In Germany, new measures have come into effect as part of the GKV-FinStG Act in 2022 that put into question this market’s desirability for orphan drug developers. Similarly, Germany’s Institute for Quality and Efficiency in Healthcare (IQWiG) recently published its analysis regarding the price impact on orphan drugs after an abridged assessment and subsequent full benefit. GlobalData has therefore taken the opportunity to assess the current situation of orphan drugs in the German oncology market. To gain insight into this landscape, the number of orphan drugs assessed by the G-BA, their innovation rating, and price impact compared to drugs approved for common disorders have been reviewed. To help refine this analysis, health technology assessment (HTA) evaluations and related price adjustments only for oncology medicines have been considered, but reflect a significant portion of the pharma market.
31% of oncology products assessed by the G-BA from 2011 onwards have an orphan drug designation
Between 2011 and now, 134 oncology brands have been assessed by the G-BA, of which 31% have an orphan drug designation. The German market has traditionally been appealing to orphan drug developers, taking advantage of the initial free pricing period and exemptions to the benefit assessment system. Under the German benefit assessment system, orphan drugs are not required to undergo a full benefit assessment procedure. The nature of their orphan drug status demonstrates superiority over comparators and as such undergo an abridged benefit assessment where the minimum benefit rating given is “unquantifiable” until expenditure on the drug by the statutory health insurance (Gesetzliche Krankenversicherung, GKV) funds exceeds €30m ($32m) over a 12-month period. Due to the privileged nature of orphan drugs, the number of drugs entering the German market has slowly increased since 2011, with both 2020 and 2022 being landmark years for the greatest number of orphan drugs entering the market.
Orphan drug status does not guarantee a greater innovation rating
Despite orphan drugs receiving greater opportunities for price negotiations with the GKV by nature of their designation, their status does not always guarantee a higher or highest innovation score. Orphan medicines are intended for a limited number of patients, which prevents clinical trials from providing statistically robust data. The lack of direct competitors commonly leads to comparative data with placebo only. When comparing the highest innovation score for oncology drugs since 2011, only two brands in each category (orphan versus non-orphan) have received the highest innovation rating of “major added benefit.” Deciphera Pharmaceuticals’s (US) Qinlock (ripretinib) and Amgen’s (US) Blincyto both received a “major added benefit” rating by the G-BA in 2022. For non-orphan drugs, Gilead’s (US) Trodelvy (sacituzumab govitecan) and Vertex’s (US) Kalydeco (ivacaftor) received this rating in 2022 and 2021, respectively. Additionally, more non-orphan drugs have received “considerable added benefit” and “minor added benefit” ratings than orphan drugs. Several orphan drugs have even received an outcome of “no added benefit” during reassessment, suggesting that orphan drugs are at risk of receiving even lower innovation ratings once the orphan drug exceeds the €30m threshold that triggers a full benefit assessment.
Orphan drug assessment is followed by more favourable first price cuts
Due to the initial minimum rating of “unquantifiable benefit” for orphan drugs, these products enter price negotiations with the GKV. Consequently, orphan drugs have seen less severe first price cuts compared to non-orphan medicines. On average, orphan drugs undergo a first price cut of 23% after assessment, compared to non-orphan medicines that on average decline in price by 29% after their first price cut. Non-orphan drugs see more neutral outcomes compared to orphan products and those that receive an outcome of “no added benefit” or “less benefit than the comparative therapy” by the G-BA are subject to therapeutic reference pricing, which in turn provides more severe price cuts. This is further justified since oncology products that receive neutral outcomes and are therefore subject to therapeutic reference pricing see an average first price cut of 29%, whereas oncology products with positive outcomes that then enter negotiations with the GKV see an average first price cut of 21%, according to GlobalData’s Price Intelligence (POLI) database.
Further price cuts see less discrepancy between orphan and non-orphan oncology medicines
Of the 16 orphan oncology medicines reviewed, the average second price cut sat at 8% and would typically follow either a full benefit assessment by G-BA following the initial abridged assessment or indication/patient population expansion. These price declines ranged from minor cuts of 2% for drugs such as brentuximab vedotin and blinatumomab to the most severe cut at 30% for mogamulizumab. In comparison, the 51 non-orphan medicines that were analyzed indicated an average second price cut of 7% and ranged from cuts as minor as 2% for drugs such as lorlatinib and talazoparib to 32% for ramucirumab. Less discrepancy between price changes for orphan and non-orphan drugs, however, occur upon further price cuts and the privileges that orphan medicines once enjoyed are then eroded over the years.
IQWIG has long been critical of the privileged status that orphan drugs hold in Germany. These drugs receive advantageous initial outcomes in the benefit system, allowing less of an impact on price within the German oncology market at first. However, their privileges erode upon further benefit analysis. These products are also not guaranteed greater outcomes beyond “unquantifiable benefit.” Subsequent price cuts, and legislation updates that allow orphan drugs to reach their expenditure threshold for a full benefit assessment quicker, have meant less incentive for developing and launching orphan medicines in Germany. While certain orphan drug privileges will likely remain, the current environment puts in question the market potential for orphan drugs in Germany going forward.
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By GlobalData
This article is produced as part of GlobalData’s Price Intelligence (POLI) service, the world’s leading resource for global pharmaceutical pricing, HTA and market access intelligence integrated with the broader epidemiology, disease, clinical trials and manufacturing expertise of GlobalData’s Pharmaceutical Intelligence Center. Our unparalleled team of in-house experts monitor P&R policy developments, outcomes and data analytics around the world every day to give our clients the edge by providing critical early warning signals and insights. For a demo or further information, please contact us here.