Germany may stiffen up its already strict drug pricing rules, a move that could exacerbate the pharma industry’s sometimes-acrimonious relationship with health officials there.
Under a proposal now up for debate by lawmakers, Germany would set a 250 million euro ($268 million) ceiling on new drugs for their first year on the market. As Bloomberg reports, price controls would begin after a product hit that limit.
Right now, that first year is the only time when drugmakers enjoy the ability to set their own prices in Germany. Officials have been warning since April that the one-year amnesty could meet its end soon, and at least one counter-proposal would shorten that period, rather than use a revenue threshold.
These new rules would tighten limits in a market where Big Pharma already balks at local decisions. A range of companies have pulled their drugs from Germany after pricing negotiations yielded less-than-desirable reimbursement levels, including Novo Nordisk, which pulled its next-gen insulin drug Tresiba last year.
The German proposals are another sign that pricing pressures are intensifying around the world as cash-strapped governments and budget-minded insurers look to save money on prescription drugs. Expensive specialty treatments and the spread of so-called “lifestyle” diseases in the developing world are putting unprecedented pressure on healthcare budgets worldwide.
And though Donald Trump’s election as president may have lifted some worries about government action in the U.S., private payers are expected to continue their squeeze on drugmakers stateside as well.
Indeed, the debate in Germany echoes controversy in the U.S. after Gilead rolled out its highly effective, highly expensive Sovaldi and its follow-up combo pill Harvoni. Though the drugs promised to cut long-term healthcare costs, they presented an unprecedented burden on current spending because they were pricey meds aimed at a large population of patients.
“We need to put the brakes on prices precisely when an especially expensive medicine is aimed at a large number of patients,” German Health Minister Hermann Groehe told parliament last week (as quoted by Bloomberg). Immediate cost-saving moves need to be followed up with “long-term price curbs,” he said.
Both Harvoni and Sovaldi would have hit the revenue ceiling had these rules been in effect at the time of their launches, as would Biogen’s multiple sclerosis pill Tecfidera, Bloomberg says. Germany and Gilead struck a pricing deal on Sovaldi last February.
Previously, drugs with high price tags tended to be targeted at less common maladies, with the most extreme examples in the rare diseases, where drugs routinely cost $250,000 per year and up, but are used in numbers that are tiny by comparison to hep C.
The German government is looking to save about 1.9 billion euros ($2.04 billion) between this measure and another that would extend current caps on price increases for older drugs to 2022. That rule is now set to expire next year.
Meanwhile, insurers in Germany are proposing a time limit on pharma’s drug-pricing power, rather than a revenue threshold. They say that insurers should be able to negotiate prices as soon as health officials finish evaluating data on a drug — a process that typically takes about six months.
That evaluation, conducted by the Institute for Quality and Efficiency in Healthcare (IQWiG), is designed to determine whether a drug offers benefits over and above those conferred by existing treatments. A variety of new drugs have been slapped with the “no additional benefit” tag–which insurers say warrants immediate price cuts. Pharma, on the other hand, has fought back against those decisions, and sometimes persuaded officials to change their minds.
Eisai pulled its seizure drug Fycompa off the market in 2013 after the agency said it didn’t deserve to be priced higher than older generics. The Japanese drugmaker tried again last year, only to suffer another smackdown, and, more recently, criticized IQWiG’s assessment of its cancer drug Halaven.
Meanwhile, Eli Lilly and Boehringer Ingelheim initially chose not to launch their diabetes treatment Tradjenta in the country because of its approach to pricing. And after initially launching their new SGLT2 diabetes treatment, Forxiga, in Germany, AstraZeneca and then-partner Bristol-Myers Squibb decided to pull out for pricing reasons in December 2013.
By Tracy Staton
Source: Fierce Pharma
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