Gilead Sciences (US) and the German National Association of Statutory Health Insurance Funds (GKV-Spitzenverband) have agreed to reduce the reimbursement price of chronic hepatitis C drug Sovaldi by approximately 30% for three years, with a further price cut due for the subsequent two years.
IHS Life Sciences perspective | |
Significance | The US pharma company Gilead Sciences and Germany's National Association of Statutory Health Insurance Funds (GKV-Spitzenverband) have agreed on an approximately 30% reimbursement price discount for the producer's chronic HCV drug Sovaldi for a three-year period, with a further price cut to follow in the subsequent two years. |
Implications | Sovaldi has been singled out as a major factor in the highly significant increase in drug reimbursement spending in Germany over the past year, and the manufacturer has attracted substantial criticism because of the high price charged for the drug. |
Outlook | Gilead announced the discounted price after the agreement was reached, indicating that the company is not overly concerned about the potential effect on prices in other European countries. It may also have done so in anticipation of new products entering the chronic HCV market space. |
Germany's National Association of Statutory Health Insurance Funds (GKV-Spitzenverband) has announced that it has reached an agreement with United States-based pharmaceutical company Gilead Sciences over an approximately 30% reimbursement price discount for its chronic hepatitis C virus (HCV) Sovaldi (sofosbuvir). According to the GKV-Spitzenverband in its press release, the association played an "important" role in the seven-month price negotiation process, in terms of reaching an agreement that "adequately reflects the differentiated benefit assessment of the Federal Joint Committee (Gemeinsamer Bundesausschuss: G-BA)". The press release can be accessed in full at its website, in German, here.
The GKV-Spitzenverband states that the discounted reimbursement price is valid for three years, retroactive from 23 January, adding that it has also negotiated a tiered pricing arrangement that will ensure further savings in the subsequent two years – although no details of this have been given. In addition, it reports that the compromise between the sides on the reimbursement price meant that no decision from the arbitration board was required.
The association reports that based on the early benefit assessment of the drug, concluded in July by the G-BA, Sovaldi showed a hint of a considerable additional benefit for 5% of the relevant patient population. The drug demonstrated an indication of a minor additional benefit for 35% of patients, but no additional benefit could be ascribed for the remaining 60%.
German news weekly Der Spiegel reports on its website that following the conclusion of the agreement, the GKV-Spitzenverband declined to provide details of the negotiated discounted price. However, the source quotes GKV-Spitzenverband spokesman Florian Lanz as stating that the tiered pricing arrangement means that in the two years subsequent to the three years of the validity of the negotiated discount price, the drug's price will be further reduced.
Der Spiegel reports that it was Gilead that announced the negotiated price of the drug after the conclusion of the agreement. German pharmaceutical news provider Apotheke Adhoc reports that the exact price for one package will be, under the negotiated discount price, EUR14,520.84 (USD16,470.6), which makes the cost of a 12-week treatment cycle EUR43,562.52. However, as Apotheke Adhoc reports, with the 7% mandatory discount required for patent-protected medicines, the cost will come to approximately EUR41,000. The same source reports that before the agreement on the discount price, a treatment cycle cost approximately EUR60,000. Therefore, as a result of the agreement, the cost of one full treatment cycle will be reduced by 31.6%.
Der Spiegel reports that the price of one Sovaldi pill for the statutory health insurance (Gesetzliche Krankenversicherung: GKV) funds will now be EUR488, compared with approximately EUR700 before the agreement (it was not specified whether this is the ex-manufacturer or retail price).
Outlook and implications
Towards the end of January, it was announced that price negotiations on Sovaldi had ended without agreement. At that point, it was thought that the arbitration board would need to intervene and set the price according to international reference pricing (IRP).
Over the course of 2014 and into this year, Sovaldi has frequently been mentioned as a major reason for the large increase in spending on pharmaceutical reimbursement by the GKV funds (see Germany: 4 December 2014: Sovaldi seen as major contributor to 9.4% y/y increase in Germany's public drug spend in January–September). A number of senior executives of the GKV funds have focused on Sovaldi's high cost in connection with appeals to change the system implemented under the Pharmaceutical Market Restructuring Act (Arzneimittelmarktneuordnungsgesetz: AMNOG), which allows producers 12 months' free pricing before the price negotiations are completed, after an early benefit assessment.
However, it was in association with Sovaldi's assessment that the G-BA made its first "exceptional case" for what it described as "ethical reasons", after the drug's potential additional benefits were almost wholly rejected by the Institute for Quality and Efficiency in Healthcare (see Germany: 18 July 2014: Germany's G-BA decides Sovaldi demonstrates additional benefits, makes exceptional case for "ethical reasons").
The prices from the aforementioned sources cannot be fully verified in terms of their original source, but, according to IHS's PharmOnline International, the ex-manufacturer price per pill of Sovaldi in Germany stands (before the implementation of the new discounted price) at EUR581.7 (rather lower than the EUR700 quoted above, although this may have been a retail-price figure). Therefore, a reduction to EUR488 (and potentially more if this is a retail-price figure) means that the German price of the drug will be closer to (and potentially lower than) its price in France and the United Kingdom. According to PharmOnline International, the ex-manufacturer price per pill of Sovaldi in France is EUR488, and EUR491.2 in the UK. The price in the US remains considerably higher, at USD1,000 per pill, or EUR881.5 for comparison's sake (also the ex-manufacturer price).
The fact that Gilead was willing to reveal the discounted price indicates that the company is comfortable with the result of the negotiations, and is not overly concerned about the potential impact of the price reduction in Germany on prices in other European countries through IRP. The fact that new competitor therapies for HCV are coming into the market – for example, Abbvie (US)'s Viekira Pak (ombitasvir + paritaprevir + ritonavir tablets; dasabuvir tablets) – is likely to have influenced Gilead's thinking in accepting a fairly hefty price cut for the three-year period, and a further cut in the subsequent two years.