Translation of a-t 2026; 57: 39-40
IN BRIEF
What is a "fair" price for a medicine?
According to the World Health Organization (WHO) definition, a fair price for a medicine is one that healthcare systems and patients can pay that simultaneously gives the pharmaceutical industry a sufficient incentive to invest in innovation and production.1 However, the assessment of what is fair may vary significantly depending on the party's perspective and interests. In our experience, providers of new, patent-protected medicines try to get the maximum price that the market has to offer where possible (a-t 2015; 46: 119-21 and others). An extreme example is the hepatitis C drug sofosbuvir (SOVALDI), which became known as the "thousand dollar pill" (the profit margin for the provider, Gilead, in the year after it was introduced onto the market was 55%; a-t 2019; 50: 105-8). Currently, the high price of the multi-billion-dollar cancer treatment pembrolizumab (KEYTRUDA; see a-t 2026; 57: 39) is said to "reflect its value to patients and health-care systems," according to Johanna HERRMANN, Senior Vice President of the provider, MSD.2 The company thus clearly feels that the current price is "fair". However, we do not feel that high prices, which like for pembrolizumab are said to be justified by substantial research and development (R&D) costs, which have not been specified and are therefore not verifiable, are either acceptable or fair (see a-t 2017; 48: 87-8). In 2019, the International Association of Mutual Benefit Societies (AIM) presented an online programme called the European Fair Pricing Calculator,3 which can be used to determine prices that are transparently fair. The calculator uses the expected number of patients and the costs for R&D (where no specific information is available, a flat rate of 250 million, 800 million or 2.5 billion is used), production, sales and scientific information (up to 20% of the R&D costs), as well as profit (8% of the total cost plus an innovation bonus of 5% to 40% of the total cost where applicable, depending on the therapeutic benefit).3,4 AIM has recently calculated "fair" prices for ten patent-protected medicines that were approved by the European Medicines Agency (EMA) between 2015 and 2018, including daratumumab (DARZALEX), ocrelizumab (OCREVUS) and semaglutide (OZEMPIC), and compared them with the list prices in six European countries including Germany, the Netherlands and Switzerland. According to the calculations, fair prices are an average of 45% below the actual costs in Germany for the ten medicines.4 The negotiation-based AMNOG procedure,* which does not protect against incomprehensibly high reimbursement prices (see a-t 2013; 44: 53-4), needs to be revised to more closely approximate fair prices. Since providers are permitted to set the price of new medicines freely at the start, it is not possible to rule out the fact that they are pricing in the discounts that will subsequently be offered. However, from the start the basis for the price determinations should be clear information from the provider about expenditure on R&D and the like so that the prices charged have a verifiable and real basis, just like the benefit assessment made by the Federal Joint Committee (G-BA) in Germany. A transparent method like the price calculator could offer some guidance here, –Ed.
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An independent benefit assessment of newly authorized medicinal products forms the basis of decisions on the prices which statutory health insurance providers pay in Germany.
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