Ulf Staginnus, AMNOG Kakushin 2001 (1)

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

10

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

0

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

Thank you!

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