The German Institute for Quality and Efficiency in Health Care (IQWiG) published its long-awaited draft methodology on the cost-benefit analysis of drugs in January. In the first part of a two-part interview that featured in the April edition of IMS Health's monthly newsletter, Pharma Pricing & Reimbursement, IQWiG Director, Professor Peter Sawicki, talks about the guidelines, including his reactions to criticism of the proposed approach.
IMS: You were quoted in press materials released with the draft methodology as saying that the proposed approach will "separate the wheat from the chaff" and motivate manufacturers to develop products that are as beneficial as possible. What did you mean by that?
Peter Sawicki: I think it was one of the aims of the new law that became effective 1 April last year, that German society wants the industry to stop copying their own products, and not develop the tenth calcium channel blocker, the twentieth statin, or whatever. They want the industry to focus on newer pathways or newer developments and on real progress. If as a manufacturer you concentrate on things we already have, if you develop the tenth ACE inhibitor or whatever, that's fine - if you do that, then please do not expect us to pay more for that than we do for established products. If you want to earn a lot of money, if you really want high pricing, then please go for something more effective and beneficial than what we already have.
IMS: But there will be no consideration of novel therapies under the proposed approach?
PS: We will be commissioned by the Ministry or G-BA [the Federal Joint Committee] to address the question of whether a drug has a benefit. If there is only one drug for the disease, that is where the process stops. Either we will say there is no benefit, in which case it is not likely to be reimbursed, or we will establish the benefit and then the manufacturer can set the price as they wish.
IMS: There will be no response, no assessment of this price?
PS: No. The manufacturer in such a case would set the price and the insurance companies would pay for that.
IMS: Why is it the case that for those products that are deemed appropriate for health economic assessment, there will be a two-step approach, with the benefit analysis first and the health economic analysis as a second step?
PS: Because first we have to define additional benefit. If there is no additional benefit seen for the new product, compared with an established treatment, then we will not carry out a cost-effectiveness analysis. If we have established that a new product is superior to an established treatment in terms of its benefits, then we will carry out a cost-effectiveness analysis.
There may be cases where the additional benefit of the new product is limited. In such a case, we would need to ask if the established treatment offers a true alternative to the new product, taking into account the costs of the products involved. It could be that in such a case, the umbrella organisation of the insurance agency [the SK] may decide that it will not pay the price proposed by the manufacturer of the new product and will pay, for example, only half that price. On the other hand, the manufacturer may decide that it is not prepared to reduce its price, owing, perhaps, to European pricing reasons. In such a case the price would stay the same, but reimbursement by insurance would only be 50% of that. In such a situation, some patients can be expected not to be able to afford to pay the co-payment that would result from such an approach. In which case, it must be clear that an established product does offer a true alternative to the new treatment - so that those patients who cannot afford the co-payment may use the older product.
IMS: One of the concerns of the industry is that in the benefit analyses as they're carried out at the moment, there is a perceived emphasis on the importance of randomised controlled trials (RCTs). Whereas there is an acceptance in the wording of the draft methodology that when it comes to translating this into a value concept in relation to costs, there may be a need for some modelling to see the true benefit in those terms. Given the continued reliance on trials in the first stage, does this not potentially disenfranchise manufacturers of products that do not make it to the second phase, which cannot be assessed in terms of their real world value?
PS: RCTs don't necessarily represent an artificial situation. It depends how you do the trial. The industry very often performs a trial in an optimised situation. RCTs carried out by the industry often are done not to overlook a benefit, as a result of which there is an optimised surrounding for the therapy. In such cases, we are overestimating the true benefit in 100% of cases. If we move to a real-life setting, let's say use of the drug by GPs in all patients, in cases of multiple diseases, etc, then this will decrease the benefit in the majority of cases in practice. So, yes, RCTs do represent an artificial situation. But the bias is in one direction - in overestimating the benefit.
IMS: At the moment, what would be considered to be truly superior benefit?
PS: Improvements in morbidity, fatality, quality of life. All these aspects - impact on length of disease or hospitalisations - are factors. We not only look at the trials, we look at the literature, we talk to experts and we regularly talk to patient representatives and ask them what is important for them.
IMS: The innovative industry is concerned that when it comes to the concept of superior benefit at the first stage, there may not be the opportunity to reach the second stage where the incremental value may be perceived, because of the nature of the judgement on what is a superior benefit. Is incremental benefit supported in the first stage - the benefit assessment? For example, in an international context, the industry has had issues in areas such as antibiotics and vaccines, where investment has been reduced in recent years owing to concerns about a lack of reward for incremental increases in product benefits. More specifically, in the German context, a case that is regularly cited is that of the short-acting insulins.
PS: That's a good example. There is no additional benefit for short-acting insulin analogues. We have described the potential benefits and better metabolic control, reduced complications, including acute complications such as ketoacidosis and hypoglycaemia. We have looked at all these aspects and there is no additional benefit. There is no proof that you have a better life.
But you could have improvements in antibiotics through, for example, reduced side effects, or extent of resistance. These would be true benefits. But the industry has also reduced its investment in this area for its own reasons: these are usually short-term treatments and the industry is interested in developing treatments for chronic diseases that need to be used for many years, rather than for a few days.
IMS: There is a suggestion in the draft paper that the methodology could have other applications, in addition to the analysis of new products deemed to offer superior benefits to established treatments. What sort of applications?
PS: If we describe, for example, a full-blown analysis of interventions in an indication, then you might see interventions that are below the efficiency frontier - including, perhaps, cheap interventions with a low cost-effectiveness ratio. In such a case, the G-BA might think about removing such interventions from the reimbursement basket. It is written in the law that the G-BA can do that - removing ineffective therapies.
IMS: So are we talking about some form of reimbursement review, based on cost-effectiveness analysis, at some stage?
PS: Well, that's not our task. That's something that the G-BA has to do. According to the law, they might use our evaluations to decide upon such ineffective therapies. We could - I stress could - go back and see what has been included in healthcare in Germany and is not cost-effective.
If we look at this example [see Figure 1], from A-E we have several different interventions. Both B and D might then be removed from the healthcare basket in Germany.
Figure 1:
Example of the Position of New Product X
Relative to Established Products on the Efficiency Frontier
IMS: Would that also offer an opportunity to look at the pricing of established products and say we may not have the pricing at the right level in those cases?
PS: It depends on the commission by the G-BA. It's possible. For example, we could also look at an entire disease - for example all antidepressants and see what they do with regards to the benefit and with regards to the cost.
IMS: Coming back to some of the practical issues with the proposed methodology, we understand that the perspective of the proposed analysis is rooted in the law. But it has been criticised as being narrow.
PS: Yes, this is based on the law and it is also because there is no rationing in Germany. The law does not allow this. We do not have a body that says we will spend a given amount on the treatment, for example, of HIV, and another amount on liver transplantation. Decisions will only be taken in one indication.
IMS: It is stated quite openly in the draft that there is no interest in societal considerations, in indirect costs, and that there is a need to focus on direct costs. Why is that?
PS: It is not exclusively so. The law binds us with the perspective of the health insurance companies. We have to take this perspective. However, this does not mean that we can't take into account the impact that it may have on expenses that relatives might have, for example. We will decide whether to broaden the perspective on a case-by-case basis. Once we have the protocol of a report we will decide what to add to the perspective of health insurance companies.
IMS: So, for example, if you're looking at something like Alzheimer's treatments (which, it would seem, could possibly happen at some stage in the context of a retrospective review), then it would be appropriate to take the perspective of carers into account?
PS: Of course, yes. This is not excluded in the draft. We have just described what it is necessary to do. So we will always take the perspective of the health insurance companies and the cost that is incurred by the insurer and when necessary also take others into consideration.
In Part 2 of the interview to come next month, Professor Sawicki discusses the potential application of the proposed methodology in relation to the pricing of new products, including IQWiG's role as an advisor on price setting. He also discusses his views on the application of health economics across therapeutic areas and the inequities that may result. The interview concludes with a discussion of the timetable for discussion and implementation of the proposed approach - and IQWiG's capability to handle this.
For more information on Pharma Pricing & Reimbursement, published monthly by IMS Health, contact the editor, Neil Turner at nturner@uk.imshealth.com, tel +44 (0)1223 273207.