Market Access in Germany after AMNOG Major Healthcare Reform Kakushingroup webinar, October 13 2011

The Pricing Effects in a European level

Ulf Staginnus
Access Lead, Franchise Head Oncology, International Health Economics & Reimbursement Amgen Intl.

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 govt 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

Latest Pricing developments

The Perfect Pricing Storm in Europe
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

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

35 France

30

Germany
Belgium

Italy Portugal

Spain

United Kingdom

25 Greece Austria 15 Denmark Czech Rep. Finland Hungary Ireland Netherlands

Switzerland

20

Sweden

Estonia 10 Arab Emirates Bahrain Cyprus Bulgaria Afghanistan Australia Canada 5 Brazil Algeria Argentina Egypt Chile Ecuador Colombia 0

Poland Slovakia Lithuania Saudi Arabia Latvia Kuwait Slovenia United States Luxembourg Oman Malta Norway Qatar Jordan New Zealand Romania Japan Turkey Lebanon Mexico Korea (South) Panama Yemen Iran Israel Morocco Singapore Taiwan Tunisia Iceland Iraq Kenya Pakistan Peru Syria Tanzania Venezuela South Africa Palestine

Jointly with the UK, and France, Germany belongs to the top 3 of countries being price referenced internationally.

Launch sequence example

Germany was the traditional early launch country with free pricing, setting the ceiling for Europe, together with Austria, Switzerland and some Nordic markets
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

Benefit assessment and price setting

10

Example EU Price band

DTC 100

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
0

Strategic Options
Strategy
Not launch in Germany
Delay launch

Pros
Keeping higher EU price band
Maintain higher initial international price level (probably for 1 year) Higher initial price level (probably for 1 year), commitment to demonstrate product value in real life, upside potential Higher price level in Germany and internationally

Cons
Potential reputation issues, lost market opportunity
Only delaying the matter until the next pricing revision, may cause bad press Outcomes uncertain, resource intensive

Launch with high price, coverage with evidence development agreement Launch with high price initially

Short lived measure (but perhaps successful for shorter product lifecycle windows)

Conclusions

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

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

Thank you!

ulfs@amgen.com
+34 610 465 292