened, and our verdict on how the Trial Regulation has performed so far.

In the beginning, things went pretty smoothly. We compiled a value dossier featuring HTA-relevant data, including a detailed, technical description of the device, appraisal of the scientific literature and extensive data extraction from trials. We submitted the dossier in mid-2013. Three months later, we received positive notification that the technology would be considered as having potential. In fact, we had delivered high-quality RCT data and had been rather worried that the outcome of the G-BA’s assessment would be that the technology is beyond just having potential, and that this route actually had been inappropriate. That would have left the manufacturer without any direct way of applying for reimbursement in Germany.

Early in 2014, we received another notification that the technology would be included in the coverage with evidence development program, and that planning of the study would commence shortly after an initial hearing procedure. We were invited to further comment during the official hearing procedure, as were scientific and professional societies and other stakeholders. We were further granted an informal and confidential consultation session with representatives of the G-BA at their offices in Berlin.

At this point, things took a turn for the strange. We connected the G-BA with the principal investigator of a post-marketing clinical follow-up (PMCF) study at a German university hospital. There was some discussion between them about incorporating the PMCF into the G-BA trial.

And since mid-2014, nothing has happened and the process seems stuck. At first, we were worried that the G-BA may just want to wait until the closing of the PMCF, or thought that ethical reasons might be playing a role, since there was a lot of discussion in the public domain about the technology, including in national newspapers and on TV.

However, because none of the technologies selected under the Trial Regulation have seen any progress and trials did not start until recently, we are currently confident that the whole Trial Regulation has been on hold. We hope to see the program pick up speed again once the updated NUB process is in full effect, since the updated NUBs will to some extent rely on the legal and resource framework of the Trial Regulation.

IQTiG Institute – A Snapshot

Dr. Christof Veit became the inaugural head of the newly formed IQTiG (Institute für Qualität und Transparenz im Gesundheitswesen – Institute for Quality and Transparency in Healthcare) in January 2015. One year and 80 new staff appointments later, IQTiG has taken over full responsibility for quality assurance in German health care, doing the job previously done by the AQUA-Institut GMBH (the Institute for Applied Quality Improvement and Research in Health Care).

It is assumed that Veit will present his agenda for quality indicators in April 2016, and that the reporting of updated quality indicators may be required by hospitals as early as 2017.

Here is a little background on what the possible future role of IQTiG will be in German health care. Veit has a history in health care QA. A physician by training, he has worked in hospital QA since 1992. From 2007 until his appointment as director of the IQTiG, Veit was managing director of the BQS institute (responsible for national quality assurance in German hospitals before AQUA was commissioned with this task).

Further, he was part of an advisory board for the health ministry that did research on quality in health care, quality indicators and especially pay for performance (P4P). He was lead author of a 340-page assessment for the health ministry concerning feasibility of P4P in Germany (Pay-for-Performance im Gesundheitswesen, 2012). One of the key messages of that paper is that well-established quality indicators are among the most important factors for reliable and successful P4P structures.

The Triple Verdict

There is probably still some way to go before we know the impact of the IQTiG on market access and reimbursement in Germany. Currently, we would rate the new institute not as a threat, but definitely as something to watch. It is likely that we will see an increase in quality indicators and we may see some P4P structures in the coming years in areas that already have well-established quality indicators, like heart valve replacement and knee endoprostheses. In these areas, there are definitely some opportunities for devices with exceptional clinical outcomes and low complication rates.

The revision of the NUB program looks like a big threat for the medical device industry. Due to restricted use in a clinical trial setting, indications may remain rather narrow, and broadening them will likely be difficult.

The Trial Regulation in the German outpatient sector still seems to be more of an opportunity than a threat, but it is definitely nothing to build a business on currently. Though the whole process seems to be on hold, we hope to see some progress again in 2016.

By contrast, the revision of the NUB program looks like a big threat for the medical device industry. Due to restricted use in a clinical trial setting, indications may remain rather narrow, and broadening them will likely be difficult. Though the framework is very different, the result may to some extent resemble the current situation in the US, where CMS reimbursement is restricted to rather narrow, expressly FDA-cleared, indications for innovative and expensive devices.

The overhead costs of a multicenter RCT may be tough to take on, especially for SMEs, and must be taken into consideration when developing a business plan. Although SMEs often support investigator-initiated trials and hence may be used to giving over control of their trials to a third party, this might not hold true for the bigger players who may not be willing to give over control of a clinical study using their technology to an official authority.

On the other hand, additional clinical data concerning patient-relevant benefit over and above CE-marking requirements must be generated anyway to secure reimbursement in most European markets, and in the US. Germany’s revised NUB program may allow for the collection of the necessary data under an easily accessible conditional coverage program.

Additionally, under the Trial Regulation, SMEs are entitled to apply for co-funding of study overhead costs through the G-BA of up to 50% of the total costs generally, and up to 70% for orphan disease indications.

Overall, we rate these changes in the German market collectively as “substantial threat with a hint of opportunity.”

Ben Modley ([email protected]) heads the leads.healthcare consultancy (www.leads-healthcare.com), specializing in market access, pricing, health economics and health technology assessment, out of offices in Freiburg, Germany.