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German healthcare reforms

Payer and pharma perspectives on what the changes mean
german reforms

Cornelius Erbe is senior vice president and member of the extended Board of DAK-Gesundheit, Hamburg/Germany, the third-largest German statutory health insurance organisation. He is head of product management and here shares his thoughts on the country's healthcare reforms from the payer perspective:

“I would describe the current market conditions in Germany as undergoing a major change that has not been witnessed before. We have seen considerable change in the pharmaceutical market, with older and current cost containment measures, but especially with the new AMNOG law coming into action at the beginning of last year. Looking to the future, I think we will not see another major change prior to the next general election in Germany in September 2013, unless there is an amendment to the AMNOG law.

“The most important change resulting from the new law is that, in comparison to former market conditions, pharmaceutical companies are not allowed to set their own prices forever. They can do so only for the first 12 months after market launch and, in the meantime, the additional benefit generated by the product is evaluated. In cases where there is an additional benefit, price negotiations will occur between the pharmaceutical company and the German statutory health insurers' umbrella organisation.”

Talking about how German reimbursement strategies can be used to optimise product development strategies, he believes this is very difficult: “If pharmaceuticals are registered, all the German statutory health insurers have to reimburse them. Regardless of the way the price is set (either by the pharmaceutical company during the first 12 months or, after that, according to reference prices or after negotiations), there is always mandatory full reimbursement. So there is little room for a voluntary action to either alter, or adjust, the market or product development strategy according to the reimbursement. From my point of view, the key questions are whether we really get the necessary innovations at affordable prices and do we get the necessary additional benefit promised by new drugs?”

Regarding the creation of cost-effectiveness studies that will satisfy payer demand, he states that the most important point is that there is adequate information about the comparison between new formulations and comparator drugs in cost-effectiveness studies: “We as payers need a very deep insight into the additional benefit generated by new pharmaceuticals, compared to existing treatments.

Head-to-head studies
“It is most important for payers to have valid head-to-head studies using the right comparator drug. Based on clear evidence we want to see what value the new drug generates compared to existing treatments. It is of utmost importance to show the outcomes of any treatment. It is not enough to have traditional clinical studies. The relevant committees and bodies need clear evidence when they make their decisions about assessing the value added and afterwards when they negotiate the price.”

Looking at the future for the pharmaceutical industry in Germany, Erbe says it is facing very important changes in the legal framework and the market environment: “We are a bit concerned about the thoroughness of this change and politicians are thinking about readjusting the laws they have passed. So, it may be that the future looks a little more positive than it does today.”

Ulf Staginnus, a health economist with more than 15 years of international experience in health economics, pricing and market access strategies, comments on Erbe's final point, saying: “Given how involved with health policy making Cornelius is, I am curious about how things will unfold.

“To remind you, the scoring system applied in Germany is:

1: Major added benefit over comparator
2: Significant added benefit
3: Slight added benefit
4: Unquantifiable added benefit
5: No added benefit proven
6: Less than comparator.

“Pricing of drugs in Germany will be related to the scores. According to an IHS Global Insight review, 60 per cent of new therapies have been rated between 4 and 1 and therefore are eligible for price negotiations with the association of the statutory sickness funds. Those scored below will only be able to obtain a referenced price in Germany.”

Cornelius Erbe was interviewed by Rebecca Aris of Pharmaphorum.
More insights on this topic will be shared at Eyeforpharma's Clinical Commercial Conference on May 8-9 in Zurich. See:  

23rd April 2012


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