Coming through – facing the new market access hurdle in Germany, AZ receives encouraging news for Brilique

by Torsten Bernewitz

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A few weeks ago, I mentioned that the U.S. are not the only country working on healthcare reforms. I was referring to a new law in Germany that appears to have an effect on curtailing healthcare costs, in particular regarding pharmaceuticals (http://payer-strategies.blogspot.com/2011/09/reversing-rising-costs-for.html).

This new Germany healthcare law mandates early evaluation of the additional benefit of the drug in comparison to a corresponding established therapy, creating an additional hurdle pharmaceutical manufacturers have to take when they bring new products to the market. Savings are expected to reach the healthcare system 2 billion euros (~$2.7 billion) annually.

Shortly after regulatory approval of a new drug, a Joint Federal Committee (Gemeinsamer Bundesausschuss G-BA; self-governing body of physicians, dentists, hospitals and health insurance companies) rates new drugs on a range from 1 (“major additional benefit”) to 6 (“less benefit than comparator”).

While the new law has already created some casualties - the withdrawal in Germany of Novartis’ Rasilamlo and the decision by Boehringer Ingelheim and Eli Lilly not to launch Trajenta in Germany - a preliminary assessment report regarding the medical benefit of AstraZeneca’s clot buster Brilique/Brilinta (ticagrelor) for acute coronary syndromes (ACS), seems to be reasonably positive, at least for the more significant part of the market(http://www.worldpharmanews.com/astrazeneca/1815-brilique-receives-a-positive-preliminary-medical-benefit-assessment).

For patients with NSTEMI/UA (Non ST-Elevation Myocardial Infarction/Unstable Angina), which represents over 70% of the ACS patient population in Germany, a rating of 2 - “important additional benefit” - was assigned versus comparator Clopidogrel + aspirin.

For the smaller patient sub-populations with STEMI/PCS (ST-Elevation Myocardial Infarction/Percutaneous Coronary Intervention), however, the rating was 5 - “no additional benefit proven” versus comparators Prasugrel +aspirin and aspirin in monotherapy.

AstraZeneca will now respond to the G-BA regarding the initial assessment, after which the final benefit assessment will be performed by the GKV-SV (Federal Association of Statutory Health Insurance Funds). The decision is expected in 2012 (in the meantime, the product s already available in Germany).

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Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com

Accountable Care Organizations: Houston (or rather Washington), we have a problem!

by Torsten Bernewitz

During the debate about healthcare reform, institutions like the Mayo Clinic, the Cleveland Clinic, Geisinger Health System and Intermountain Healthcare were repeatedly showcased as models for a new health care delivery system dubbed “accountable care organizations” (ACO).

This new approach to delivering health care services rewards doctors and hospitals for providing high-quality care to Medicare beneficiaries while keeping costs down. In March CMS announced that it will allow up to 30 provider organizations to apply for "pioneer ACO" status and join the Shared Savings or Pioneer program this fall.

As it turns out, Mayo, Cleveland, Geisinger and Intermountain - considered the most likely candidates - have declined to apply for the “Pioneer” program. They complained that the draft CMS rules were too burdensome and didn't offer enough incentives.

Other stakeholders, such as the American College of Physicians, the American Academy of Family Physicians, the Medical Group Management Association, the American Medical Group Association, and the American Medical Association, voiced similar concerns.

CMS has not yet published how many health systems applied for the program (the deadline to apply was Aug. 19), but The Advisory Board Company, a hospital consulting firm, estimates based on surveys that between 30 and 50 organizations have applied for the Pioneer program. CMS goal was 30, so in terms of numbers they may be fine, however the composition of the group may be disappointing.
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Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com

How critical is the Individual Mandate really for the implementation of health care reform?

by Torsten Bernewitz

Yesterday, a District Judge in Harrisburg ruled that Congress exceeded its constitutional powers when it included in the Affordable Care Act the provision commonly known as “individual mandate”, which will require that by 2014 nearly all persons not covered by Medicaid, Medicare, or other health insurance programs purchase an approved insurance policy.

Now, this is only one decision, on a lower level. But even if it becomes a trend - will it jeopardize the health care reform in the US with all its effects on the various stakeholders: patients, providers, payers and manufacturers of drugs and medical devices?

This may be important as we are working on various strategies to address the challenges and opportunities of health care reform. If there is a good opportunity that the reform will be toppled, then perhaps "wait and see" is a good approach. So how likely is it?

Some thoughts:

While outlawing denial of health coverage on the grounds of pre-existing conditions aims to give coverage access to individuals who want to purchase insurance but cannot obtain it, the individual mandate is designed to expand the insurance pool by bringing in individuals who have been disinclined to purchase a health policy - generally assumed to be the young and healthy, i.e. the “better risks”. This measure is deemed necessary to offset the incremental coverage costs arising from the law’s guaranteed issue provisions and limits on premium variations.

The individual mandate is only one provision in the new law - but this is the one that is the anchor point for the constitutional challenge. And a constitutional challenge is (currently) the only realistic way to stop the law's implementation.

A number of states have joined litigation in federal challenging the constitutionality of the provision. So far several court rulings have disagreed about whether the mandate is constitutional, and it is expected that the ultimate decision will be taken by the Supreme Court.

But even if the individual mandate were ruled unconstitutional, this may not make such a difference to the rest of the Affordable Care Act. The reason is that it isn't really a strong mandate, because the penalties for violating the law are fairly mild.

The fixed dollar penalty is set at $95 per person per year in 2014, $325 in 2015, $695 in 2016, and indexed to inflation thereafter. The amount is halved for under-18-year-olds, and capped for a family at 3 times the individual amount or 2.5% of household income of household income, whichever is greater. To compare, in 2009 the average annual premium was $2,985 for a single person and $6,328 for a family, and has likely since increased.

So as it stands today, the individual mandate may actually not be very effective anyway (and therefore many calculations by the government may be wrong, but that's another story), and if it falls, this is probably not the undoing of the Affordable Care Act.
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Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com

Reversing rising costs for pharmaceuticals – the German experience

by Torsten Bernewitz

The U.S. are not the only country working on healthcare reforms. In Germany, a new law governing pharmaceuticals (Arzneimittelmarkt-Neuordnungsgesetz - AMNOG) is in place since the beginning of the year, and recent data seems to indicate that it is working. Expenditures for pharmaceuticals shrunk(!) 6.3% in the first half of 2011, leaving the Germany sick funds with a surplus in spite of rising costs in other healthcare sectors. The sick funds had ended 2010 still with a deficit.

The new Germany law allows for early assessment of the benefit of a medicinal product. Shortly after regulatory approval of a new drug, a Joint Federal Committee (Gemeinsamer Bundesausschuss G-BA; self-governing body of physicians, dentists, hospitals and health insurance companies) will evaluate the additional benefit of the drug in comparison to a corresponding established therapy. The law thus establishes a "fourth hurdle" pharmaceutical manufacturers have to take when they bring new products to the market, in addition to having to demonstrate efficacy, safety and quality.

If an additional benefit is determined, the price of the new medicine will be negotiated between the Federal Association of the health insurance funds and the manufacturer. If no additional benefit is determined, the new medicine will be part of the fixed price system (“Festbetragsystem”) in accordance with their pharmacological profile.

Similar procedures have already been introduced in many other European countries.

The G-BA has in fact taken its first decision following the introduction of early benefit assessments for new innovative drugs. The G-BA decided to include Livalo (pitavastatin) - which was launched in Germany in June 2011 - in the existing level 2 reference price group for statins, because a therapeutic improvement was deemed not proven.

The new law has also created some “casualties”:  Thus Novartis has discontinued the marketing of Rasilamlo (aliskiren + amlodipine) in Germany, which was approved by the European Commission in April 2011 and launched in Germany in May. Novartis was unable to provide data requested as part of the early benefit assessment.

In another recent case, Boehringer Ingelheim and their partner Eli Lilly decided not to launch their new type 2 diabetes treatment, Trajenta (linagliptin) in Germany due to the negative pricing prospect for their drug. The drug manufacturers feared that the comparator (which remains unnamed) might well be a generic diabetes drug, and would in that case put the drug at risk of obtaining a generic price.

However, while these changes should have a cost containing effect in the longer-term, the current reduction of pharmaceutical budgets in Germany is most likely caused by the 16 percent mandatory rebate introduced a year ago.
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Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com