Determining the price for pharmaceuticals in Germany: comparing a shortcut for IQWiG's efficiency frontier method with the price set by the manufacturer for ticagrelor

Abstract

Under the recently enacted pharmaceutical price and reimbursement regulation in Germany, manufacturers and payers negotiate an appropriate reimbursement price for new products. If one of the parties involved wishes so, a formal evaluation of costs and benefits will be conducted by the Institute for Quality and Efficiency in Health Care (IQWiG). IQWiG makes recommendations for a reimbursement price based on the ‘efficiency frontier’ in a therapeutic area. The analysis requires, when applicable, to calculate savings in other areas of the healthcare system (cost offsets) and healthcare costs during the years of life gained (i.e., downstream costs). A recent paper described the conditions under which calculation of downstream costs is not required. The purpose of this study is to use the drug ticagrelor as an example to demonstrate this shortcut for the efficiency frontier method. The analysis shows that applying the IQWiG approach would result in substantial savings.

Keywords::

• drug pricing
• Germany
• IQWiG
• ticagrelor

Financial & competing interests disclosure

The authors have no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending or royalties.

No writing assistance was utilized in the production of this manuscript.

Key issues

• Under the recently enacted pharmaceutical price and reimbursement regulation in Germany, manufacturers and payers negotiate an appropriate reimbursement price for new products.

• If one of the parties involved wishes so, then a formal evaluation of costs and benefits of the product in question can be initiated, which will be conducted by Institute for Quality and Efficiency in Health Care (IQWiG).

• A shortcut for IQWiG's methodology has been recently developed describing the conditions under which calculation of downstream costs is not required.

• This study uses the drug ticagrelor, an antiplatelet agent, as an example to demonstrate this shortcut for IQWiG's methodology.

• The analysis shows that the price of ticagrelor as originally set by the manufacturer is at least twice the reimbursement price that would result from an application of IQWiG's methodology.

• Payers and manufacturers may use the shortcut method to conduct a rapid assessment of the appropriateness of drug prices and define their reservation price during price negotiations.

Notes

¹The term ‘rule’ is used in its usual sense, that is, it does not preclude that other criteria may lead to a change in recommendation.