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International Clinical Trials

Surmounting the Hurdles of New German Regulations

Manufacturers with products at every stage of development now have a strong incentive to prepare and maintain efficiency evaluations that include existing and potential comparators. If these indicate that more information is needed to support a reasonable price, then the earlier they recognise this, the better, argues Jaime Caro of United BioSource Corporation

The new requirement for setting ceiling prices after a product is already on the market in Germany has sent shockwaves throughout the pharmaceutical community. The new Methods for Assessment of the Relation of Benefits to Costs in the German Statutory Health Care System, expected to be implemented by the Institute for Quality and Efficiency in Health Care (IQWiG) in April 2008, have important implications for the advanced planning that should be carried out by manufacturers wanting to sell in the German market – the world’s third largest.

The core of the Methods is an analysis of the efficiency of an intervention. This efficiency is visualised on a graph where the value of the product’s benefits is plotted on the vertical axis and the net costs are plotted on the horizontal. The resulting point reflects the efficiency of the product – and when other interventions are added to the plot, its relative position can be seen: points up and to the left indicate greater relative efficiency. On this basis, IQWiG will recommend a ceiling price that is consistent with maintaining the existing efficiency.

In this article, we explore the implications of this new approach and recommend questions that project leaders should ask – at each phase of drug development – to help support the price when it is eventually evaluated by German authorities. Assume that you have a new pharmaceutical product coming to market. It has been carefully studied for years and, based on completed research, it has met the requirements for efficacy and safety. All that remains is to set a price that is reasonable for both buyers and manufacturers – a price that rewards the development investment fairly, while reflecting the value that society places on the benefits of this product. While this seems like a straightforward question, arriving at an answer is not.

The new German guidelines go about defining the process and seek to provide an approach that can help manufacturers who are adequately prepared.


The most important implication for manufacturers is that they should carry out the same analyses internally that IQWiG will eventually do – but as early as possible in the development process. This needs to be done so that all concerned can make development decisions with a view to the data that will be required to support a reasonable price.

The analyses themselves are not complicated. Very early on, they involve estimating what their product will in all likelihood do and proceeding with efficiency analyses against the known performance facts about existing (and upcoming) products in the same therapeutic category. These analyses will involve plotting the results on the two axes: benefits versus costs.

Obviously, the best approach is for manufacturers to start thinking this way – and planning accordingly – well before IQWiG does its evaluation. If your company believes, for example, that it will want to support a price of about €5/day, then you can use the approach to calculate how much effect will be needed to justify it. If based on the information available, it looks like you will only be able to support a price of say €1.50/day, this should be taken into account in the ‘go/no-go’ decision regarding continued development. An alternative implication is that you will need to collect additional data – both to support the higher value of the product and to yield a lower net cost – during the clinical trials programme.

Therefore, conducting this kind of economic analysis early – and following it closely, updating results as the real data come in – will be critical. In an ideal world, the industry would begin to conduct economic analyses on the potential of drug candidates at discovery or even earlier, before investing in further research. It is important to consider whether a drug like this can be expected to reach the benefit threshold required to support a profitable price, and thus justify the expense of taking it forward into development.

Until now, trials have been designed to establish whether a drug works in a biological sense and is reasonably safe; they haven’t had to define how well it works, in whom it works, and which factors are involved in whether or not it works. In light of the new IQWiG guidelines, companies will need to analyse clinical trial data much more extensively in order to provide answers to these additional questions. Lacking such information, IQWiG may simply conclude that there is no additional benefit and proceed to reference pricing.

In fact, while pharma routinely collects data that could provide answers to these questions, they have rarely been analysed in that way. For example, although in recent years trials have started to report curves of events over time, future research will need to examine what determines those effects and how those curves vary in different patient groups.

Take a pharmaceutical company that is developing a new cholesterol-lowering agent. They would typically look at what was done for competitor products during their development, and do the same thing: determine the impact on physiological markers (for example, the lipid profile) relative to placebo over a short period of time. This approach will no longer be adequate for Germany; asserting that ‘our drug lowers cholesterol more than placebo’ will not be considered sufficient evidence of benefit. The German agency will want to know what this means for patients:

  • Will this drug extend life?
  • Will it reduce the number of heart attacks?
  • What other health risks does this affect?
  • What is the value of these effects to German citizens?

The German guidelines also imply a preference for active comparator studies over placebo-controlled ones, if such products are already on the German market. Although it is more difficult to show an effect in these studies, if one is found, the idea of a superior benefit will be much easier to sustain. Clearly, this heightens the importance of choosing the right comparators.

The length of clinical trials will be another key issue. Many clinical trials today are short for a variety of reasons – most obviously to reduce the time to market. Longer trials, naturally, cost more and delay registration. Antihypertensive trials, for instance, have typically lasted eight weeks – a time that is adequate to show an effect on blood pressure but not on the outcomes that are truly of interest.

Moreover, longer studies have shown more mixed results. Initially, it seems, blood pressure goes down, but with certain drugs the effect diminishes over time. In any case, IQWiG will not accept these short-term studies. They will respond quite directly: we do not see evidence that your product is better in terms of patientrelevant outcomes.

So the second major implication is that manufacturers will have to obtain and publish data that demonstrate (a) that their drug is superior to existing drugs on patient-relevant outcomes (b) what the value of those outcomes is and (c) that their drug merits its price. Otherwise, a company could end up with all the information necessary to register the new drug, but without the data required to support its price.

A third major implication results from the fact that IQWiG will not accept direct submissions from industry. Compare this with the approach of other HTA agencies. In the UK, for example, a manufacturer can wait and prepare all of its information much nearer to market because it can be submitted to NICE, even if none of it has been published. In Germany, only published data or those generated by IQWiG will be considered.

Thus, the only way to bring any of the manufacturer’s information to bear on IQWiG is to ensure that it is published. Companies that want IQWiG to consider their economic models and modelled results must see to it that they have been peer-reviewed and are available in the literature. If they wait until late Phase III to prepare data for publication, there may not be enough time before the evaluation by IQWiG.


Realistically, the earliest point at which the industry is likely to engage in economic evaluation of the sort envisaged in Germany is Phase II. At this point, they should be asking three questions:

How Strong an Effect will be Required to Support a Reasonable Price?
To answer this question, they will need to consider the following:

  • What is the efficiency of current competitors, including non-drug interventions?
  • What are the likely efficiencies of other prospective drugs in this therapeutic category?
  • What is the cost structure within this therapeutic area? That is, what are the relevant costs, such as hospitalisations, procedures, tests, monitoring and side effects?
  • Does this disease or treatment have implications for costs that patients or families need to bear?

IQWiG (unlike many countries) will factor these costs into their analysis. For instance, if a treatment reduces the need for a patient to spend money on home nursing, IQWiG will consider that as part of the cost structure. To support this, though, the manufacturer will need to collect and publish adequate data on this aspect.

Outcome Measures?
It is important to consider what the outcome measures in this therapeutic area are – and whether they meet IQWiG standards. Specifically, while measures used in trials are commonly physiological surrogates (for example, blood pressure and cholesterol), IQWiG will tend not to accept these unless there are published studies that can link modification of the surrogate to changes in patient-relevant outcomes. Also do new outcome measures need to be developed, validated and published? And are patientreported outcomes crucial?

Is the Value of the Benefits known in Germany?
Today, of course, the answer is no, because work of this type hasn’t been done. Going forward, sponsors will need to consider conducting valuation studies and publishing them well before they’re ready to face IQWiG.


The questions start to shift at late Phase II/early Phase III, focusing on whether there is an adequate model of the relevant disease area already accepted in Germany. If not, the manufacturer needs to escalate the process of getting their model published before IQWiG performs its evaluation.

By Phase III, one key question that needs to be considered is: Are the planned Phase III trials adequate for providing all the information that IQWiG will need? That is to say, do they include the longer-term data, patient outcomes and comparators described above? If not, and you don’t want to change your clinical trials, what is the solution?

One answer is extension studies. In the past, these have been largely about safety; now they will need to consider outcomes pertinent to the economic evaluation.

Piggyback studies, a potential alternative in cases where the main clinical trial proceeds as planned, involve running related studies in order to acquire the missing information. The advantage of piggyback studies is that they don’t burden the main trials, but gather data in parallel.

Alternatively, registries and other epidemiologic designs, although more common in Phase IV, can be very useful for providing the necessary data. Special hybrid designs involving part cross-sectional, part retrospective data collection can be particularly efficient. Other factors to be considered are:

  • Whether the relevant costs in Germany are adequately documented
  • Whether the use of other databases to support key pieces of the value story have been fully explored
  • If a model of the disease and its treatment, pertinent to Germany, has been validated and published
  • Whether all the necessary data – including epidemiologic, costing, and value studies – will be published in time

By the end of Phase III, the manufacturer should be consolidating all of this information into a strong, evidencesupported position on the efficiency plot mentioned. Manufacturers with products already late in development or even already on the market need to set up an immediate assessment to see where their drugs fall and prepare to defend their position. This may require collecting additional data or other strategies like meta-analysis.


Manufacturers who want to sell in Germany must assess existing and potential comparators to see where their product fits in terms of likely benefits and costs. This early research will allow them to incorporate this information in trial planning (considering required effects, sample size, outcomes measures, and so on), in development of other supportive studies, and in ‘go-no go’ decisions.

By updating the early evaluation as data accumulate – and as other companies’ data are published – they will have ongoing information about what the likely result will be when IQWiG does its evaluation. Provided the data are published, this will also provide IQWiG with a solid evidence base that supports a reasonable price. Companies can no longer leave the economics to Phase IV – preparation must be early and substantial.

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Jaime Caro, MDCM, Senior Vice President, Health Economics, United BioSource Corporation (UBC), is an expert in advanced modelling techniques used to inform complex healthcare decisions. Founder of Caro Research (which merged with UBC in September 2007), he trained at McGill University, where he practiced internal medicine and is now Adjunct Professor of Medicine, as well as of Epidemiology and Biostatistics. Frequently asked to serve on steering committees of global health initiatives, he has published articles on over 100 disease models. Jaime continues active research on modelling methods and the application of epidemiologic concepts to economic studies. Jaime headed the eightmember international panel that developed the Methods for Assessment of the Relation of Benefits to Costs in the German Statutory Health Care System.
Jaime Caro
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