More than ever, drug pricing is a contentious topic with many stakeholders. Health Technology Assessment (HTA) agencies have argued that drug manufacturers are asking for prices that do not necessarily match with their drug’s efficacy/effectiveness. For example, G-BA recently ruled that Eisai’s Epilepsy drug Fycompa offers no additional benefit over existing Epilepsy treatments, meaning that the drug will be priced comparably to generic drugs. Eisai withdrew Fycompa from the German market last year because of a similar ruling and hoped for a better outcome after this reassessment. Manufacturers, on the other hand, argue that HTA agencies are quick to issue a “do not recommend” based solely on cost, without taking into account the larger picture. We wrote about this in a recent blog post, “Sovaldi and the Politics of High-Priced Drugs: Are We Asking the Right Questions?”, which addressed Gilead’s much-discussed Hepatitis C drug Sovaldi. Several manufacturers, including Eisai, AstraZeneca, and Pfizer, have pulled drugs from the German market because they believed the approved prices were too low.
The drug development process is complex, nuanced, and full of risks great and small, but we think the general points of view serve as a great framework for an analysis project. To that end, we decided to look at some data from Germany’s HTA authority, the Gemeinsame Bundesausschuss (G-BA). Specifically, we examined how G-BA assesses the additional benefit of a drug in relationship to the annual cost the manufacturer submits and we looked to determine if manufacturers are submitting higher annual costs for drugs that have a greater additional benefit. Essentially, we used our data set to weigh in on the debate. Are manufacturers charging too much for drugs that do not show enough efficacy? Or are agencies quick to rule unfavorably on drugs that have high prices?
Additional Benefit Explained
The “Additional Benefit” determination is a scale that ranges from “less benefit than the comparator” to “major additional benefit.” G-BA uses this additional benefit score in pricing negotiations with manufacturers. As part of the submission to G-BA, manufacturers provide annual drug-cost estimates that are the starting point for the pricing negotiations.
At a recent presentation at the International Society for Pharmacoeconomics and Outcomes Research (ISPOR), we asked the following questions and presented our findings:
Does G-BA Give Poor Benefit Assessments to High-cost Drugs to Secure Lower Prices?
Are drugs that are priced higher than their comparators more likely to receive poor benefit assessments from G-BA? We estimated the influence of the drug cost relative to the comparator on the G-BA additional benefit assessment. We built a model based in 58 reviews and we controlled for the drug’s clinical efficacy and the cost per patient. We found that as the cost difference between the drug and its comparator increased, there was an increase in the odds of the drug receiving a higher additional benefit score.
Are Manufacturers Submitting Higher Annual Costs for Drugs that Provide Greater Additional Benefit?
In order to answer this question, we used the G-BA additional benefit score to predict the manufacturer’s estimated per-patient annual drug cost. If manufacturers are setting higher prices for more effective drugs we should see a positive relationship: as the annual cost of the drug increases, the additional benefit of the drug should also increase. We based our model on 73 reviews and we controlled for costs per patient and the annual cost of the comparator.
Our results showed a positive relationship between manufacturer-submitted annual cost and the G-BA additional benefit. Drugs that received an unquantifiable or minor additional benefit from the G-BA were priced two times higher than drugs that showed no additional benefit. A drug with the G-BA assessment of “considerable additional benefit” is estimated to have an annual per patient cost that is nine times greater than drugs that showed no additional benefit. Drugs with a higher manufacturer submitted annual cost are determined by G-BA to be more efficacious.
After Looking at the Data, Who’s Right?
While a single study of one agency cannot settle the question, it is interesting to note that, within our analysis, it appears that the assumptions made by agencies and manufacturers may not be correct. Contrary to the manufacturers’ argument, G-BA does not appear to be issuing lower benefit assessments for drugs with a higher cost.
From the agencies’ perspective, their concerns regarding over-pricing also seem to be unwarranted. Manufacturers are asking for higher prices for those drugs that actually show greater efficacy/effectiveness compared to the comparator.