Stephanie Sutton was an assistant editor at Pharmaceutical Technology Europe.

Stephanie Sutton

Germany used to be a golden market for the pharma industry in Europe because the country allowed global pharmaceutical companies to set their own prices for new medicines. However, all good things must come to an end…

		In Germany, healthcare reform (known as AMNOG – Arzneimittelmarkt-Neuordnungsgesetz) that came into effect in January 2011 introduced stringent new pricing measures that linked the price of a medicine to its perceived therapeutic benefit. Eighteen months from the reform and the full effects have been realised. Although successful in cutting costs (a primary goal of the legislation), the change has resulted in a number of global companies delaying or refusing to market their drugs in Germany. It’s a testament to the fact that Germany has historically been one of the first markets in Europe to receive innovative new drugs.

		The European Federation of Pharmaceutical Industries and Associations (EFPIA) recently asked the German government to take “urgent action” concerning the pricing assessment of new medicines. In a statement, Richard Bergström, director-general of EFPIA, said, “It is absolutely appropriate that Germany manages its healthcare budget carefully and assesses medicines to ensure that they are priced at a level that reflects the value they deliver. However, early experience with AMNOG is very disappointing.”

		EFPIA is not the only organisation to have expressed concern about AMNOG. Understandably, the pharmaceutical manufacturers have also spoken out, including Boehringer Ingelheim and Eli Lilly. One of the main issues highlighted by companies and the media seems to be the types of comparisons that are used to evaluate therapeutic benefit. Indeed, in 2011, the use of indirect comparators to assess innovativeness in Germany was noted at the ISPOR Congress held in Madrid, Spain.

		EFPIA members companies say they have found that the choice of a comparator often differs from that chosen for their development program after consultation with EMA. Eli Lilly and Boehringer Ingelheim submitted their jointly developed diabetes drug, Trajenta, for review. However, Germany’s Institute for Quality and Efficiency in Health Care (IQWiG) requested that the product be evaluated against a different class of drug to the one provided by the company. It has also been reported that Eisai’s breast cancer drug eribulin was initially compared with a drug used in the first phase of illness, even though eribulin was to be administered when an initial therapy no longer worked.

		Generic products have also featured in comparator assessments to direct the prices of new medicines closer to generic prices or prices of older medicines.

		Another highly controversial decision in the healthcare reform was to include Greece in the group of countries (Belgium, Denmark, Finland, France, Greece, UK, Ireland, Italy, Netherlands, Austria, Portugal, Sweden, Slovakia, Spain and the Czech Republic) used as a reference for pricing negotiations. Greece is in the midst of a severe debt crisis. Although some pharmaceutical companies have withdrawn products from the markets, others continue to supply products at lower prices for the benefit of patients. It’s a charitable action, but these lower cost medicines, however, will impact assessments made using Greece as a reference market.

		Although cheap medicines and lower healthcare costs are desirable by all countries, I’m sure most people will agree that many European countries do not need the same type of charity that Greece is currently in need of.

Articles

Pricing Controversy in Germany

Dr. Reddy’s Laboratories and Merck Serono, a division of Merck KGaA, have partnered to codevelop a portfolio of biosimilar compounds in oncology. The partnership will focus on monoclonal antibodies and covers codevelopment, manufacturing, and commercialization of the compounds worldwide.

For Dr Reddy’s, the partnership will help expand the company’s presence in the biosimilar area and enable them to participate globally. For Merck, the announcement represents the company’s early steps to make inroads into the biosimilars marketplace. Earlier this year, Merck also announced that it was setting up a dedicated biosimilars unit in the Canton of Vaud in Switzerland. The company’ move into biosimilars is part of the Merck Group’s transformation program, which aims to deliver long-term value and growth opportunities for the company.

, G.V. Prasad, vice-chairman and CEO of Dr Reddy’s, explained, “Biosimilars is an important area of future growth... With the recent EMA and FDA guidance on biosimilars, it is clear that any significant player in the field will need strong biologics development, manufacturing, and commercialization capabilities.”

According to the agreement, Dr Reddy’s and Merck will codevelop the molecules and share R&D costs. Dr. Reddy’s will lead early product development and complete Phase I development, after which Merck will take over in manufacturing and Phase II development. 

Merck Serono will commercialize the molecules globally, except for in the US and in certain select emerging markets, which will be coexclusive or are where Dr. Reddy’s already maintains exclusive rights. In the US, products will be cocommercialized on a profit-sharing basis.

Additional details of the deal have not been disclosed. 

In the statement, Stefan Oschmann, Merck executive board member and CEO of Merck Serono, added, “Sharing know-how, risks, and rewards is the right approach to enter the emergent biosimilars market and will be a win–win for both parties.”

Dr. Reddy's Laboratories and Merck Serono, a division of Merck KGaA, have partnered to codevelop a portfolio of biosimilar compounds in oncology.

Dr. Reddy's and Merck Serono Team Up on Biosimilars

The prices of pharmaceuticals are coming under increasing scrutiny in today's age of cost constraints. Drug development is expensive, but governments and healthcare payers are not always willing to pay the price that pharmaceutical companies are asking.  

In the UK, the National Health System (NHS) has taken the controversial step of cutting the cost of treating wet age-related macular degeneration (AMD) by prescribing a cheaper drug over a more expensive one. The controversial element? The cheaper drug isn't licensed for wet AMD. 

The approved treatment for AMD is Lucentis (Ranibzumab), which is marketed by Genentech (now owned by Roche) in the US and by Novartis elsewhere. The drug costs around $1190, but has been approved by the UK's cost–effectiveness evaluation agency, NICE. 

But according to the NHS, Roche's Avastin (bevacizumab) is just as effective and costs significantly less—around $80. The UK's National Institute for Health Research Health Technology Assessment has even funded a study examining the two drugs. The results, released last month, show that both treatments are equally effective in wet AMD. In addition, it was found that using Avastin in place of Lucentis could save the NHS around $135.9 million annually. A similar study has also been conducted in the US, with both drugs being shown as effective (1).  

Novartis has hit back, claiming that the results highlight "serious safety concerns" and a "significantly higher risk of serious systemic adverse events" with Avastin versus Lucentis. 

But the US study added, "Although Avastin had a higher rate of serious adverse events, they were distributed across many different conditions, most of which were not associated with Avastin... The number of deaths, heart attacks, and strokes were low and similar for both drugs during the study." 

Novartis feels so strongly about the situation that it is taking the case to court by seeking a judicial review of the decision to enable patients to choose between Lucentis and Avastin in the UK. The Association of the British Pharmaceutical Industry is reportedly backing Novartis after speaking out at the association's recent annual conference in London. The backing is based on the fact that NICE has approved the use of Lucentis so it should be made available, as well as the fact that Avastin is unlicensed for treating wet AMD. 

Another option is for Roche to seek a license for the use of Avastin in wet-AMD, according to NICE. Roche has said that it is not interested in pursuing this. There's a good reason for this too. Both Lucentis and Avastin were both developed by Genentech, which Roche acquired in 2009. The drugs are similar in that they both act against Vascular Endothelial Growth Factor, but were developed with different specifications. From a cost point of view, why would any pharmaceutical company want to license Avastin for wet AMD when more money can be made from Lucentis? A lot of work also went into developing Lucentis specifically for eye conditions. Pharmaceutical companies are businesses after all and profits have to be considered. 

Doctors in Europe and the US have been using Avastin off label for years for wet AMD. It will be interesting to see whether anything changes as the situation with the NHS and Novartis unfolds and as comparative effectiveness studies become the norm. 

1.  NIH News, "Avastin and Lucentis are Equivalent in Treating Age-Related Macular Degeneration," 

UK chooses to use off-label drug indication to cut healthcare costs. Will others follow suit?

Cheap versus Expensive

The European Federation of Pharmaceutical Industries and Associations (EFPIA) has welcomed the launch of a €223.7-million ($276.5 million) program to tackle antimicrobial resistance and speed up the development of new antibiotics. The program was launched by the Innovative Medicines Initiative (IMI), a public–private partnership, and builds on the European Commission’s Action Plan against the rising threats from Antimicrobial Resistance, which was launched in November 2011.

The program will bring together leading academics and five major pharmaceutical companies. The IMI has issued a call for proposals and has set aside a budget of up to €223.7 million ($276.5 million) in funding, with €109 million ($134.8 million) coming from the IMI and a further €114.7 million ($141.8 million) coming from contributions by participating EFPIA companies. 

Michael Goldman, executive director of the IMI, said in a 

, “This is a historic opportunity for Europe to overcome a public health problem which threatens millions of lives worldwide. For researchers in universities, hospitals and small and medium-sized enterprises it is also a unique opportunity to speed up their research in the area of antimicrobial resistance, as the collaboration will give them access to the knowledge and expertise of the pharmaceutical industry.”

According to the IMI, antibacterial drug development is no longer a financially viable option for pharmaceutical companies. As well as scientific challenges and complex regulatory requirements, the cost of developing an antibiotic outweighs the potential returns on investment. 

The IMI’s program is expected to use approximately €600 million in funding over the next seven years. Initial projects will focus on building and training networksof researchers, facilitating and increasing the exchange of research data, and improving the efficiency of clinical trials.

Richard Bergström, director-general of EFPIA said, “Our researchers and the scientific community have realized that we can only deal with this urgent threat by working together and pooling our knowledge.... by co-funding clinical trials, policy makers in Europe have created a strong incentive for companies and investors to come back to this field of research.”

The European Federation of Pharmaceutical Industries and Associations (EFPIA) has welcomed the launch of a EUR 223.7-million ($276.5 million) program to tackle antimicrobial resistance and speed up the development of new antibiotics.

Antibiotic Resistance Program Launched in Europe

 from the UK’s All Party Pharmacy Group (APPG) has attributed shortages of prescription medicines in the UK to parallel trade and is calling for urgent action. In particular, the APPG has asked the UK government to consider whether certain goods should be exempt from the European law concerning the free movement of goods across EU borders.

The report details the results of an inquiry into drug shortages that the APPG began in November 2011. The inquiry investigated the causes of the shortages, which have plagued the UK for four years, the problems they have caused, the effectiveness of efforts to tackle the problem, and potential solutions.

According to the APPG, the reasons for the shortages are complex and a result of many factors; however, the export of medicines intended for the UK market to other EU countries is a principal factor. Parallel trade is legal in Europe, and although the APPG doesn't object to the practice, it is concerned about the effect on patients and pharmacists.

The UK has sought to address to mitigate the problem of shortages previously. Among other mechanisms, members of the supply chain have implemented quota arrangements, while the Department of Health has updated the obligations under which supply chain participants must act. The UK’s Medicines and Healthcare products Regulatory Agency has also pledged to address the shortages, but a lack of market data means that it is difficult to know exactly which products are in short supply and who is exporting them.

The report also added, “We have detected an air of resignation among those responsible. The problem of shortages has been dismissed variously as either inevitable, or as having been inherited from the previous Government. The Department of Health has also seemed reluctant to take action without having hard evidence...”

Several recommendations have been made by APPG. As well as asking the government to consider using an exemption on free trade movement, the group has also suggested that the government consider extending current legislation requiring the maintenance of continued supply to short-line wholesalers and other entities in the supply chain.

The MHRA needs to enforce obligations on those with licenses to conduct wholesale activities. 

There needs to be improved and more regular collaboration between the Department of Health, the MHRA, and supply chain representatives. 

The government should see what can be learned from the French government’s recent proposal that curtails the export of medicines.

The paucity of market information needs to be addressed urgently.

Quota arrangements need to be simpler, less burdensome for pharmacists, more transparent, and more sensitive to local variations in demand. A task force should be established to deal with this issue.

A recent report from the UK's All Party Pharmacy Group has attributed shortages of prescription medicines in the UK to parallel trade and is calling for urgent action.

UK Condemns Parallel Trade

 in the US that contains measures to strengthen the ways in which drug shortages are dealt with. The US FDA is also taking action by asking companies to alert them as to possible drug shortages so that it can prepare back ups. But what about other parts of the world?

		Drug shortages are not unique to the US. The UK is also currently struggling with severe shortages of prescription medicines. In the US, many shortages have been attributed to plant closures or manufacturing problems, but in the UK the shortages are being caused for a different reason: parallel trade.

		Parallel trade, which is legal in EU law, involves products intended for the UK market being exported to other EU countries where they can often be sold at higher prices. This practice is common throughout Europe and has caused drug shortages in several countries over the years, impacting both patients and pharmacists who subsequently have to spend time sourcing medicines rather than performing other clinical and public health services.

		Last week, the UK’s All Party Pharmacy Group (APPG) published a 

 detailing the results of an inquiry into drug shortages, which have plagued the UK for four years. The inquiry investigated the causes of the shortages, the problem they have caused, the effectiveness of efforts to tackle the problem and potential solutions. Occasional supply problems caused by manufacturing issues were not a focus of the inquiry as they have already been identified and there are contingency arrangements to deal with them.

		But unfortunately there is no simple solution. The UK has already tried to solve the problem by implementing quotas and other supply mechanisms, as well as issuing best practice documents, but these have proven ineffective. The UK’s Medicines and Healthcare products Regulatory Agency has also pledged to address the shortages, but a lack of market data means that it is difficult to know exactly which products are in short supply and who is exporting them.

		The report also added, “We have detected an air of resignation among those responsible. The problem of shortages has been dismissed variously as either inevitable, or as having been inherited from the previous Government. The Department of Health has also seemed reluctant to take action without having hard evidence…”

		One drastic suggestion in the report is to put a stop to the exports. European law allows for the free movement of goods across EU borders, but the report claims that there it is possible to exempt certain goods if their free movement threatens public health. The report urges the government to at least consider this exemption.

		In addition, the report poses other recommendations including:

			The UK government must state that the interest of patients comes first ahead of the free movement of goods.

			The MHRA needs to enforce obligations on those with licenses to conduct wholesale activities.

			There needs to be improved and more regular collaboration between the Department of Health, the MHRA and supply chain representatives.

			The paucity of market information needs to be addressed urgently.

			Quota arrangements need to be simpler, less burdensome for pharmacists, more transparent and more sensitive to local variations in demand. A task force should be established to deal with this issue.

		The APPG has invited the Department of Health to provide an update in six months’ time about its progress in tackling the shortages.

Greece’s Financial Crisis and Devastated Healthcare System

A bill has recently been in discussion in the US that contains measures to strengthen the ways in which drug shortages are dealt with. The US FDA is also taking action by asking companies to alert them as to possible drug shortages so that it can prepare back ups.