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PharmacoEconomics

https://doi.org/10.1007/s40273-019-00872-8

ORIGINAL RESEARCH ARTICLE

Determinants of Orphan Drug Prices in Germany


Franziska Worm1 · Charalabos‑Markos Dintsios2 

© Springer Nature Switzerland AG 2020

Abstract
Background and Objective  Legislation introduced in 2011 in Germany has instituted an early benefit assessment of newly
licensed pharmaceuticals with a subsequent price negotiation. For orphan drugs (ODs) a special legal framework applies,
which accounts for the fact that ODs do not have to prove an added benefit over an appropriate comparative therapy previ-
ously determined by the decision maker. As, in addition, the content of negotiations between pharmaceutical companies and
the payer is confidential, the aim of this study was to identify factors influencing the negotiated prices of ODs.
Methods  Twelve hypotheses on factors influencing the negotiated OD price were derived based on the existing literature
and framework agreement between payers and pharmaceutical unions according to German social legislation. Univariate
analyses were applied to detect statistically significant correlations between annual therapeutic costs of ODs and the hypoth-
esized factors. Bivariate analyses were used to determine confounding factors. In addition, a multiple ordinary least squares
(OLS) regression with backward selection was conducted. Finally, sensitivity analyses assessed the robustness of the results.
Results  Thirty-five ODs were included in the analysis. The univariate analyses and subsequent sensitivity analyses validated
five of the 12 hypotheses formulated. Univariate analyses suggest a statistically significant association between the OD price
and the (i) therapeutic area; (ii) approval for pediatric care; (iii) treatment population size; (iv) cost of comparative therapies;
and (v) European prices. The OLS regression identified European prices as the variable with the strongest association with
the negotiated prices.
Conclusion  We show that German OD pricing is a multivariate phenomenon. However, due to interdependencies, these
results must be treated with caution.

1 Introduction the resulting need, the European Union (EU) introduced


a regulation on orphan medicinal products [3]. However,
Due to high development costs and low profitability, phar- even though the budgetary impact of orphan drugs (ODs)
maceutical companies have traditionally refrained from amounted to only 2.1% of the overall drug expenditure in
investing in diseases that affect only a small number of Germany in 2007 [4], debate regarding the affordability of
patients [1]. Therefore, rare diseases were neglected or ODs emerged [5], predominantly based on the high prices
‘orphaned’, leaving people suffering from these condi- of ODs in comparison to non-ODs [6]. To control the gener-
tions with limited treatment options [2]. In 2000, to address ally increasing expenditure on patented pharmaceuticals [7],
Germany followed the example of other European countries
[8] and in 2011 introduced the Act on the Reform of the
Electronic supplementary material  The online version of this Market for Medicinal Products (AMNOG).
article (https​://doi.org/10.1007/s4027​3-019-00872​-8) contains
Since the introduction of AMNOG, innovative pharma-
supplementary material, which is available to authorized users.
ceuticals now undergo an early benefit assessment (EBA).
* Charalabos‑Markos Dintsios The resulting appraisal by the Federal Joint Committee
dintsios@hhu.de (FJC) forms the basis of the subsequent price negotiations
Franziska Worm regarding the new pharmaceutical between the National
franziska.worm@gmx.de Association of Statutory Health Insurance Funds (NA SHI)
1 and the pharmaceutical company. For ODs a special legal
Health Economics, University Duisburg-Essen, Essen,
Germany framework comes into force as their added benefit has
2 already been approved with the orphan designation granted
Institute for Health Services Research and Health Economics,
Medical Faculty, Heinrich-Heine-University Düsseldorf, by the European Medicines Agency (EMA) [9]. The FJC
Building: 12.49, Moorenstr. 5, 40225 Düsseldorf, Germany

Vol.:(0123456789)
F. Worm, C.-M. Dintsios

benefit, if any, is rated on a subgroup level [11, 12] as one of


Key Points for Decision Makers  the four categories: non-quantifiable, minor, considerable,
and major. After the FJC’s decision, negotiations between
Policy makers need to consider the criteria for pricing the manufacturer and the NA SHI commence. In case of a
and reimbursement decisions as well as costs per mem- negotiation failure, an official arbitration board will set the
ber of the population insured in collectively financed final price within 3 months [13].
health schemes. The special legal framework for ODs in the AMNOG
German orphan drug (OD) pricing is a multivariate process is repealed if an OD exceeds a turnover limit of
phenomenon. Univariate analyses suggest a statistically €50 million Euros within 12 months of marketing. In this
significant association between the OD price and the case, an OD is reassessed with the same procedure as a non-
therapeutic area, approval for pediatric care, treatment OD and a new price is negotiated. The content of price nego-
population size, cost of comparative therapies, and Euro- tiations in Germany is confidential. Therefore, the question
pean prices. arises of which factors influence these price negotiations for
ODs after 8 years of AMNOG being in place?
As all variables found to be significantly associated with
the negotiated price were correspondingly related to the
European prices, the high correlation between the OD 2 Methods
price and European prices is traced back to the fact that
other European countries consider similar criteria for the 2.1 Research‑Guiding Hypotheses
setting of OD prices.
A scoping review generated research-guiding hypotheses.
decides the extent of the additional benefit in the absence of Existing literature on the pricing and reimbursement of
a defined appropriate comparative therapy. For both ODs as pharmaceuticals, particularly ODs, generated one part of
well as non-ODs, the AMNOG process takes 12 months in the hypotheses. The other part was derived from literature
total (Fig. 1). During this time, the pharmaceutical is distrib- on negotiation techniques and the framework agreement
uted at a price freely set by the manufacturer. The manufac- between NA SHI and pharmaceutical companies’ unions
turer is obligated to submit a comprehensive dossier, which [14].
contains information on their rating of the added benefit The hypotheses and further analyses are structured in
according to the studies conducted. Prior to submission of four categories: the pharmaceutical manufacturer’s char-
the dossier, the manufacturer is entitled to seek advice from acteristics, the OD’s characteristics, criteria for the price
the decision-making body, the FJC [10]. The extent of added

Public hearing
Assessment by the
Advice of the Federal Joint
Federal Joint Commiee
Commiee
Orphan drug
Reimbursement price
Appraisal by negoaons (Naonal
Evidence Arbitraon
Manu- Dossier Federal Joint the Federal Associaon of
report in case of
facturer submission Commiee Joint Statutory Health
failure
Commiee Insurance Funds
& Manufacturer)
Non-orphan drug

Assessment by the
Instute for Quality
and Efficiency in
Health Care
Wrien comments

3 months 3 months 6 months 3 months

Fig. 1  General steps of the Act on the Reform of the Market for Medicinal Products (AMNOG) process
Determinants of Orphan Drug Prices in Germany

negotiation listed in the framework agreement, and further treating severe diseases is assumed to be higher than that
characteristics. ascribed to ODs treating less severe diseases. That similar
value judgements exist is shown in the scoping review of
2.1.1 The Pharmaceutical Manufacturer’s Characteristics Paulden et  al. [19] who identified severity of the disease
as a value argument related to OD prices. To investigate
2.1.1.1  Hypothesis 1: The Manufacturer’s Origin as Declared this influence, the manufacturer’s dossier for each OD was
in  the  Dossier has  a  Negative Influence on  the  Negotiated skimmed for the terms ‘fatal’ or ‘deadly’.
Price Unless It is Germany  According to Chang [15], nego-
tiation techniques vary with culture. The occurrence of 2.1.2.3  Hypothesis 5: Approval for Pediatric Care has a Posi-
communication issues such as non-verbal expressions, role tive Influence on  the  Negotiated Price  Lately, discussions
interpretations, attitudes, and cognitive patterns might also on the need for a greater investment in clinical development
be concentrated on manufacturers of ODs as historically for children in Europe have arisen [20]. Because most of
these are small biotech companies that have expertise in rare the pharmaceuticals applied in the pediatric population have
diseases [16] and have no national affiliates, in comparison not been studied or authorized for such use, the European
with ‘big pharma’ companies. Commission launched the Pediatric Regulation in 2007 to
foster the development and accessibility of pharmaceuticals
2.1.1.2  Hypothesis 2: The Manufacturer’s Experience Posi- in pediatric care [21]. The introduction of this regulation
tively Influences the  Negotiated Price As the AMNOG shows the need for drugs approved for pediatric care. Con-
procedure has been in effect for 8 years, the question arises sequently, it is supposed that the value at which treatments
of whether manufacturers can reach higher prices the more approved for the use in pediatric care are rated exceeds the
experience they gain? The confidentiality of the price nego- value of pharmaceuticals treating adults.
tiations makes it impossible for manufacturers to learn from
previously conducted negotiations in general. Lauenroth 2.1.2.4  Hypothesis 6: The Population Size Targeted
and Stargardt [17], who analyzed factors influencing the has a Negative Influence on the Negotiated Price  The Euro-
negotiated price of non-ODs, controlled for the number of pean Orphan Medicinal Product Regulation was introduced
negotiations previously experienced by the manufacturer. in 2000 to incentivize the research and development of ODs
Moreover, not only the total experience but also experience as they were neglected by pharmaceutical manufacturers
exclusively with the AMNOG process of ODs is assumed due to very low patient numbers and the related improb-
to determine the negotiated price as manufacturers of ODs able return on investment [6]. In addition to the incentives
are usually one-product manufacturers. Consequently, the received by the granted orphan designation, manufacturers
number of OD negotiations previously experienced is also need higher prices to compensate for the lower population
included in this analysis. size in order to achieve a return on their investments [22].
Existing European studies found a significant inverse cor-
2.1.2 The Orphan Drug’s Characteristics relation between the population size treated by the OD and
their prices [1, 6, 23, 24]. However, evidence is still needed
2.1.2.1  Hypothesis 3: The Therapeutic Area Influences for ODs in Germany.
the  Negotiated Price in  an  Unknown Way  The therapeutic
area for which the OD is approved has already been noted 2.1.3 Criteria for the Price Negotiation Listed
as a value-driving factor by Korchagina et  al. [1], Picavet in the Framework Agreement
et al. [18], and Lauenroth and Stargardt [17]; thus, the exist-
ing literature is followed, and therapeutic area is included in The framework agreement [14] states criteria that should be
our analyses as it is assumed that certain therapeutic areas considered during price negotiations. The actual influence
reach a higher negotiated price. However, this influence is of the criteria on the negotiated price is still unknown and
thought to be caused by the underlying diseases and their needs to be studied empirically.
characteristics being cumulated into therapeutic areas. As
the inclusion of the diseases would cause extreme heteroge- 2.1.3.1  Hypothesis 7: A  Quantifiable Added Benefit
neity, which would not lead to reliable results, the therapeu- Appraised by  the  Federal Joint Committee has  a  Positive
tic area is instead used as a proxy. Influence on  the  Negotiated Price The hypothesis that
a quantifiable added benefit appraised by the FJC has a
2.1.2.2  Hypothesis 4: The Disease’s Severity has  a  Positive positive influence on the negotiated price is based on sec-
Influence on the Negotiated Price  The hypothesis that the tion 6 (1) of the framework agreement [14]. This influence
severity of the disease has a positive influence on the negoti- has also been assessed by Schlander et al. [23], who inves-
ated price is proposed because the value attributed to ODs tigated determinants of non-oncological OD prices. Their
F. Worm, C.-M. Dintsios

results did not indicate an association between the additional considered to result in a notable price difference between
benefit and the negotiated price [23]. In contrast, Lauenroth ODs with and without a temporal limitation [26].
and Stargardt [17] and Theidel and von der Schulenburg
[25] demonstrated a significant relationship for non-ODs. 2.1.4.2  Hypothesis 11: Actual and Anticipated Uptake have
a  Negative Influence on  the  Negotiated Price The patient
2.1.3.2  Hypothesis 8: Comparable Therapies’ Annual Thera- population reached in reality is usually lower than the SHI
peutic Costs and Their Availability have a Positive Influence target population size considered in the EBA [27]. Conse-
on  the  Negotiated Price  Michel and Toumi [22] assumed quently, Cassel and Ulrich [27] advise that a distinction be
that ODs that are the first treatment in their indication bene- made between the epidemiology and market potential as
fit from higher prices than ODs with comparative therapies. only the latter is regarded as important for price negotia-
The hypothesis that the availability of comparative therapies tions. The actual market uptake 6, or at most 9, months after
influences OD prices has also been statistically proven by launch of the OD can be considered during the price nego-
both Korchagina et al. [1] and Picavet et al. [18]. However, tiations. Any subsequent evolving market potential has to be
for Germany, the availability of comparative therapies has anticipated based on the observable actual uptake.
not been found to be correlated with the negotiated OD price
[23]. Going beyond the existing literature, this paper addi- 2.1.4.3  Hypothesis 12: The Budgetary Impact has  a  Nega-
tionally aims to investigate the influence of the comparative tive Influence on the Negotiated Price  In 2016 the budget-
therapies’ annual therapeutic costs (AnTCs), if available, on ary impact of ODs on the German SHI amounted to 3.7%
the negotiated OD price as this is one of the criteria for the of the overall drug expenditure on outpatient care [28].
price negotiation listed in the framework agreement [14]. However, the budgetary impact of individual ODs varies.
We consider this variability of the OD budgetary impact to
2.1.3.3  Hypothesis 9: Orphan Drug Prices in  Other Euro- be relevant to the price negotiations since the NA SHI has
pean Countries have a  Positive Influence on  the  Negoti- an incentive to keep the impact as low as possible. At the
ated Price  In preparation for the price negotiations, the same time, the pharmaceutical manufacturers’ probability
pharmaceutical’s manufacturer is obligated to submit of return on investment is higher the higher the associated
information on the price of the pharmaceutical in other budgetary impact.
European countries in which it is already distributed [14].
By including the European price as a criterion for the 2.2 Data Extraction
price negotiations, the negotiating parties can investigate
the value judgement of other countries and obtain a refer- All ODs that had completed price negotiations up to the end
ence value. of January 2018 were identified from the website of the FJC.
The underlying dataset does not contain ODs for which the
2.1.4 Further Characteristics arbitration board set the price. The outcome variable is the
AnTCs per patient post negotiations. The AnTCs define the
2.1.4.1  Hypothesis 10: Anticipation of  a  Renegotiation average therapy costs incurred by treating a patient over the
Influences the  Negotiated Price in  an  Unknown Way The course of a year. They were used as different package sizes,
AMNOG process comprises different factors leading to a durations of treatments, and dosages make a comparison of
reassessment of the pharmaceutical’s added benefit by the the individual negotiated package prices inaccurate.
FJC and to subsequent renegotiations. Two of those are con- Whenever a dosage range due to different age groups or
sidered to influence the negotiated price of an OD: an excess indications led to an annual consumption range, the average
of the €50 million turnover limit within 12 months of mar- was used for further calculations. For the negotiated prices,
keting; and a temporal limitation of the FJC decision, at the the pharmacies’ sale price (PSP) was considered to calculate
expiry of which the manufacturer is obliged to submit real- the AnTC. For factor IX preparations predominantly distrib-
world evidence [26]. At the time of the price negotiations, uted directly to specialist centers, the manufacturer’s sale
the OD will have been marketed for 6 months and both par- price (MSP) plus value-added tax (VAT) was used instead.
ties are able to get an impression of the respective distribu- If multiple package sizes existed, consistent with the FJC,
tion figures. A change in the negotiation technique due to the cheapest per unit was chosen. For combination therapies,
an upcoming renegotiation seems plausible, as the temporal only the AnTCs of the evaluated ODs were calculated to
duration of the negotiated price is limited. Since the NA ensure that the outcome variable is free of confounders as
SHI needs a low price to start the renegotiation with and only the price of the innovative pharmaceutical is negotiated.
the manufacturer needs a high price until renegotiation, the The previously derived research-guiding hypotheses lead
pressure of negotiations for both parties increases, which is to one or more variables with a potential influence on the
price of ODs. Table 1 includes the explanatory variables,
Determinants of Orphan Drug Prices in Germany

their distributions, as well as the sources they were gathered The calculation of the actual and anticipated uptake of the
from. ODs is specified in the Electronic Supplementary Mate-
To find out if the OD is not exposed to any competition rial (Supplement Calculation of the Actual and Anticipated
in its authorized label, meeting an unmet need, the clini- Uptake of the ODs).
cal practice guidelines of each indication were scanned for Finally, to compare the market uptake between ODs,
comparative therapies that were available at market entry of a function of each OD’s proportional market uptake was
the applicable OD. If no clinical practice guidelines were estimated using the plotting software Graph version 4.4.2
traceable, information from the pharmaceutical manufac- (https​://www.padow​an.dk/). As at the time of price negotia-
turer regarding comparative therapies in the second module tions both parties do not know the uptake of the OD after
of the dossier was browsed and an internet search was car- 9 months, this proportional market uptake was called the
ried out. In cases in which the OD was reassessed in a non- ‘anticipated uptake’ (Electronic Supplementary Material
orphan EBA, the appropriate comparative therapies defined Tables 3 and 4). To allow for better interpretability, we pre-
by the FJC were also documented. sented the budgetary impact results as mean values. For all
Treatment costs for non-drug comparable therapies were other skewed data, median values were primarily reported.
calculated according to the German inpatient remuneration
system. Calculations of the average annual treatment costs 2.3 Statistical Analyses
of comparable therapies were weighted by their use (Elec-
tronic Supplementary Material: Supplement Calculation of To test the hypotheses, first, a descriptive analysis for each
AnTC of Comparable Therapies). Whenever several applica- variable in the dataset is applied. Following the descrip-
tion areas were assessed for one OD, the uptake-weighted tive analysis, a log-transformation is used to address skewed
AnTCs of each therapeutic area according to the described data. Univariate analyses are conducted to assess the correla-
approach were calculated (Electronic Supplementary Mate- tion between the negotiated prices and the explanatory vari-
rial Table 1). ables. Bivariate correlations between statistically significant
To obtain an estimation of the EU reference prices, a explanatory variables are then also calculated to identify
pool of countries from within the defined countries in the confounders.
framework agreement between NA SHI and pharmaceutical For the univariate and subsequent bivariate analyses, sev-
companies’ unions [14] in which the pharmaceuticals were eral tests are used depending on the variable’s characteristics
marketed prior to or during the German price negotiations and distributions. For log-transformations, parametric tests
had to be assumed as this information is unavailable. To are applied. For data that are not transformed, but also not
do so, documentation from a large pharmaceutical com- assumed to be Normally distributed, non-parametric tests
pany’s three most recent price negotiations in accordance are chosen. Since log-transformation might produce noise
with AMNOG were analyzed. The market entry sequencing [42], the original data are also kept and non-parametric tests
decisions of pharmaceutical manufacturers is expected to are applied to compare the obtained results with each other.
mostly be based on the countries’ market regulations, size, Consequently, the Chi-squared (χ2) test or Fisher’s exact test
and expected market sales as well as their impact on interna- in combination with the Phi-coefficient or Cramer’s V are
tional reference pricing and, therefore, vary only slightly. All considered in cases in which both variables were nominal.
countries with available prices for each pharmaceutical were If both variables are continuous, scatter plots are depicted
listed and those named in all three most recent price negotia- and Spearman or Bravais-Pearson correlation coefficients
tions were extracted. The resulting country pool consisted are calculated.
of Denmark, Finland, France, the UK, Austria, Sweden, To check for the correlation between a nominal and
and Italy. Since Germany might itself be a reference price continuous variable, a Welch’s test, Student’s t test or
country for these countries, a self-referencing bias should be Mann–Whitney U test is applied, the point-biserial correla-
avoided. However, using the list prices of the European ref- tion is determined, or the continuous variable is classified
erence countries is not a risk for circular reasoning regard- to calculate Cramer’s V. The χ2 test or Fisher’s exact test
ing the negotiated German price. Although German prices in combination with Cramer’s V is considered if a nomi-
are part of the country-specific price baskets, the negotiated nal ordinal combination exists. To check for the correlation
German prices are only valid after 12 months and the launch between an ordinal variable and a continuous variable, a
prices are not used within these country-specific baskets. scatter plot is considered.
All available list prices were purchase power corrected with In addition to the scatter plot, and depending on the vari-
Germany as the price index. Subsequently, the result was able’s distribution, a post hoc pair-wise comparison, analysis
weighted by the population share of the country in relation of variance, or Kruskal–Wallis H test is conducted to check
to the total population across all countries of the previously for a significant difference between the means of the ordinal
defined pool (Electronic Supplementary Material Table 2). variables’ groups. If significant, this test is followed by a
F. Worm, C.-M. Dintsios

Table 1  Explanatory variables, distributions, and sources


Variable Distribution Source

Manufacturer’s origin Manufacturer dossier, module 1 [29]


{
Dichotomized: x = 1, x = Germany
0, x ≠ Germany
Manufacturer’s experience Continuous FJC website [29]
Therapeutic area Categorical FJC website [29]
Severity of the disease Manufacturer dossier, module 2 [29]
{
Dichotomized: x = 1, x = fatal/deadly
0, x ≠ non fatal/deadly
Approval for pediatric care FJC appraisal [29]
{
1, x = approved
Categorical, dichotomized: x =
0, x ≠ not approved
SHI target population size Continuous FJC appraisal [29]
Prevalence Continuous Orphanet [30], EMA assessment report [31]
Ultra-orphan status Calculations based on the prevalence data
{
Dichotomized: x = 1, x = yes
0, x ≠ no

Additional benefit extent FJC appraisal [29]


{
1, x = quantifiable
Categorical, dichotomized: x =
0, x ≠ not quantifiable

Absolute soloist Applicable practice guidelines


{
Dichotomized: x = 1, x = yes
0, x ≠ no

Comparable therapies’ AnTC Continuous Applicable practice guidelines, FJC website


[29], German Drug Directory (Lauer ­Taxe®)
[32], INSIGHT Health data base, Engelhardt
et al. (2014)a [33], Adam et al. [34], flat rate
catalogs, federal base rates

European prices (AnTC) Continuous DK: Danish Medicines Agency [35]


FI: Kela Medicinal products database [36]
FR: L’assurance maladie en ligne. Base des
Médicaments et Informations Tarifaires [37]
UK: British National Formulary [38]
AT: Hauptverband der österreichi-schen Sozial-
versicherungsträger. Erstattungskodex [39]
SE: Dental and Pharmaceutical Benefits Agency.
Databas läkemedel [40]
IT: Federazione nazionale unitaria titolari di
farmacia. Cerca un farmaco [41]
Temporal limitation of the deci- FJC website [29]
{
1, x = yes
sion Dichotomized: x = 0, x ≠ no

Excess of the €50 million turno- FJC website [29]


{
Dichotomized: x = 1, x = yes
ver limit 0, x ≠ no

Actual and anticipated uptake Continuous INSIGHT Health data base, SHI target popula-
(t6, t9, t12, t18, t24) tion size

Budgetary impact (t6, t9) Continuous German Drug Directory (Lauer ­Taxe®) [32]
FJC appraisal [29]

AnTC annual therapeutic cost, AT Austria, DK Denmark, EMA European Medicines Agency, FI Finland, FJC Federal Joint Committee, FR
France, IT Italy, SE Sweden, SHI Statutory Health Insurance
a
 Insight Health GmbH & Co. KG is a neutral service provider that extracts prescription information from different databases [33]
Determinants of Orphan Drug Prices in Germany

post hoc multiple comparison test, the Dunn’s test, which out. The resulting dataset, therefore, contains 35 ODs with
shows which group is responsible for the identified differ- negotiated prices for analyses (Fig. 2).
ence. Subsequently, Spearman’s rank correlation analysis is
applied to indicate the relationship between the most domi- 3.1 Descriptive Analysis
nant group and the continuous variable. The sizes of the
correlation coefficients are interpreted in accordance with A total of 28 manufacturers had submitted dossiers for these
the classifications of Cohen [43]. 35 active substances. Only six of the manufacturers are not
Furthermore, a multiple ordinary least squares (OLS) located, as declared in the dossier, in Germany; other manu-
regression analysis of the variables suggesting a strong cor- facturers’ origins are France, Sweden, Switzerland, and the
relation is applied. Backward selection by p value with a UK. Seventeen manufacturers (48.57%) had no experience
stopping rule at a p value of 0.05 is thought to identify the with the AMNOG process at the time of their OD EBA.
best explanatory variables for the negotiated price. To deter- However, two (5.71%) manufacturers had already experi-
mine the model fit, the Akaike Information Criterion (AIC) enced 13 EBAs. Nevertheless, the 75th percentile shows that
is used. Since we used the procedure only for an exploratory three-quarters of the manufacturers had experienced at most
model specification to identify potential significant explan- three EBAs prior to submitting the dossier of their OD.
atory variables, we abstained from a split-sample design, When looking at the number of EBAs for a substance
which would be proper for the identification of predictors. with an orphan indication, 80% of the manufacturers had
no experience of EBAs before the AMNOG process of the
2.4 Sensitivity Analyses applicable OD. The remaining 20% had already experienced
up to five EBAs for an OD at the time of dossier submission.
The sensitivity of the approach is tested in several ways Figure 3 shows that almost half of the ODs in the sample
using univariate analysis with different datasets. First, OD (48.57%) are indicated for oncological diseases, followed by
price outliers are removed from the dataset, as some of the 22.86% indicated for metabolic diseases.
applied statistical analyses are sensitive to outliers. Sub- In five of the 35 manufacturers’ dossiers the disease is
sequently, univariate analyses of the factors that initially described as fatal or deadly. Most of the ODs are approved
showed a correlation are repeated. As a second robustness for an application in adults (77.14%), followed by the com-
check, the upper and lower bounds of the SHI target popu- bined group of children and adults (14.29%), solely children
lation size and the European prices are considered instead (5.71%), and elderly people (2.86%).
of the average values accounted for in the initial analyses. With 18 patients, the average SHI target population size
Additionally, the European prices are replaced by the OD of the active substance cholic acid is by far the lowest. The
prices in Denmark in all statistical analyses of interest. The largest average SHI target population size is 22,500 patients.
reason for doing this is that the website of the Danish Medi- The median of the average SHI target population sizes is
cines Agency [35] provides a history of drug prices from 830. The OD prevalence data vary between 0.25/100,000
1998, which allows us to access the OD prices at the time of and 39.00/100,000 people, with a median of 11.90/100,000
the FJC appraisal and thus reduces possible variance due to people. Of the 35 ODs, seven (20%) are ultra-ODs with
price changes over time. If the sensitivity analyses show a
robustness of the univariate outcomes, bivariate and multiple
OLS analyses outcomes are regarded as equally robust.

3 Results

In total, price negotiations were completed for 254 EBAs


by 31 January 2018; of these, a total of 58 involved ODs.
Twenty-three of the EBAs for ODs had to be excluded from
the following analyses. Fifteen EBAs were excluded due to
exceeding the €50 million turnover limit (three), expiration
of the FJC appraisal (two), and a label extension (ten). These
ODs had already undergone a negotiation and, therefore,
had a different negotiation basis than the other ODs, which
would bias the analyses. In six cases the negotiations failed
and the arbitration board had to set a price; two ODs opted Fig. 2  Flowchart of the selection of the study sample. EBA early ben-
efit assessment
F. Worm, C.-M. Dintsios

a prevalence of less than one in 50,000 people. The FJC second largest values represent upwards outliers, as their
appraised 13 (37.14%) ODs with a quantifiable (three con- AnTCs are considerably higher than the others (Fig. 4).
siderable and ten minor) and 22 (62.86%) with a non-quanti- The median average negotiated AnTC is €92,198.08. The
fiable added benefit. Comparable therapies for 23 ODs were range of discounts between launch prices and negotiated
identified. The median uptake-weighted average compara- prices is high; however, the two upward outliers drive this
ble therapies’ AnTC is €59,931.04 (€7049.23–401,378.60). range. When excluded, the range between the AnTC is more
The European prices were only available for 30 substances, than halved and equals €467,713.70. The median discount
as some ODs in the dataset had not been priced in any of following the exclusion of outliers is then €17,032.31. Addi-
the selected pool countries. Of these, the median AnTC is tionally, in general, higher launch prices, set by the pharma-
€89,284.14 (€6436.60–2,522,956.00). ceutical manufacturer at the market entry of the drug, also
A total of 19 ODs have been or need to be renegotiated result in higher negotiated prices. Table 2 summarizes the
due to a time limitation of the FJC appraisal (11), a label descriptive statistics of the outcome variable and all explana-
extension (seven), or because they exceeded the €50 mil- tory variables.
lion turnover limit (five). The gap in market uptake within Histograms, box plots and the summary statistics of the
ODs rises with time. Six months after market entry, the average SHI target population size, prevalence, AnTC of
actual uptake across all 35 ODs ranged from zero patients to comparative therapies, budgetary impact, as well as the
1471 patients treated. After 9 months, the uptake increases negotiated AnTC suggest a right skewness of the data. Addi-
to 1663 patients (rise of 13%), although, again, some ODs tionally, the Shapiro–Wilk test, which is recommended for
had not been utilized by any patient. Even after 2 years of sample sizes smaller than 50 [44], is statistically significant
marketing, it is anticipated that some ODs will not treat any at a 95% level for all previously listed variables. Therefore,
patient, whereas one OD is estimated to be used by 1568 the data are transformed by taking the logarithm. As a result,
patients. The median uptake is 18 patients in t6, 33 in t9, 36 parametric tests for the log-transformed variables and non-
in t12, 37 in t18, and 41 in t24 (t = month). As the actual parametric tests for the original data are applied. The histo-
uptake in t6 and t9 was used to calculate the OD budgetary gram, box plot, and summary statistics as well as the Sha-
impact on the SHI, the variable also varies widely. The mean piro–Wilk test also confirm that the actual and anticipated
budgetary impact after 6 and 9 months of marketing equals uptake as well as the pharmaceutical manufacturers’ total
€12,547,655.30 and €13,333,521.59, respectively. EBA experience and experience with OD indications in the
The mean average negotiated AnTC per patient per year EBA is not Normally distributed. Nevertheless, due to a high
is €217,693.70 (€7320.98–2,363,670.00). The largest and

Fig. 3  Therapeutic areas of
negotiated orphan drugs 3% 3% 6%
6%

6%

3%

49%
23%

3%

Therapeutic area
Blood and the blood-forming organs Cardiovascular
Digestive system Infectious
Metabolic Nervous system
Oncological Others
Respiratory system
Determinants of Orphan Drug Prices in Germany

Fig. 4  Price comparison pre-


and post-negotiations. AnTC
annual therapeutic cost

number of zero values we do not transform this variable and way, backward selection is started with the following explan-
rather employ non-parametric tests. atory variables: therapeutic area, approval for pediatric care,
SHI target population size, comparative therapies’ AnTC,
3.2 Univariate Analyses and European prices. Through backward selection, first the
therapeutic area, then the comparable therapies’ AnTC, the
Collectively, Table 3 shows all variables found to be sig- SHI target population size, and finally the approval for pedi-
nificantly associated with the negotiated price. It is con- atric care were eliminated from the regression. The back-
cluded that the statistical analysis does not reject five of the ward selection identifies the European prices as the variable
12 hypotheses proposed: the influence of the (i) therapeutic most strongly associated with the negotiated price of an OD
area; (ii) approval for pediatric care; (iii) target population (p < 0.05). If the European prices change by 1%, we would
size; (iv) AnTC of comparable therapies; and (v) European expect the negotiated prices to change by 0.966%. The over-
prices on the price negotiated for ODs. view of the selection process shows that the AIC got smaller
with each selection step, indicating a better model fit with
3.3 Bivariate Analyses each non-significant variable being removed (Table 5).

Table 4 depicts the resulting correlation matrix. In cases in 3.5 Sensitivity Analyses


which continuous variables had to be categorized, the data
ranges were again observed and trichotomized. From Table 4 To verify the results, several sensitivity analyses were con-
we can see that, except for two pairs (comparative therapies’ ducted in which univariate analysis with varying datasets
AnTC and approval for pediatric care; comparative thera- was repeated. For greater comparability with the results of
pies’ AnTC and SHI target population size), all variables that the initial univariate analyses, Electronic Supplementary
are statistically significantly (p < 0.05) associated with the Material Table 5 lists all results of the sensitivity analyses.
negotiated price are correspondingly related to each other. In the first sensitivity analysis (column a), OD negotiated
prices outliers were identified (sebelipase alfa, asfotase alfa,
3.4 Multiple Ordinary Least Squares Regression pitosant) and excluded. As a second robustness check, upper
(column b) and lower bounds (column c) of the negotiated
Once confounders were identified using bivariate analyses, prices, the SHI target population size, and the European
a multiple OLS regression analysis with five of the seven prices instead of average values are considered. Subse-
explanatory variables in Table 3 (only one population size quently (column d), European prices were replaced with
measurement) was applied. Since the SHI target population OD prices in Denmark as a price history allows the relevant
size is a continuous variable with a consistent source, it is prices at the time of FJC appraisal in Germany to be cho-
chosen to be the representative variable for the different pop- sen. To check the sensitivity of the investigated correlation
ulation size measurements in the following analysis. This between the weighted average AnTCs of the comparative
F. Worm, C.-M. Dintsios

Table 2  Descriptive statistics of the outcome variable and all explanatory variables


Variable N Value (%) Minimum Maximum Median Mean

Outcome variable
 Reimbursement price (€) 35 7320.99 2,363,670.00 92,198.08 217,693.70
Explanatory variables
 Manufacturer’s origin (1 = Ger- 35 29 (82.86%)
many)
 Manufacturer’s experience (total) 35 0 (48.57%), 1 (5.71%), 2 (11.43%),
3 (5.71%), 4 (8.57%), 5 (8.57%), 7
(2.86%), 12 (2.86%), 13 (5.71%)
 Manufacturer’s experience (OD) 35 0 (80.00%), 1 (11.43%), 2 (2.86%), 3
(2.86%), 5 (2.86%)
 Therapeutic area 35 A (5.71%), B (5.71%), C (5.71%), D
(2.86%), E (22.86%), F (2.86%), G
(48.57%), H (2.86%), I (2.86%)
 Severity of the disease (1 = fatal/ 35 5 (14.29%)
deadly)
 Approval for pediatric care (1 = yes) 35 7 (20.00%)
 SHI target population size (N) 35 18 22,500 830 2564
 Prevalence (N/100,000) 35 0.25 39.00 11.90 13.78
 Ultra-orphan status (1 = yes) 35 7 (20.00%)
 Additional benefit extent 35 con (8.57%), min (28.57%), nq
(62.86%)
 Absolute soloist (1 = yes) 35 12 (34.29%)
 Comparable therapies’ ATC​ 23 7049.23 401,378.60 59,931.04 100,361.40
 European prices (ATC) 30 6436.60 2,522,956.00 89,284.14 233,191.80
 Temporal limitation of the decision 35 11 (31.43%)
(1 = yes)
 Temporal limitation of the decision 35 11 (31.43%)
(1 = yes)
 Excess of the €50 million turnover 35 5 (14.29%)
limit (1 = yes)
 Actual and anticipated uptake
  t6 35 0 1471 18 134
  t9 35 0 1663 33 162
  t12 35 0 1645 36 180
  t18 35 0 1303 37 201
  t24 35 0 1586 41 223
 Budgetary impact
  t6 35 0 128,139,166.55 2,843,912.10 11,218,905.41
  t9 35 13,748.64 133,746,953.98 4,918,772.19 13,333,521.59

ATC​Anatomical Therapeutic Chemical, OD orphan drug, SHI Statutory Health Insurance, t time in months
Therapeutic areas: A diseases of the blood and blood-forming organs, B cardiovascular diseases, c diseases of the digestive system, D infectious
diseases, E metabolic diseases, F diseases of the nervous system, G oncological diseases, H other diseases, I diseases of the respiratory system
Additional benefit extent: con considerable, min minor, nq non-quantifiable

therapies, the unweighted average of the comparative ther- across all subgroups) would impact the results (column f).
apies’ AnTCs are inserted into the analysis (column  e). In summary, the results of the sensitivity analyses suggest a
Finally, it was tested whether a change in the additional robustness of all factors discovered in the previous sections
benefit extent of ivacaftor from considerable (the highest to be associated with the negotiated price (see Electronic
extent across all subgroups) to marginal (the lowest extent Supplementary Material Table 5).
Determinants of Orphan Drug Prices in Germany

Table 3  Variables statistically Variablea Correlation coefficient N Correlation (p value)


significantly associated with the
negotiated reimbursement price Therapeutic area Cramer’s V 35 0.745*** (0.000)
Approval for pediatric care Point-biserial 35 0.694*** (0.000)
SHI target population size Bravais-Pearson 35 − 0.521** (0.001)
Prevalence Bravais-Pearson 35 − 0.627*** (0.000)
Ultra-orphan status Point-biserial 35 0.688*** (0.000)
Comparative therapies’ ATC​ Bravais-Pearson 23 0.586** (0.003)
European prices (ATC) Bravais-Pearson 30 0.979*** (0.000)

ATC​Anatomical Therapeutic Chemical, SHI Statutory Health Insurance


*p < 0.05, **p < 0.01, ***p < 0.001
a
 The SHI target population size, prevalence, comparative therapies’ ATC, and European prices (ATC) are
log-transformed

Table 4  Correlation matrix
Thera- Approval for SHI target popu- Prevalence Ultra-orphan Comparable European prices
peutic pediatric care lation size status therapies’ ATC​ (ATC)
area

Therapeutic area 1 0.816*** (0.001) 0.631** (0.005) 0.558* (0.047) 0.816** (0.001) 0.723*** (0.000) 0.683* (0.002)
Approval for 1 − 0.450** − 0.706*** 0.821*** (0.000) 0.328 (0.127) 0.678*** (0.000)
pediatric care (0.007) (0.000)
SHI target popu- 1 0.444** (0.008) − 0.420* (0.012) − 0.184 (0.402) − 0.553** (0.001)
lation size
Prevalence 1 − 0.818*** − 0.497* (0.016) − 0.666***
(0.000) (0.000)
Ultra-orphan 1 0.486* (0.019) 0.690*** (0.000)
status
Comparative 1 0.656* (0.002)
therapies’ ATC​
European prices 1
(ATC)

The SHI target population size, prevalence, comparative therapies’ ATC, and European prices (ATC) are log-transformed. Cramer’s V, point-
biserial, Bravais-Pearson, and Spearman correlation coefficients used
ATC​Anatomical Therapeutic Chemical, SHI Statutory Health Insurance
*p < 0.05, **p < 0.01, ***p < 0.001

4 Discussion of a defined appropriate comparative therapy), a discount


is negotiated. Pharmaceutical manufacturers are, thus, able
Particularly against the background of only slowly increas- to choose their own basis for the negotiations with the NA
ing prescription volumes but almost doubled OD turnovers SHI. This initial price setting is described in the literature
from 2011, the year of AMNOG commencement, to 2016 as ‘anchoring’ [46]. Accordingly, it represents the foremost
[45], determinants of OD prices within the AMNOG context determinant of OD prices in Germany.
are of major interest. In Germany, pharmaceutical manufac- In our study, the total experience of the manufacturers
turers freely determine the launch price of innovative phar- does not show a significant correlation with the negotiated
maceuticals for the first 12 months of marketing. In compari- price. This outcome diverges from the result of Lauenroth
son with other European countries with a health technology and Stargardt [17]. The fact that their study investigates non-
assessment [22], this regulation guarantees patient access OD pharmaceuticals in Germany implies that, in contrast
simultaneously with the market authorization. However, to non-ODs, the manufacturer’s experience does not influ-
the freely set prices constitute the foundation of the price ence the negotiated price of ODs. This conclusion is sup-
negotiations on which, in the case of ODs (in the absence ported by Picavet et al. [18], who observed a statistically
significant relationship between their measurement for the
F. Worm, C.-M. Dintsios

Table 5  Ordinary least squares Independent variable Coefficient SE t statistic p Value adj R2 AIC
regression models with
transformed and untransformed (1) Log–Log reimbursement price model with 5 independent variables
independent variables
 Coefficient − 0.8105 2.0815 − 0.3894 0.7028 0.9178 10.6820
 Therapeutic area 0.0475 0.1339 0.3546 0.7282
 Pediatric indication 0.3250 0.1931 1.6830 0.1146
 Log SHI Target population 0.0412 0.0671 0.6135 0.5494
 Log comparable therapies’ ATC​ 0.0603 0.0949 0.6354 0.5354
 Log European prices 0.9778 0.1883 5.1920 0.0001***
(2) Log–Log reimbursement price model with 4 independent variables
 Coefficient − 0.3180 1.2226 − 0.2601 0.7983 0.9178 8.8902
 Pediatric indication 0.3498 0.1889 1.8520 0.0838
 Log SHI Target population 0.0603 0.0532 1.1340 0.2745
 Log comparable therapies’ ATC​ 0.0596 0.0946 0.6303 0.5380
 Log European prices 0.9346 0.1400 6.6840 0.0000***
(3) Log–Log reimbursement price model with 3 independent variables
 Coefficient 0.6957 0.5409 1.2860 0.2096 0.9558 4.0974
 Pediatric indication 0.1887 0.1415 1.3340 0.1939
 Log SHI target population 0.0191 0.0295 0.6486 0.5223
 Log European prices 0.9323 0.0380 24.560 0.0000***
(4) Log–Log reimbursement price model with 2 independent variables
 Coefficient 0.9692 0.3997 2.4250 0.0223** 0.9569 2.4626
 Pediatric indication 0.1807 0.1353 1.3550 0.1930
 Log European prices 0.9193 0.0360 25.570 0.0000***
(5) Log–Log reimbursement price model with 1 independent variable
 Coefficient 0.4837 0.2676 1.8070 0.0815* 0.9560 2.1765
 Log European prices 0.9655 0.0222 43.550 0.0000***

adj adjusted, AIC Akaike Information Criterion, SE standard error, SHI Statutory Health Insurance
*p < 0.1, **p < 0.05, ***p < 0.001

manufacturer’s experience and the negotiated OD price for the analysis of Schlander et al. [23]. This result might be
only one of the six European countries investigated. linked to the special legal framework of ODs that guaran-
The univariate analysis and sensitivity analysis determine tees a proven additional benefit and gives the FJC exclusive
a strong relationship between the therapeutic area and the decision-making power over the extent of the added benefit.
negotiated price. This result corresponds with the finding of Consequently, the FJC and SHI desire further development
Korchagina et al. [1], who identified a significant correlation of the AMNOG and call for an unrestricted EBA of ODs
of the Anatomical Therapeutic Chemical (ATC) class with for which comparative therapies are available. In 2014, a
the annual cost of ODs in France. Because the therapeutic rapid report by the Institute for Quality and Efficiency in
area is a proxy of the underlying disease treated by the OD, it Health Care (Institut für Qualität und Wirtschaftlichkeit im
is concluded that the therapeutic area is a mediator variable Gesundheitswesen; IQWiG) considered the possibility of an
associated with all variables related to the treated condition unrestricted EBA for ODs. The report found that a conven-
as well as to the price. tional assessment of ODs is, in general, possible. However,
Hypothesis 4, which predicts a relationship between the compromises should be made with respect to the diseases’
disease’s severity and the negotiated OD price, is the only rarity when considering the statistical validity. Such a com-
hypothesis related to the OD characteristics that was not promise could be raising the customarily accepted p value
shown to be statistically significant. This is surprising as of 0.05 to a higher level [47].
several authors attribute a high relevance to the condition’s The aim of several studies has been to verify an inverse
severity for medical decision-making regarding ODs [19]. relationship between the patient population size treated
The data source used to define the severity of the disease by the OD and the negotiated price. Firstly, Medic et al.
might be insufficient. [6] studied the association between OD prices in several
The extent of added benefit was not shown to signifi- European countries and ultra-orphan status by calculating
cantly affect the negotiated OD price, a result that proves correlation coefficients. Six European countries showed a
Determinants of Orphan Drug Prices in Germany

significant association. However, a continuous measure of sample size potentially caused some influential explanatory
the patient population size might be more relevant to assess variables to become non-significant. Consequently, interpre-
an association with OD prices. In our study, both continu- tation of the results must be done with caution. Secondly,
ous measures of the treatment population size show a strong data availability is a limitation. Compromises made between
inverse relationship with the negotiated OD prices. Three the negotiation parties and soft factors affecting the nego-
studies support this result (Korchagina et al. [1], Onakpoya tiation outcome remain unobserved and cannot be consid-
et al. [24], and Schlander et al. [23]). The equally signifi- ered in the analysis. Third, the informative value of some
cant results of these studies lead to the conclusion that OD variables is limited. This is due to the data sources used
prices in any indication are higher the lower the number of to construct the variables and the assumptions required to
patients suffering from the condition. The multicollinearity generate them.
of the measurements for the population size again seems to Despite these limitations, we believe this study to con-
be moderated by the underlying therapeutic area. The size of tribute to the literature as it helps increase the transparency
the prevalence’s correlation coefficient exceeds the correla- of the price negotiations for ODs in Germany. Against the
tion coefficient of the SHI target population, which suggests background of budgetary constraints and affordability con-
that during negotiations the prevalence of the disease has cerns, more studies regarding the subject of OD pricing and
a greater association than the SHI target population. One reimbursement are needed. For example, a preference analy-
explanation for this difference in the coefficients’ sizes might sis such as the Swedish study by Wiss [50] is expected to
be the uncertainty associated with the SHI target population reveal the German population’s true willingness to pay for
as well as the inconsistency of the calculation method [48]. ODs. If conducted in Germany, policy makers would have an
Unexpectedly, the assumption of a significant correlation evidence base that could be used in the discussions regarding
between the availability of comparable therapies and the the alteration of AMNOG in relation to ODs. Furthermore,
negotiated price was not met. Existing literature considering policies regarding the pricing of ODs are becoming of major
this question are equivocal [1, 18, 23]. The variation in avail- European interest. To make an informed decision on the
ability of comparable therapies due to country-specific deci- introduction and alteration of respective regulations, Euro-
sion-making policies [49] might be an explanation for the pean policy makers need information on price determinants
differences in significance observed. Additionally, it could and a comparison with existing systems. Yet, present Euro-
be assumed that in Germany only the AnTC of comparable pean literature is rare and does not include Germany, the big-
therapies and not the availability of alternative therapies gest pharmaceutical market in Europe [51]. In the past, the
is relevant. The results indicate an appropriateness of the impartial head of the FJC raised the question of whether the
method to determine the comparable therapies’ AnTCs and pharmaceutical industry is following a strategy of ‘orphani-
constitute a contribution to the literature. However, whether zation’ because of the automatically granted added benefit
the comparable therapies’ AnTCs determine the negotiated for ODs [52]. As a consequence, payers (NA SHI) and the
price or only build a reference basis cannot be concluded IQWiG favored a conventional assessment of ODs, but the
from our results. lawmaker, the Federal German Parliament, did not accept
The variable found to have the strongest association this argument and left the regulation on ODs untouched.
with the negotiated price was the OD price in other Euro- Furthermore, payers proposed that the turnover threshold
pean countries. However, this strong association might be limit of ODs for a conventional assessment be lowered and
explained by two limitations of the study. Firstly, list prices suggested the ability to claim retroactive maintenance of
were used to calculate the reference price as confidential the negotiated price from the beginning of market entrance
rebates were unknown and an estimation was avoided to (for all pharmaceuticals). However, neither the proportion
prevent inaccuracy. Secondly, as all variables found to be of ODs nor their prices justify these claims as, on average,
significantly associated with the negotiated price were cor- one-third of new compounds are ODs, and less than 4% of
respondingly related to the European prices, the high cor- the pharmaceutical budget is spent on ODs [53]. The results
relation between the OD negotiated price and the European of our analysis show similar prices of ODs in the early mar-
prices is traced back to the fact that other European coun- ket entrance countries, mitigating the allegation of Germany
tries consider similar criteria for the price setting of ODs being a high-price country for ODs.
[1, 18, 19]. Accordingly, it is assumed that the height of the
European prices does not determine the OD price but rather
represents a directive value. 5 Conclusion
Besides the limitations on the variable level already out-
lined, further important limitations must be noted. First, A strong statistically significant association was found
although information from all initial EBAs available was between the OD negotiated price and the (i) therapeutic area
used, the sample size is small. Furthermore, the small in which the OD is applied; (ii) OD approval for pediatric
F. Worm, C.-M. Dintsios

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