Germany’s New Non-Substitution Drug List No Big Bang For Pharma

Germany will have its first list of non-substitutable pharmaceuticals since the introduction of discount contracts, but the benefit it offers to original product manufacturers will be severely limited.

The creation in Germany of a non-generic-substitution list will give the research-based pharmaceutical industry a bit of a boost, but the respite will be limited.

The agreement of a catalogue of criteria for the publishing of the list agreed on by health insurers and pharmacists is the result of an arbitration committee decision of Jan. 7, and means that for the first time since the introduction of discount contracts between drug manufacturers and health insurers, specific medicines will be protected against substitution (Also see "Germany's Discount Contracts Are Changing The Pharma Market Landscape" - Pink Sheet, 9 Aug, 2010.).

“The first two active ingredients to be included on the list as of April 1, 2014, will be the immunosuppressant cyclosporine and the anti-epileptic phenytoin,” said a spokesperson for the German pharmaceutical industry association BPI.

The idea that was being pushed by pharmaceutical manufacturers – and championed by the BPI – was that therapies for chronic illnesses should not be interrupted through the substitution of products during the treatment term. Although products may be considered to be bioequivalent, slight changes in treatment could occur due to switching products, which could impact negatively on patients with illnesses such as epilepsy or chronic pain.

Germany’s government and health insurers have made substantial savings through the introduction of discount contracts, which encourage manufacturers to compete against each other in order to secure a contract with an insurer for the supply of a single active ingredient.

Drug manufacturers, though, argue that contracts are based only on achieving the lowest price for the insurers and do nothing to guarantee either quality of the product or supply (Also see "AstraZeneca Blames Germany’s Tender System For Influenza Vaccine Shortages" - Pink Sheet, 16 Oct, 2012.).

Also, the two-year limit on the duration of a contract would mean that a patient might have received a new drug at any time during his or her treatment cycle, depending on when treatment started in relation to when the contract was agreed.

Pharmacies hitherto have been obliged to substitute products with the discount contract drug unless this has been ruled specifically out by the prescribing doctor. While it may be argued that physicians should be aware of potential harm – however limited – to chronically ill patients through hasty drug substitution, doctors also are required to maintain budget restraint and therefore might not immediately prohibit substitution.

A non-substitution list already was being championed by concerned pharmacists early in 2013. This prompted all political parties to sign up to an agreement requiring the Federal Union of German Associations of Pharmacists, or ABDA, and the leading groups of the statutory health insurance firms (GKV) to lay down a framework for excluding products from the substitution rules.

By the end of July last year, the ABDA asked for the matter to go to arbitration. While the pharmacists already had compiled a list of 20 active ingredients that should not be substituted, the GKV was arguing that first rules should be drawn up and then products selected for the list based on these rules.

Questions Remain

Now the catalogue of criteria for a list has been given the go-ahead by the arbitration committee, but the pharmaceutical industry remains somewhat in the dark as to what happens next.

“We only know that there is supposed to be a catalogue,” the BPI spokesperson said. This means there are continued questions over how extensive the list will be, how often it will be revised and whether products can be added to it without others being removed.

A severely limited list is unlikely to impress the pharmaceutical industry. If, however, Germany’s guidelines on chronically ill conditions form the basis of what is possible to include in them, this should offer some hope to manufacturers.

The real problem is that the list agreement between health insurers and pharmacists is only – as the GKV stressed on Jan. 8 – an interim solution. While the BPI somewhat anxiously refers to it as “a first step”, there is a question over whether it is going in a direction that the industry will ultimately favor.

Germany’s new grand coalition government of the CDU/CSU and SPD parties already has agreed that the responsibility for compiling the non-substitution list will rest ultimately with the highest reimbursement authority, the Joint Federal Committee (G-BA).

With the G-BA’s continued focus on cost restraint, it looks like a severely restricted product list could be in the cards.