Determinants of Orphan Drug Prices in Germany

Legislation introduced in 2011 in Germany has instituted an early benefit assessment of newly licensed pharmaceuticals with a subsequent price negotiation. For orphan drugs (ODs) a special legal framework applies, which accounts for the fact that ODs do not have to prove an added benefit over an appropriate comparative therapy previously determined by the decision maker. As, in addition, the content of negotiations between pharmaceutical companies and the payer is confidential, the aim of this study was to identify factors influencing the negotiated prices of ODs.

Twelve hypotheses on factors influencing the negotiated OD price were derived based on the existing literature and framework agreement between payers and pharmaceutical unions according to German social legislation. Univariate analyses were applied to detect statistically significant correlations between annual therapeutic costs of ODs and the hypothesized factors. Bivariate analyses were used to determine confounding factors. In addition, a multiple ordinary least squares (OLS) regression with backward selection was conducted. Finally, sensitivity analyses assessed the robustness of the results.

Thirty-five ODs were included in the analysis. The univariate analyses and subsequent sensitivity analyses validated five of the 12 hypotheses formulated. Univariate analyses suggest a statistically significant association between the OD price and the (i) therapeutic area; (ii) approval for pediatric care; (iii) treatment population size; (iv) cost of comparative therapies; and (v) European prices. The OLS regression identified European prices as the variable with the strongest association with the negotiated prices.

We show that German OD pricing is a multivariate phenomenon. However, due to interdependencies, these results must be treated with caution.