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Euro'vision blog

A look at the key issues for pharma across Europe

AMNOG – trick or treat?

It’s referred to as the “reorganisation of the pharma market”. What exactly are the implications of the German AMNOG legislation, adopted by Bundestag (the national parliament), and will other countries follow suit?

It's the time of year for scary things to come to life and frighten us mere mortals – and what could be scarier to the pharmaceutical industry than the new health bill in Germany – the AMNOG legislation. Sounding like a villain out of a Harry Potter book – AMNOG  (or Neuordnung des Arzneimittelmarktes to give it its very full name) at first glance really is very very scary…

Introduced in January this year this law regulates the reimbursement of drugs in the German state-funded healthcare system. In order to set the price the legislation requires new drugs to show additional benefit in comparison to a corresponding established therapy.

So far, I hear you say, this is sounding not much different from legislation in many other European countries. But actually AMNOG has a real sting in its tail.

After the first year on the market (during which time the pharmaceutical company sets the price) the price for subsequent years is negotiated with the Government and central insurance authorities, and it appears that the price offered will be in direct proportion to the amount of additional benefit shown by the product in the principal clinical measure, in either regulatory or additional studies.

So why is that so scary? Well, it's very possible that the pricing authorities will argue that a 10 per cent additional benefit means a 10 per cent price uplift on the comparator product. And since many clinical trials for regulatory submissions use standard of care comparators (which are often generic) you can start to see the issue.

The recent decision by Boehringer Ingelheim and Eli Lilly not to launch their new oral diabetes drug in Germany until the law is clarified demonstrates this. Rather than a price based around similar products in the same class, it is very possible that the authorities could argue for a price based around showing benefit over the pivotal study comparator, which is generic and sets a low price.

And now you can feel the full bite of the fearsome AMNOG…

So AMNOG is the end of the world, as we know it? Actually not quite, but if the regulation remains as it is, it is certainly the beginning of a whole new way of looking at things. Companies are going to have to be very careful how they select comparators and design studies for both pivotal and additional trials.

We might need to look for surrogate parameters and outcome measures that go beyond the simple “it lowered levels by x % vs comparator”. And that's where the treat comes in. In a funny way AMNOG might just be the stimulus the industry needs to relook completely at how it puts together development programmes. The impact of 'first in class' product introductions will be radically changed since they will set the new class benefit to price structure.

More meaningful and clinically impactful endpoints could actually speed up adoption of new products. From a piece of legislation that at first glance appears to be doing exactly the opposite – that is a surprising thought!

Article by
Max Jackson

Max Jackson is CEO, EMEA & APAC, Sudler & Hennessey and former chair EACA Healthcare Communications Council

10th November 2011

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