Alexander Ehlers of Ehlers Ehlers & Partners highlights the obstacles within the German regulatory framework, including how to approach market authorisation and reimbursement.
Overview on pharmaceutical law
The importance of both regulatory and market access law is reflected by the fact that nearly 90 per cent of the German population is insured on a statutory health insurance (SHI) level. Therefore, the reimbursement price of pharmaceuticals is the relevant price with which pharmaceutical companies make their money. Thus the pharmaceutical industry has to overcome two obstacles: the marketing authorisation level, and the reimbursement level afterwards.
How to apply for a marketing authorisation
Pharmaceuticals for certain indications must be approved by the European Medicines Agency (EMA) in the centralised procedure. These include advanced therapeutic medicinal products (ATMPs); new active substances for treatment of AIDS, diabetes, cancer, neurodegenerative diseases, auto-immune diseases, other immune dysfunctions and viral diseases; and orphan and animal drugs. The marketing authorisation for other indications can be applied for within the decentralised procedure or mutual recognition procedure by the authorities of the EU member states. In Germany, the Federal Institute for Drugs and Medical Devices (BfArM) is in charge. In the market authorisation procedure, the respective authority decides on effectiveness, safety and harmlessness according to the European harmonised law, Directive 2001/83/EC. All procedures are applicable for new or known active substances.
How to approach the reimbursement pathway
Regarding reimbursement decisions, article 168 section 7 of the Treaty on the Functioning of the European Union (TFEU) regulates that health policy issues and medical care are to be organised on a member state level. Hence reimbursement systems differ significantly within the EU.
There have been momentous regulatory changes of late regarding the reimbursement of pharmaceuticals in Germany. The Pharmaceuticals Market Reorganisation Act (AMNOG) sets the system of examination of new active substances, pharmaceuticals for new indications, and new combination preparations by the federal joint committee. This assessment procedure signifies a challenge for the industry, because the added value of a drug over comparative therapy is determining the price that the SHI pays for the preparation.
In AMNOG’s early years, known pharmaceuticals also had to be examined – resulting in the pharmaceutical industry having no current studies for submission. On 1 April 2014, the early benefit assessment of the existing market was abolished and all ongoing procedures ended (with one exception). Hence, prices for known pharmaceuticals are to be set without an early benefit assessment procedure.
AMNOG works as follows: for new pharmaceuticals with new active substances, pharmaceuticals for new indications or new combination preparations, the manufacturer has to submit a dossier attempting to prove the additional benefit of the new drug in comparison with alternative therapy. The federal joint committee, in cooperation with the Institute for Quality and Efficiency in Health Care (IQWiG), assesses the dossier and makes a public report. Afterwards, the National Association of Statutory Health Insurance Funds negotiates the pharmaceutical’s reimbursement price based on the results of the early benefit assessment, comparative European prices and prices of the comparative therapy.
After the first three years of this reimbursement system, the interim result is that negotiated prices which count after one year (end of the assessment procedure and price negotiations) equal one-third of the list price of new pharmaceuticals. Hence, we observe a relevant price reduction in the pharmaceutical spending with AMNOG in force, in particular because of the lower costs for new preparations.
For the industry, the early benefit assessment is costly and labour-intensive. It is also increasingly difficult for foreigners to enter the German market because the process involves complex hearings and obligations. Furthermore, price negotiations do not wholly follow the IQWiG and federal joint committee assessment; they therefore need to be prepared and conducted thoroughly. Experience demonstrates that negotiation tactics and knowledge of the system may lead to better results than relying solely on studies’ results. Finally, “no or little added value” has been the most frequent result of the assessment procedure. This is mostly a marketing problem – although new therapy alternatives need to be introduced even if they have no additional benefit.
AMNOG for medical devices?
One major development is the increased requirements for the market access of medical devices. Up until now, medical devices have had to be approved in Europe without any study material or cost-benefit examination; they have to run through a conformity assessment and apply for a CE mark at a notified body in any EU member state. The requirements of this process depend on the different risk class of the medical device. Low-risk classes do not need to run through an external conformity assessment, whereas high-risk classes need to prove safety and quality to the notified body.
Following the breast implant scandal in Europe, on 26 September 2012 the EU Commission issued draft regulations for medical devices. These regulations are intended to prompt changes regarding the market authorisation system, the classification of medical devices and – in particular – tracking methods for the application of medical devices. It is expected that the requirements will closely match those of the pharmaceutical sector; several added steps are also planned in order to increase the safety and transparency of the devices’ application.
Despite the draft regulations, the German solution to the costly application of medical devices and almost-free market access and reimbursement – at least in the inpatient sector – is different. It is not the market authorisation but the reimbursement that will depend on cost-benefit studies in the future. For some months, the discussion in Germany focused on the system transfer of AMNOG with regard to medical devices. Following the October 2014 bill, the market access and reimbursement of complex medical devices will regularly depend on an assessment procedure that follows the AMNOG procedure. Currently, assessment procedures can be initiated for complex treatment methods including devices; reimbursement will regularly depend on this in the future, however.
There is also the potential for cost savings in this regard, via exclusion of cost-intensive methods without proven benefit from reimbursement.
For the industry, this means a prolonged market access procedure for complex medical devices. The industry will also need to set up studies that are, in comparison to the pharmaceutical sector, not needed for market authorisation. Hence, the placing of complex medical devices into the market will be cost and time-intensive in the future; but safety hurdles will be increased, too.
Marketing activities of pharmaceutical companies
Marketing activities are regulated on a member-state level, too. In Germany, advertisements addressed to health-care professionals or the general public are regulated by the Advertisement of Medicinal Products Act (HWG). If the activity in question is product-related and intended to increase the sales of a product, the relevant legal framework is to be respected. Provided that the (marketing) activity is solely company-related, the rules of the Act Against Unfair Competition (UWG) are applicable, too. Finally, the Medicinal Product Act (AMG) also imposes legal requirements for interactions with health-care professionals and patient organisations. In addition, several industry guidelines apply to product or company-related marketing activities of pharmaceutical companies, addressed to either health-care professionals or the general public.
As a key principle, product-related advertisements and company-related advertisements addressed to health-care professionals must not be misleading or unfair – that is, the promotional statement must be correct and, if necessary, verifiable. The HWG and the UWG contain concrete examples of misleading or unfair competition. As far as product-related advertisement is concerned, most importantly, the law requires that the promoted medicinal product must not be ascribed therapeutic efficacy or effects that it does not possess, and that the advertisement gives no false impression that success is guaranteed or that the recommended use has no side effects. A respective list of legal examples is set out in the UWG, which applies to company-related advertising statements. Additional principles applying to product-related advertisements dictate that the advertisement should always provide the mandatory information regarding the promoted medicine, and the promoted indications must be in line with the marketing authorisation, the summary of product characteristics and the package leaflet.
The above-mentioned rules also apply to advertisements addressed to the general public: promotional statements must not be misleading or unfair.
In addition, further legislative provisions enhance the general public’s protection, since the public is considered to have no medical knowledge. For instance, the HWG sets out that the advertisement of prescription-only medicines to the general public is prohibited. This shall ensure that the health-care professional decides independently on the prescription of a certain medicine, a decision based solely on medical considerations that are not influenced by the patient. Furthermore, the HWG stipulates a list of examples of advertisements that shall not be directed to persons other than health-care professionals, as they are potentially misleading or manipulative.