Drug firms should expect stronger calls for rebate deals around patented drugs in Germany as the country’s payers increase their influence on prescribing decisions via parallel tie-ups with doctors’ associations. "I expect contracts around on-patent drugs will become more numerous, as in the next months and years there will also be more contracts between health funds and independent doctors’ associations in Germany," sums up Christopher Hermann, Chief Negotiator and Deputy CEO at Germany’s largest insurer, AOK.
The goal of the doctor deals is clear: to reduce costs by persuading GPs to prescribe rebated drugs (payers aren’t allowed to force them, as for generics) and by preventing unnecessary visits to specialists through more regular GP consultations. (In Germany, patients are allowed to visit a specialist without GP referral.) AOK claims that doctors within its July 2008 deal with two associations can earn cash bonuses of up to €80 per patient per month by playing ball. As payers’ influence over doctors’ behavior grows, so too does their clout within price negotiations with drug firms, which have been legal since 2007. According to Peter Behner, VP and Partner at consultants Booz & Co. in Berlin, it’s also legal for payers to strike gain-sharing agreements whereby they split the savings secured from a drug firm with doctors, in exchange for recommending the right treatment. "Thus you now have a dual-pincer effect as far as pharmaceutical companies are concerned," Behner warns: mandatory switching at pharmacies, whereby pharmacists have to dispense the cheaper drug for which the insurer has a binding discount, and these gain-sharing models with doctors." For now, me-too drugs are most vulnerable, but Behner expects this pressure to hit highly differentiated pharmaceuticals as well, if payers don’t clearly recognize that differentiation themselves. Cue the drug firms, most of which are dragging their feet when it comes to rebate deals. The heat is on, not just to discount anything that isn’t highly novel or differentiated (as some firms, including Novartis and Sanofi Aventis are already doing) but to figure out alternative means of securing a formulary place. Several, including most prominently Novartis, are experimenting with creative financial and risk-sharing arrangements like the Swiss group’s ‘no-cure, no pay’ arrangement around osteoporosis drug Aclasta, or its overall price-cap on AMD drug Lucentis. (See "Germany Gets Creative with Payer-Pharmaco Contracts," EuroPharmaToday, Jul 15 2009.) But these aren’t likely to hold water for long, according to Hermann. "Risk shares are difficult to track and assess, and thus represent only a limited model," Hermann declared in an interview. He’s seen through Lucentis-style price-caps, too. Since such contracts only last two or three years, "it allows the company to establish its drug in the market, making it difficult to draw back in the next contract" when the company is likely to try to push the price or overall cost up again, he argues. Hermann wants more plain vanilla rebates. Thus the only way for drug firms to avoid seeing prices slide is to provide convincing data proving the cost-benefit of their drug over anything else that’s out there. And that means, longer term, more "integrated care" set-ups,
which purport to assess the cost-effectiveness and impact not just of a drug, but of the broader health care elements surrounding that treatment.
Pfizer
, with partner Eisai, is trialing one such study in Germany with dementia drug Aricept. The firms began a study in 2005 to assess whether a program of home-visits and support to those looking after home-based dementia patients can postpone transfer into a nursing home, and thus reduce costs. This isn’t a drug study—some patients in the 390-strong trial are on Aricept, some aren’t—but the companies clearly hope that by supporting it, they secure an integral role for their drug in any future treatment paradigm embraced by partner AOK, and potentially by other sick funds, too, if the results are compelling. (And whatever the results—due this year—Pfizer has secured reimbursement for Aricept for the study duration.)
It isn’t just in Germany that payers and firms are being forced to look at treatment costs more holistically, beyond the drug.
If the US health reform effort succeeds in expanding insurance coverage to a substantial portion of the roughly 50 million uncovered or under-insured individuals, then there will be similar increased pressures on insurers in the US. A few, including Kaiser Permanente, are already assessing costs in a broader, more integrated fashion.
Drug firms will likely end up footing much of the cost of administering such integrated-care studies, but they have little choice as payers increasingly demand clear health economic data to justify reimbursing a drug. Many companies simply don’t have sufficient data to argue convincingly in favor of their product’s use, and these Pfizer/Aricept-style deals represent a sensible way to collect it. Armed with that data, negotiations around price, capping, rebates and any risk-share will become much easier: pharmas with a proven cost-effective drug can command reasonable prices and priority formulary places; those without will have to take the hit.
[For more on the evolution of rebate deals in Germany, check out the next issue of IN VIVO.]
--Melanie Senior (m.senior@elsevier.com)
