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Germany planning to table pricing reforms 'by the summer'

Proposed changes include replacing 12-month full price policy with €250m threshold

German flagGermany is considering a shake-up of its pricing system for medicinal products, including discounts on drugs that cross a sales threshold.

The proposals - reported in the Wall Street Journal on Friday - would change the current system whereby pharma companies can charge full price for new drugs for a year after launch.

Discounts would now be required once sales of a new drug reach €250m, a move designed to side-step situations where pent-up demand for a highly-priced new medicine leads to a hefty bill for the state in the first 12 months.

That situation was particularly evident after the launch of Gilead Sciences' hepatitis C virus (HCV) therapy Sovaldi (sofosbuvir), which achieved $10bn in global sales in its first year on the market thanks to a high price tag.

The source of the report appears to be the publication earlier this month of the Pharmadialog, a negotiation process between the German government, the pharma industry and academic institutions that has been ongoing since 2014.

The report proposes reforms to the AMNOG (Pharmaceutical Market Restructuring Act), which include the introduction of rebates after a sales threshold is met and suggests that only five or six new medicines would have crossed the €250m threshold in 2015, limiting the impact of the initiative.

German Minister of Health Hermann Gröhe has suggested that the government intends to introduce draft legislation reforming the AMNOG by the summer.

Germany is Europe's largest pharma market but is recognised as having one of the toughest pricing policies in Europe. Nevertheless it has seen accelerating spending on prescription drugs, rising almost 22% in the last five years and helping to drive total healthcare spending up 20% to €202bn.

With R&D productivity picking up again in the pharma industry there is now a steady stream of new medicines, particularly novel drugs for cancers and rare diseases that can command premium pricing.

The pharma industry has been able to leverage the one-year pricing amnesty to build profits before price controls kick in and encourage prescribing, notes the WSJ, and the policy has been praised by industry as a means to hasten patient access to new therapies.

Overall, Germany's pricing policies are proving controversial, however, with some drugmakers withdrawing new products in protest at what they see as draconian price controls and the determination of pricing levels by assessing them in relation to the least expensive comparator drug.

Last year for example Novo Nordisk withdrew its new diabetes product Tresiba (insulin degludec) after the complex German pricing negotiations resulted in a price it felt was untenable, while in 2013 Eisai did likewise for its epilepsy treatment Fycompa (perampanel).

In some cases the prices charged in Germany for new medicines are the lowest in Europe and often well below the EU average, according to the VFA trade body.

The Pharmadialog report seeks to address those concerns, proposing that the comparator drug rule could be relaxed in some circumstances. It also recommends that details of the rebates offered by companies be kept confidential - as occurs in the UK for example - to avoid driving prices down in other countries.

Article by
Phil Taylor

25th April 2016

From: Sales

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