1. Pharmaceutical Policy and Pricing: How are Countries Getting Greater Value? Commonwealth Fund/ Alliance for Health Reform Briefing on Capitol Hill Dr. jur. Rainer Hess Federal Joint Committee, Germany (G-BA) Page 1 | 7th November 2011 | Commonwealth Fund/ Alliance for Health Reform© 2011, Dr. jur. Rainer Hess

2. Pharmaceutical Policy and Pricing Page 2 | 7th November 2011 | Commonwealth Fund/ Alliance for Health Reform© 2011, Dr. jur. Rainer Hess Development of RX drug sales and prices (index Q1/2007) Generic drugsOn patent drugs Source: NVI (INSIGHT Health); pharmacy retail prices (Apothekenverkaufspreise).

3. A.State/Federal Physicians organisation B. State/Federal Hospital organisation C. State/Federal Sickness Fund-Ass. Patient / Insuree Decision Platform for defining the services delivered as statutory health insurance Federal Joint Committee (G-BA) A. C. B. Patient Organisations Advisory membership Institut for Quality and Efficiency (IQWiG) Commissioning Legal Framework for Healthcare established by law and the Ministry of Health Pharmaceutical Policy and Pricing Page 3 | 7th November 2011 | Commonwealth Fund/ Alliance for Health Reform© 2011, Dr. jur. Rainer Hess Industry: Transparency of assessments and drafts of decisions; written and oral hearings; justified decisions; right to sue

4. Pharmaceutical Policy and Pricing Pharmaceutical steering tools: 1.Federal level: Reference price setting for comparable drugs including patented drugs Early assessment of new pharmaceutical agents within 6 months after market access and based on the assessed value (started in 2011) Negotiation or setting of a reimbursement price 12 months after market access (starts in 2012) Exclusion of drugs in case of inappropriateness compared with treatment alternatives OTC-exemption list; lifestyle-negative list Page 4 | 7th November 2011 | Commonwealth Fund/ Alliance for Health Reform© 2011, Dr. jur. Rainer Hess

5. Pharmaceutical steering tools: 2. State level: Negotiation of savings goals on the basis of DDD- recommendations IT-based drug prescribing check of physicians Discount negotiations between sickness funds and pharmaceutical companies based on tendering procedures including the possibility of risk-sharing and price-volume payback agreements Binding on the pharmacists to dispend a discount negotiated drug, if the physician does not exclude aut similar. Pharmaceutical Policy and Pricing Page 5 | 7th November 2011 | Commonwealth Fund/ Alliance for Health Reform© 2011, Dr. jur. Rainer Hess

6. Manu- facturer Market access Manu- facturer Market access G-BA Efficiency assessment (published) G-BA Efficiency assessment (published) IQWIQ Control and assessment Evaluation request G-BA Manufacturers price Free price setting Prepares assessment Submits dossier G-BA Efficiency assessment decision G-BA Efficiency assessment decision Manufact./ Head associa. statutory health ins. Price negotiation Manufact./ Head associa. statutory health ins. Price negotiation Arbitration authority Arbitral verdict Arbitration authority Arbitral verdict IQWIQ Cost-benefit assessment IQWIQ Cost-benefit assessment Hearing manuf. experts Add. Benefit No agreement Not accepted Reference price Maximum GKV reimbursement price Reference price Maximum GKV reimbursement price Market access No add. Benefit No reference price applicable Agreement Rebate Freely decided on Rebate Freely decided on Rebate On ex-factory price Rebate On ex-factory price Retro- active Valid until the end of the procedure 3 months6 months12 months15 months Pharmaceutical Policy and Pricing We are here Page 6 | 7th November 2011 | Commonwealth Fund/ Alliance for Health Reform© 2011, Dr. jur. Rainer Hess

7. Free market access of a new pharmaceutical 2. Reference prices 8. OTC exemption list 6. Prescription restrictions 7. Therapeutical advice 3. Reimbursement price agreements for new pharmaceuticals with additional benefit 4. Cost-benefit assessment (second line) 1. Early benefit assessment of new pharmaceuticals 5. Subsequent benefit assessment Health care research/ Health care studies Pharmaceutical Policy and Pricing Page 7 | 7th November 2011 | Commonwealth Fund/ Alliance for Health Reform© 2011, Dr. jur. Rainer Hess

8. Benefit-package decisions must be justified by an evidence- based process to determine whether services, pharmaceuticals or technologies are medically effective to reach patient relevant objectives: morbidity, mortality and life-quality. Evidence based assessments in Germany only could be used to select the most appropriate (efficient) service etc. from others; if a costly innovation has a significant additional benefit, the sickness funds must pay for it (rationalizing not rationing). Pharmaceutical Policy and Pricing Page 8 | 7th November 2011 | Commonwealth Fund/ Alliance for Health Reform© 2011, Dr. jur. Rainer Hess