ulf staginnus, amnog kakushin 2001 (1)
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The Pricing Effects in a European level
Ulf Staginnus
Access Lead, Franchise Head Oncology, International Health Economics & Reimbursement
Amgen Intl.
Market Access in Germany after AMNOG – Major Healthcare ReformKakushingroup – webinar, October 13 2011
Disclaimer
The views expressed in this talk are my own opinions and understandings of the subject and
are not related to Amgen.
Topics
• The changing European pricing environment• Understanding the potential implications and changes
in other markets after AMNOG• How pricing structures and practices might change in
Germany?• Implications for early development and a European
launch pricing strategy• Questions & Answers
Pricing challenges in the new European context
• Increasing price pressures– Arbitrary price cuts/out of cycle reviews due to gov’t budget crisis / health care budgets– International reference pricing combined
with currency fluctuations and new laws
• Other pricing developments– EU developments on drug prices – Increasing link of HTA and pricing
• UK VBP, Role in price setting?• IQWIG – Process , Role and Implications in price setting..?• Further HTA developments in other countries (Spain, Italy, Denmark, NCE)
• Risk Sharing and Alternative Pricing models– UK, Italy, Poland others..
Latest Pricing developments The Perfect « Pricing Storm » in Europe
Germany AMNOG – benefit assessment and new role in price setting
Spain New Real Decree 9/2011 : Mandatory prescription by active ingredient, the pharmacist will dispense the cheapest drug available ; Changes in the reference price system ; A new reference price will be set immediately when the first generic gets reimbursement authorization by the NHS
France Potential structural changes to the P&R environment could render access to reimbursement more difficult, give an increased importance to products' health economic profile, prevent therapeutic saturation with regular reassessments and/or strengthen France's internal reference pricing. Delisting of certain drugs from reimbursement.
Source: IHS Global Insights, El Global, FAZ
Italy 12.5 percent price cut on generics and introduction of tendering. Immediate price cut, tendering to start in 2011. Mandatory risk sharing for oncology drugs
Ireland 40 percent price cut on 300 branded generics; reference pricing; generic substitution. Price cut implemented; other measures to start next year.
Greece 3 percent to 27 percent price cuts on branded products (average of 21.5 percent). Change in external price reference system
UK Value based pricing system to replace PPRS, discussion ongoing
Source: IHS Global insights, The Times, AIFA, NHS.org
Latest Pricing developments The Perfect « Pricing Storm » in Europe
International price referencing
A commonly used regulation for cost containment
Trends:
• Increasing usage in many countries• Algorithm used moved from “average” to “lowest” in
various countries• Frequency of revisions is being increased• Non Euro zone countries are being included in the
basket
Countries being internationally referenced
Launch sequence example
lug-09 ago-09 set-09 ott-09 nov-09 dic-09 gen-10 feb-10 mar-10 apr-10 mag-10 giu-10 lug-10 ago-10 set-10 ott-10
Germany was the traditional early launch country with free pricing, setting the ceiling for Europe, together with Austria, Switzerland and some Nordic markets
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Benefit assessment and price setting
Example EU Price band
If for example the German price decrease to EU average (e.g. big markets) it will trigger downward external pricing effects
Overall regional price level reduction from black to red line over time
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Strategic Options
Strategy Pros Cons
Not launch in Germany
Keeping higher EU price band Potential reputation issues, lost market opportunity
Delay launch Maintain higher initial international price level (probably for 1 year)
Only delaying the matter until the next pricing revision, may cause bad press
Launch with high price, coverage with evidence development agreement
Higher initial price level (probably for 1 year), commitment to demonstrate product value in real life, upside potential
Outcomes uncertain, resource intensive
Launch with high price initially
Higher price level in Germany and internationally
Short lived measure (but perhaps successful for shorter product lifecycle windows)
Conclusions
• Germany is loosing the price setting position (end of free pricing) in the launch sequence – at least in the long run
• German prices will cause a decrease in overall price levels and EU price band will become narrower over time resulting in a lower average
• On the upside, products with a clearly demonstrated additional benefit might still be able to command premium prices (although probably on a lower level, unless new in class) and may set a positive signal throughout Europe and beyond
• Distinctive head to head evidence will become key for success (e.g. Shire CEO announced early head to head trials)*
* First Word
“The government doesn't want to allow prices for medicine in Germany to be significantly higher than in other countries in Europe.” - Philipp Roesler, Health Minister