Insights from The Pharma Market Access and Pricing Summit Asia by our analyst Sophie Cairns who is at the event https://t.co/PZVhsvm4E0
Drug supply shortages in Germany
Drug supply shortages have become an increasingly pressing issue in Germany in the past 5 years, and the pharmaceutical industry sees a strong relation between the shortages and the continual downward price pressure on generics; in particular, discount contracts between GKV funds and generics' producers have been identified as a regulatory root-cause of shortages - and various groups are now calling for changes to the rules on these contracts.
The problem of drug supply shortages affects both developed and developing countries, to varying degrees, and for a complex range of interconnected reasons. It would be easy to assume that Germany, as Europe's strongest economy, with one of the best-funded public healthcare systems, would be exempt from such challenges; however, as events over the past five or six years have shown, such an assumption would be fundamentally wrong. When it comes to apportioning blame for the shortages, the familiar pattern in Germany of the pharmaceutical industry on one side and the statutory health insurance (Gesetzliche Krankenversicherung: GKV) funds on the other is again in evidence.
Hospitals and retail pharmacies equally vulnerable to "Lieferengpässe"
Supply shortages (or "Lieferengpässe" in German) are an everyday occurrence for pharmacists in Germany, both in hospitals and the retail sector. In the most recent survey of pharmacies carried out by the Drug Commission (AMK) of the Federal Union of German Associations of Pharmacists (ABDA) in October 2016, involving 865 retail pharmacies and 54 hospital pharmacies, 90% of pharmacists in the retail sector and 80% of those in hospital sector said that they had experienced supply shortages that either had, or could have had a negative impact on the health of patients, at least once in the previous three months. Over 20% of pharmacists stated that they had experienced such shortages more than 15 times. In the case of 26% of the respondents in the outpatient sector, treatment was interrupted, compared with 6% in the case of hospital pharmacies. The replacement product for the drug subject to the supply shortage led to a reduction of treatment adherence according to 60% of the respondents in the retail sector, and 17% of respondents in the hospital sector.
It can be concluded from these figures alone that supply shortages are a serious problem in Germany - as they have also become in countries with comparable economies, like France, where reported shortages increased by 30% year-on-year in 2017, and the Netherlands. While in the United States, the response to the growing incidence of shortages has been comparatively effective in recent years, EU countries, have, in general, not been as successful in their efforts.
Lack of mandatory reporting requirement diminishes transparency
While in the United States, a system of mandatory reporting by manufacturers of expected shortages to the FDA has been implemented, in Germany, mandatory notification is only in place for prescription-medicines used in hospitals, a change implemented as part of the Pharmaceutical Care Strengthening Act (AMVSG) in 2017. For medicines in the open care sector, notification is on a voluntary basis. The AMVSG also introduced a system of regular meetings ("Jour Fixe") between the Federal Institute for Drugs and Medical Devices (BfArM) and representatives of pharmaceutical manufacturers, wholesalers and pharmacists, as well as medical associations, at which the issues surrounding shortages can be discussed and debated. However, it fell short of the demands of many, including the head of BfArM, Karl Broich, for mandatory notification by marketing authorization holders, for both the retail and hospital sectors.
The lack of transparency concerning drug shortages - in stark contrast to the United States - is a regular subject of criticism. In a press release published by the GKV fund AOK Baden-Württemberg following a press conference in March 2017 on the situation regarding the availability of medicines in Germany, the president of the German Society of Hospital Pharmacists (ADKA), Rudolf Bernard, quoted data from an ADKA survey showing that among a group of hospital pharmacies catering for around 30,000 inpatients (around 6% of the inpatient population in Germany), shortages of 280 active substances were reported, and among these, 30 were considered to be essential for treatment. Out of these 30 drugs, manufacturers had only notified BfArM of shortages in 8 cases. This survey took place before the AMVSG came into effect, and in theory, producers would now be obliged to notify of existing shortages. However, if notification was selective in the hospital sector before it was mandatory, it is possible that the same now applies in the retail sector.
Which drugs are affected?
Generally, the shortages in Germany concern generics. Antibiotics and oncology medicines are also more likely to be subject to shortages. Among the more recent notifications of shortages by producers to BfArM, which can be found on its page dedicated to shortages (in German) include oncology drugs busulfan, zolendronic acid and topotecan, as well as the last-resort antibiotic piperacillin/tazobactam. Also affected by recent supply shortages is the intravenous form of German pharma major Bayer's antiplatelet drug Aspirin, Aspirin IV (D,L-lysine acetylsalicylate + glycine). Supply shortages for vaccines - also an important issue in Germany - are handled by the Paul Ehrlich Institute who provides a dedicated shortages notification page (in German).
What causes supply shortages?
There are many inter-related causes of the shortages. In an explanatory article published on its website in January, the German Association of Research-based Pharmaceutical Companies (vfa) listed a number of causes it considers to be among the most important, including:
- Problems with production due to a significant failure of machinery
- Unexpected increases in demand
- Temporary closure of production facilities (for repair, conversion or other reasons)
- Recall of batches
- Parallel exports
- Delays in production because of scarcity of excipients or packaging
However, these causes are not sufficient to explain why supply shortages have started to become an important issue, when previously, they were hardly mentioned. The case of piperacillin-tazobactam (an explosion at a Chinese API producer, one of the only producers of the combination, in October 2016, led to global shortages of the drug) demonstrates one of the most important root causes - the reliance on low-cost production markets for the supply of active ingredients that have become uneconomical to produce in Europe, and, behind this, the significant downward price pressure, through regulatory measures, on generic medicines. German consulting group iGES published a study on the antibiotics market in Germany in 2017 that showed a significant growth in the concentration of the antibiotics market, and particularly in the discount-contract segment - between 2007 and 2015.
Discount contracts seen as contributing to shortages
Discount contracts are one of the regulatory factors identified by iGES as contributing to supply shortages. GKV funds are able to sign supply contracts for two-year periods with (mostly) generics producers under which they can obtain individual discounts, additional to other statutory discounts applying to medicines they pay for. Since 2006, pharmacists are obliged to dispense the product for which the patient's GKV fund has a discount contract. Many of these contracts are with just one supplier - meaning that other producers can be effectively sidelined.
Germany's generics association, Pro-Generika, is in no doubt that discount contracts have had a majorly adverse effect on the generics sector in the country. The association's chairman Wolfgang Späth stated at a recent conference in Berlin that the net income of the generics sector had fallen 50% since 2009, while the proportion of the GKV pharma market covered by generics producers, in volume terms, has continually increased in that time, reaching 78% last year.
The German Pharmaceutical Industry Association (BPI) has also weighed in with recent calls for the new coalition government consider banning discount contracts in the case of "essential" medicines, as it did for vaccines in the AMVSG. In addition, the health ministers of Germany's federal governments are set to debate a proposal at their conference in June concerning the strengthening of the security of supply of generic medicines through multi-supplier discount contracts, instead of exclusive-supplier contracts. The original proposal, made by the health chiefs of Saarland and Hessen, had called for a much more fundamental rethink of the discount-contract system, and incentives to producers to start producing medicines subject to shortages in Europe; it remains to be seen whether these more fundamental concerns will be reflected in any potential draft bill proposed by the ministers.
In contrast, the Scientific Institute of the AOK, a research group affiliated with one of Germany's largest GKV-fund groups, published the findings of a survey into the impact of discount contracts in late April, in which it suggested that the concentration of the generics market had reduced since 2006, and asserted that the discount contracts have led to many other positive for patients - including improved adherence. They issued a press release outlining the findings of this report.
Pro-Generika has estimated that the savings made by GKV funds from discount contracts reached EUR4.0 billion in 2017, compared with EUR3.6 billion in 2015. The GKV funds regard discount contracts as a vital savings instrument, and are unlikely to give much ground when it comes to proposals to limit their application, or even just to enforce multi-supplier contracts. At the moment, drug shortages in Germany mostly only result in additional work and stress for pharmacists, who will attempt to obtain the required product or viable alternatives. However, reports of shortages are increasingly frequent, and when these involve, for example, important hospital antibiotics, or injectable cancer drugs, their consequences can be potentially far more serious. Taking Pro Generika's line, they are the symptoms of a fundamentally imbalanced market, where a massive downward price pressure on older, established products is seen as an essential means of being able to afford new, innovative treatments, without due consideration of the importance of the former.
The new German health minister Jens Spahn has proposed a draft law which would see the large financial reserves of the GKV funds reduced through offering insured people either reduced contributions rates or additional treatment benefits in kind. The BPI has argued that the financial reserves could be used to stabilize the 'imbalanced' drug market in Germany. It remains to be seen whether they will be listened to.
- Regulatory convergence or divergence for Asian pharma
- Is healthcare reform in the cards with new socialist government in Spain
- Culture shift at Takeda a sign of things to come
- Nevermore ignore the role of digital health in health decision making
- ISPOR 2018 Baltimore
- Trump speech on drug prices: Much ado about nothing
- Impact of passing through rebates at the POS for diabetes medicines
- US tariffs likely to mostly affect US generics makers
We thought it was time for an update... https://t.co/h1zq9RFM7p