1. Market Access in Germany after AMNOG – Major Healthcare Reform
Kakushingroup – webinar, October 13 2011
The Pricing Effects in a European level
Ulf Staginnus
Access Lead, Franchise Head Oncology,
International Health Economics & Reimbursement
Amgen Intl.

2. Disclaimer
The views expressed in this talk are my own
opinions and understandings of the subject and
are not related to Amgen.

3. 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

4. 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..

5. 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

6. Latest Pricing developments
The Perfect « Pricing Storm » in Europe
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

7. 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

8. Countries being internationally referenced

9. Launch sequence example
Germany was the traditional early launch country with free pricing, setting the ceiling
for Europe, together with Austria, Switzerland and some Nordic markets
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

10. Benefit assessment and price setting
10

11. 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

12. Strategic Options
Strategy Pros Cons
Not launch in Keeping higher EU price band Potential reputation issues,
Germany lost market opportunity
Delay launch Maintain higher initial Only delaying the matter until
international price level the next pricing revision, may
(probably for 1 year) cause bad press
Launch with high Higher initial price level Outcomes uncertain, resource
price, coverage with (probably for 1 year), intensive
evidence commitment to demonstrate
development product value in real life,
agreement upside potential
Launch with high Higher price level in Germany Short lived measure (but
price initially and internationally perhaps successful for shorter
product lifecycle windows)

13. “The government doesn't want to allow
Conclusions
prices for medicine in Germany to be
significantly higher than in other
countries in Europe.” - Philipp Roesler,
Health Minister
• 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

14. Thank you!
ulfs@amgen.com
+34 610 465 292