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Comparing the Effectiveness of Prescription Drugs: The German Experience

Comparing the Effectiveness of Prescription Drugs: The German Experience

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Germany's recent prescription drug market reform offers lessons for how the United States can prioritize research that compares the effectiveness of drugs and other medical treatments.
Germany's recent prescription drug market reform offers lessons for how the United States can prioritize research that compares the effectiveness of drugs and other medical treatments.

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Published by: Center for American Progress on May 20, 2014
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1 Center for American Progress | Comparing the Effectiveness of Prescription Drugs
Comparing the Effectiveness of Prescription Drugs: The German Experience
By Daniel Bahr and Thomas Huelskoetter May 21, 2014
 As ederal miniser o healh in Germany, Daniel Bahr oversaw he implemenaion o wide-reaching reorms o Germany’s prescripion drug marke. In his paper, he offers his unique perspecive o explain hese reorms and how he Unied Saes can learn fom Germany’s example.
Rising prescripion drug prices have posed a challenge o healh care sysems all over he  world. Tis is paricularly rue in he Unied Saes, which has he highes prescripion drug prices among major counries, paying more han wice as much as counries such as Ausralia and he Unied Kingdom.
1
 Alhough drugs coninue o increase in price, we ofen know litle abou wheher improvemens in he effeciveness o hese drugs are keeping pace. Many oher counries evaluae drugs by unding comparaive effecive-ness research, or CER, which evaluaes he clinical effeciveness o wo or more medical reamens, drugs, or medical devices. Alernaively, some counries ocus on cos-effeciveness and preer cos-benefi analyses, which conras he price o a drug agains he added benefi o paiens. While he consideraion o cos is conroversial in many counries, including he Unied Saes, CER considers only he differences in clinical  benefi or paiens beween wo or more reamens.
2
 Since he Unied Saes has radiionally underinvesed in CER and consequenly su-ers rom a lack o meaningul comparaive inormaion on medical reamens, he  Affordable Care Ac creaed he Paien-Cenered Oucomes Research Insiue, or PCORI, o publicly und CER in he Unied Saes.
3
 As PCORI decides how o allocae is subsanial research unding, i should look abroad o see how oher counries have successully unded and uilized high-prioriy CER.Germany reormed is prescripion drug marke in 2010 o incorporae a srucured CER process o evaluae he effeciveness o new drugs, in order o reduce spend-ing, improve compeiion and efficiency, and say paien- and innovaion-riendly. Germany’s reorm effor provides a useul example or he Unied Saes. Te German model o universal healh care is no a sae-driven, single-payer sysem, bu insead insures mos people hrough nonprofi healh insurance unds, ofen reerred o as
 
2 Center for American Progress | Comparing the Effectiveness of Prescription Drugs
“sickness unds.
4
 Similar o he Unied Saes, Germany has radiionally had higher drug prices han he res o Europe, bu prioriizes paien choice and marke avail-abiliy or new drugs ha receive saey approval.
5
 Given hese similariies, Germany’s new model or CER offers a poenial pah orward or PCORI.German policymakers el a pressing need or acion since spending on prescripion drugs by he governmen and healh insurance unds rose 6.03 percen per insured person in 2009.
6
 Tis increase, amouning o abou 1.6 billion euros󲀔or $2.2 billion󲀔ollowed previous years o high spending and conribued o oal spending on phar-maceuicals o 30 billion euros󲀔$41 billion󲀔in 2009.
7
 For new prescripion drugs, he rise in spending was paricularly high. Up unil he 2010 reorms, manuacurers could se any price or heir new drugs, wih he knowledge ha he healh insurance unds would immediaely have o reimburse hem a his price. However, corresponding increases in effeciveness did no always accompany hese price increases. By puting in place an organized CER process or assessing he added paien benefi o new drugs, Germany’s reorm has already resuled in financial savings wihou adversely affecing German access o new innovaions.
 The aims of the Pharmaceutical Market Restructuring Act
German policymakers waned o mainain open marke access or new drugs and ensure access o he bes and mos-effecive medicine or paiens in he even o illness. Similarly, hey waned o ensure ha heir reorms would no discourage innovaion  bu raher creae a reliable ramework or he coninued innovaion o new prescrip-ion drugs. However, hey also wished o ensure ha higher drug prices were ied o improved effeciveness.In shor, German policymakers sough he righ balance beween preserving access o real innovaions and reducing spending. As a resul, he 2010 reorm󲀔he Pharmaceuical Marke Resrucuring Ac, abbreviaed in German as AMNOG󲀔con-siss o a mixure o measures: shor-erm cos savings, reducion o overregulaion, and long-erm srucural changes. ogeher, hese elemens enhance compeiiveness wihin he German healh sysem. Te cenerpiece o he law was he esablishmen o an orga-nized process o assess he added benefi o new drugs hrough he use o CER.
Benefit assessment
In AMNOG’s new sysem, manuacurers coninue o se he iniial price or new prescripion drugs afer approval by he European Medicines Agency or he German Federal Insiue or Drugs and Medical Devices, he European and German regulaory  bodies responsible or prescripion drug saey󲀔a role perormed by he Food and
 
3 Center for American Progress | Comparing the Effectiveness of Prescription Drugs
Drug Adminisraion, or FDA, in he Unied Saes. Since he reorm wen ino effec in 2011, however, his iniial manuacurer price is only valid or he firs 12 monhs afer he drug’s launch. As soon as he drug eners he marke, a new process o benefi assess-men begins. Manuacurers mus submi a dossier ha uses clinical CER sudies o demonsrae proo o added benefi o he paien, compared o he previously exising sandard reamen.
8
 Te dossier mus also indicae and prove which group o paiens he added benefi will affec.Te Federal Join Commitee󲀔a nongovernmenal body ha includes insurer, provider, and paien represenaives󲀔is responsible or overseeing he benefi assessmen. o aciliae he dossier submission process, he Federal Join Commitee has esablished sandards or appropriae comparaors and endpoins and also offers o consul wih manuacurers on proper mehods o preparaion and submission.For he acual echnical evaluaion o he dossier’s research, he Federal Join Commitee commissions a repor rom anoher nongovernmenal body, he Insiue or Qualiy and Efficiency in Healh Care, or IQWiG, which evaluaes he rigor and scienific valid-iy o he dossier’s CER. IQWiG hen deermines wheher he manuacurer has suffi-cienly proven ha he new drug adds a paien-relevan benefi such as an improvemen o healh saus, shorening o disease duraion, exension o lie expecancy, reducion o side effecs, or improvemen in qualiy o lie. I he drug provides added benefi, hen IQWiG caegorizes his benefi ino one o hree levels: major, considerable, or minor added benefi.
9
 As a rule, IQWiG’s assessmen o he dossier should be compleed  wihin hree monhs o a drug’s launch.  Afer reviewing IQWiG’s findings, he Federal Join Commitee will hen issue is deci-sion on wheher he drug provides added benefi wihin he subsequen hree monhs or six monhs afer he drug’s inroducion.In addiion o he srucured process or new drugs, AMNOG also allows or dis-creionary research o evaluae exising medicaions and medical devices. Beore  AMNOG, he Federal Join Commitee had he volunary auhoriy o commission IQWiG o conduc is own CER sudies on drugs. However, his was an ad hoc, discreionary power ha was used on a much smaller scale󲀔here was no srucured process o assess he benefis o all new drugs. Under AMNOG, he Federal Join Commitee and IQWiG mainain his discreionary power or prescripion drugs ha  wen on he marke beore he reorm wen ino effec and hus were no assessed or  benefi. In addiion, he Federal Join Commitee or drug manuacurers can reques a ollow-up sudy on a drug ha was previously assessed. Tese addiional benefi assessmens, conduced by IQWiG, can hen inorm uure reimbursemen negoia-ions. While AMNOG did no include medical devices in he organized CER process, he law did empower he Federal Join Commitee o commission specific medical device sudies rom IQWiG on is own iniiaive.

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