The German biotechnology industry has gone on the offensive against the government's plans to subject orphan drugs to health technology assessment to determine their added value over existing therapies, if they generate a turnover of €50 million or more.

The move echoes statements made by BPI, the German pharmaceutical industry association, that the law on restructuring the pharmaceutical sector - which goes by the acronym AMNOG - in this particular case is confused, misdirected and a disaster for innovation.

The orphan drug provision was a last minute addition to AMNOG by the coalition government members of the parliamentary health committee, ahead of the Nov. 11 plenary vote on the law in the lower house (Bundestag).

According to the provision, once an orphan drug that has a projected turnover of €50 million ($70 million) or more has been marketed, the joint federal committee (G-BA) and the Institute for Quality and Efficiency in Health Care (IQWiG) will have three months to determine whether or not it offers additional benefit.

The German biotechnology industry association, Bio Deutschland, has not only expressed consternation at the timing of the insertion of the orphan drug provision, but has also suggested that its formulation is deceptive.

The biotech group points out that the €50 million threshold is based on the "final price" of the medicine, once it is dispensed within the statutory health system. It excludes the wholesaler and pharmacy mark-ups, value-added tax and the obligatory rebate that manufacturers must give health insurance funds, the latter having been raised from 6 to 16 percent under AMNOG. This means that an orphan drug would only have to actually turnover €33 million for it to be subjected to an added benefit assessment.

Before a drug can obtain orphan status in the EU, it must be assessed by the Committee for Orphan Medicinal Products (COMP) of the European Medicines Agency (EMA). The drug is granted orphan status if this assessment provides evidence that the product offers significant benefit over existing therapies or that it fills a therapeutic gap.

The same evidence will be used by the G-BA and IQWiG in their assessment of an orphan drug that was used by the COMP in its assessment. The G-BA and IQWiG will simply be seeking to confirm that which has already been proven by the COMP: that a product offers an additional benefit to existing therapies, according to Bio Deutschland. Moreover, the G-BA and IQWiG are already legally bound to follow the findings of the COMP. Thus it is uncertain that different conclusions would be reached.

Bio Deutschland Chairman Peter Heinrich charges that this double requirement would hit innovation hard, by creating an additional bureaucratic hurdle for companies to overcome whilst negatively impacting what few incentives to carry out research into rare diseases exist. "Those who will suffer will be patients of rare diseases that have been allocated these innovative medicines and who have hitherto profited from the support for research in this area," Heinrich said.

Robert Schupp, director of Bio Deutschland's health care policy working group, took issue with the "artificial" turnover threshold. "The benefit of an orphan drug is a separate issue from whether it can generate a turnover of €50 million or not," he said. He suggested that the law was lacking in transparency, as it was not possible to see what the point of this threshold actually was.

The industry objections are essentially a desperate attempt at the eleventh hour to remove all orphan drugs, which can be quite lucrative, from the additional benefit assessment procedures.

The government's majority in the Bundestag is only 42 and the aim of the industry is to persuade some of these MPs to apply pressure to the bill prior to the plenary vote. It must be said that this is one of the smaller issues in a large law and, whilst it would please industry, its removal would not in any way derail the AMNOG.

-Faraz Kermani (F.Kermani@elsevier.com)

German Pharmaceutical Law Removes Incentives For Orphan Drug R&D

More from Archive

More from Pink Sheet