The future of healthcare: a German payer’s perspective

Rebecca Aris interviews Cornelius Erbe

DAK-Gesundheit

With the emergence of payers there has been a shift in the customer landscape within the pharmaceutical industry. Coupled with this shift, current significant budgetary pressures, has resulted in a need for R&amp,D investments to be more targeted towards payer’s needs.

In this interview, we hear from German Payer Cornelius Erbe in advance of his speaking engagement at the upcoming Unmet Medical Need Forum. Cornelius shares with us his thoughts on how best to demonstrate value to payers and also highlights the importance of head-to-head studies.

A transcript of some edited highlights is shown in print below.

Interview summary

RA: Cornelius thank you for your time today, could you start by explaining your role and how you came to be in this position?

CE: I am responsible for contracting, and medical management at the third largest German statutory health insurance. We cover about 6.5 million lives in Germany, and have annual expenditures on healthcare services of about 18 million euros this year. I have been trained as a medical doctor, worked in pharmaceutical industry for five years, and then have been working with a major German consultancy firm for about 10 years. I hold my current position since seven years.

RA: How would you describe the current market conditions in Germany?

CE: I would describe them as being in a major change that hasn’t been anticipated before. We have seen considerable change of the pharmaceutical market with older and current cost containment measures but especially with the new AMNOG law coming into action at the beginning of last year. Looking into the future I think we will not see another major change prior to the next general election in Germany in September 2013 unless an amendment to the AMNOG law is conducted.

“…we will not see another major change until the next general election in Germany in September 2013.”

RA: What implications have the latest changes to the German law had on pharma?

CE: The most important change is that in comparison to former market conditions pharmaceutical companies are not allowed to set their own prices forever. They can do so only for the first 12 months after market launch, and in the meantime a procedure takes place that will evaluate the additional benefit generated by the product. In case there is an additional benefit price negotiations will occur between the pharmaceutical company and the umbrella organisation of all German statutory health insurances.

RA: How can German reimbursement strategies be used to optimise product development strategies?

CE: This is a very difficult point. If pharmaceuticals are registered all the German statutory health insurances have to reimburse them. Regardless of the way the price is set (either by the pharmaceutical company during the first twelve months or – after that – according to reference prices or after negotiations), there is always mandatory full reimbursement. So there is very little room for a voluntary action to either alter, or adjust the market or product development strategy according to the reimbursement. From my point of view the key question is: Do we really get the necessary innovations at affordable prices, and do we get the necessary additional benefit promised by new drugs?.

RA: What are the key challenges to creating cost- effectiveness studies that will satisfy payer demand, and how do you overcome them?

CE: I think the most important necessity is that there is adequate information about the comparison between new substances and comparator drugs in cost-effectiveness studies. We as payers need a very deep insight of the additional benefit generated by new pharmaceuticals compared to existing treatments.

“For us it is most important that we have valid head-to-head studies…”

RA: What would your key piece of advice for demonstrating value for payers be?

CE: For us it is most important that we have valid head-to-head studies employing the right comparator drug. Based on clear evidence we want to see what value the new drug generates compared to existing treatments.

RA: What in your opinion are the significance of health outcomes research and evidence based medicine?

CE: Seen from a general standpoint we can only state that it is of utmost importance to show the outcomes of any treatment, so that we can make our decisions based on clear evidence. It is not enough to have traditional clinical studies, but to produce head-to-head studies and to choose the right endpoints, and to choose the right comparator drugs. The relevant committees and bodies need clear evidence when they take their decisions assessing the value added and afterwards when they negotiate the price.

RA: Finally what do you think the future of pharma in Germany looks like?

CE: I think the pharmaceutical industry is currently faced with a very important change in the legal framework and the market environment. We are a little bit concerned about the thoroughness of this change, and politicians are thinking about readjusting the laws they have taken. So it might be that the future looks a little bit more positive than it does today.

RA: Cornelius thank you very much for your insights.

CE: It’s a pleasure Rebecca.

About the interviewee:

Dr. Cornelius Erbe is currently holding a position as senior vice president and member of the extended Board of DAK-Gesundheit, Hamburg/Germany. DAK-Gesundheit is the third largest German statutory health insurance organization with 5.0 million members and 6.5 million insurants. Dr. Erbe is head of Product Management and is responsible for developing and contracting all medical and paramedical services for

DAK-Gesundheit’s members.

Previously, Dr. Erbe was holding positions as a partner at Roland Berger Strategy Consultants, and as a product manager for diabetes pharmaceuticals at Boehringer Mannheim, Mannheim/Germany. Dr. Erbe studied medicine at Albert-Ludwigs-University, Freiburg/Germany.

How can value best be demonstrated to payers?