Open house contracts and auxiliary tax discounts in the biosimilar market: Realistic savings volumes for the GKV - calculation of currently realized savings volumes and discussion of additional savings potential for the GKV through biosimilars under the additional condition of a sustainable competition model

With the Act for More Safety in the Supply of Medicines (GSAV), the legislature has, among other things, provided for the automatic substitution of biologics in pharmacies from 2022. In fact, the new regulation on automatic substitution in the GSAV paves the way for the introduction of exclusive discount agreements in the biologicals market. The current contractual practice in the biologics market is determined by health insurance companies' tenders for non-exclusive open-house contracts in accordance with Section 130a Paragraph 8 SGB V. Both manufacturers of the biological reference products and the respective biosimilars, including any imports, can agree to these contracts at the rates specified by the respective health insurance company join the specified conditions. Although interchangeability can also come into play in the context of other types of competition models, it seems obvious that the GKV side in particular is aiming for such exclusive tenders based on the model of the generics market. Against this background, published calculations by the AOK Scientific Institute (WIdO) show that a savings volume of 141 million euros was achieved through the use of biosimilars in the period from July 2017 to June 2018.

>> These calculations are based on list prices, i.e. discounts according to the auxiliary tax as well as price reductions within the framework of discount agreements were not included here1. In a further step, savings potential for the German market of around 2,000 to over 2,800 million euros will be shown based on European prices (Schröder et al. 2019).
In some cases, the savings potential mentioned was derived using selected foreign market conditions, which can only be transferred to the German market to a limited extent. For example, the comparison with Norway, where there are price discounts of around 70% in biosimilar-capable markets, is not useful. Unlike Germany, the Norwegian market will be irrelevant to the question of refinancing a market launch due to its size. In addition, to determine further savings potential, the unexpected scenario is constructed that only the cheapest preparation in the respective biosimilar-capable market is used.
As a result, the savings volumes that have already been achieved are reported too low, as well as the savings potential that is inflated or distorted, which could contribute to giving more emphasis to a political demand for exclusive discount contract tenders in the biosimilar market.
Against this background, the authors of this article carried out a project to determine realistic savings volumes for statutory health insurance through biosimilars. The project is based on the research question of what savings volumes are currently being achieved for the statutory health insurance through biosimilars, taking into account all expenditure-relevant factors, and what further savings potential is realistic. In the course of this project, calculations were made based on market-related scenarios in order to be able to show current savings volumes taking into account all factors relevant to expenditure. Future savings potential through biosimilars with a view to the German regulatory situation were also discussed. The core results of these calculations and their significance in the context of the current regulatory situation in the biosimilar-capable market are presented below.
methodology
The model calculations carried out to determine realistic savings volumes for the statutory health insurance through biosimilars focus on the seven biosimilar active ingredients that are highly relevant to health care: adalimumab, etanercept, filgrastim, infliximab, pegfilgrastim, rituximab and trastuzumab. These are primarily used in two relevant medical submarkets, oncology and immunology. First, the savings from the use of biosimilars in Germany in the period between July 2018 and June 2019 were determined at the manufacturer's retail price (ApU) level. In a second step, the discounts were calculated according to the auxiliary tax and the resulting savings volume for the corresponding preparations. In order to be able to roughly quantify the realistic savings volumes through biosimilars, the price discounts that are granted in the biologics market under consideration as part of open-house contracts in accordance with Section 130a Paragraph 8 SGB V were included in the calculations. These discounts are confidential and not publicly visible. In order to be able to roughly show the savings volumes from open house contracts, four scenarios of possible discounts were created in the form of the open house contracts prevailing in the biologics market. The assumptions required for this are based on the authors' market assessments, which were validated and supplemented based on expert discussions with market participants. The calculations carried out are based on data from the market research institute IQVIA (IMS ContractMonitor® June 2017 – July 2019). All calculations were made on the basis of the Defined Daily Doses (DDD) and the ApU, which was valid in the middle of the month under consideration.
The direct savings from biosimilars are therefore calculated. What has not yet been taken into account is that when patents expire, the resulting biosimilar competition will already lead to price reductions and thus to the realization of economic efficiency.
potential with the reference medicines.
Results
First, the savings volume through the use of biosimilars in the selected active ingredient markets was calculated in a twelve-month period from July 2018 to June 2019 based on the ApU (savings volume 1). For this purpose, in a first step, the proportion of DDDs of biosimilars prescribed during the period under consideration was replaced by DDD prescriptions for the respective reference preparation. The savings volume 1 (see Table 1) through the use of biosimilars therefore corresponds to the difference between the costs in the case of exclusive prescription of the reference preparation and the actually realized costs on a DDD basis with biosimilars.
In addition, the savings volume was calculated based on the publicly visible discounts in accordance with the auxiliary tax for the active ingredients infliximab, rituximab and trastuzumab (savings volume 2). Since these active ingredients are often patient-specific preparations in the form of parenterally administered infusion solutions, the prices agreed between the German Pharmacists' Association (DAV) and the GKV-Spitzenverband (GKV-SV) in the auxiliary fee apply. For this purpose, the different discounts were calculated for each reference product and biosimilar and added up for each active ingredient. The sum of the discounts according to the auxiliary tax per active ingredient therefore corresponds to the savings volume 2 (see Table 1) due to discounts according to the auxiliary tax.
The savings are subject to dynamic development within the 12-month period and beyond as a result of patent expirations (in the period under consideration for adalimumab and pegfilgrastim) and steadily increasing biosimilar shares after market entry.
The costs on an ApU basis for the seven biosimilar-capable active ingredients with biosimilars considered were 2,062.49 million euros in the period from July 2018 to June 2019. Through the use of biosimilars, a savings volume 1 on an ApU basis of 211.18 million euros was recorded for the GKV. The additional savings volume 2 through the deductions according to the relief tax amounts to 29.65 million euros. In order to be able to roughly show the actual expenses and realistic savings volumes of the GKV, it is also important to take into account confidential, non-public discounts that are granted to the GKV in the form of open house contracts by the pharmaceutical company. Through an analysis of the prescription data, it was found that in the active ingredient markets under consideration, as a rule, well over half of the prescriptions for both reference drugs and biosimilars were issued with a discount agreement in the period under consideration. A proportion of more than 90% DDDs per preparation sold under a discount agreement is no exception in these active ingredient markets. This supports the hypothesis that the discounts from open-house contracts must be included in the calculation of the realistic savings through biosimilars.
In order to achieve an approximation of this additional savings volume 3 through discount contracts, four scenarios of possible discounts were created in the form of the types of open house contracts predominant in the biologics market. Based on the authors' market knowledge from previous studies, supplemented by the results of specially conducted expert interviews, data was obtained on the current effective prices in the biosimilar market as well as the existing price leeway and development trends. A relatively uniform picture emerged here: discounts of 10% - 20% on the ApU of the respective product appear to be the rule in new biosimilar-capable markets within the framework of open house contracts. In more established markets, a so-called price protection discount is often used. Its functionality is shown in Table 2 below (see Scenarios 1 & 2). These findings were incorporated into the formation of the four discount agreement scenarios and the underlying model calculations, which are shown in Table 2.
The scenarios described in Table 2 served as the basis for the model calculations made for the savings volume 3 through discount contracts. The active ingredient adalimumab, which has been off-patent since October 2018, is particularly important in the scenarios. This is a relatively young biosimilar-capable market with very high prescription shares for both the reference product and its biosimilars. Due to these peculiarities and a possible resulting bias, the assumption regarding the scheme and the level of discounting of the adalimumab preparations was kept constant (conservative) in all four scenarios.
Based on the model calculations of the scenarios, the following additional possible savings volumes result (Table 2).
This results in a range between over 200 and almost 280 million euros, in which the given savings volume through discount contracts (savings volume 3) for the statutory health insurance for the seven active ingredients under consideration in the period from July 2018 to June 2019 must be limited through the use of biosimilars .
All three calculated savings volumes 1, 2 & 3 must be subtracted from the costs when calculating the effective expenses of the statutory health insurance on an ApU basis and included when determining the realistic savings of the statutory health insurance through biosimilars. The above calculations result in relation to the actual costs as well as the realistic savings volume of the statutory health insurance through biosimilars, taking into account all expenditure-relevant factors.
It can therefore be stated that the savings volume 3 for the statutory health insurance through discount contracts in the biosimilar-capable market under consideration (200.64 - 275.15 million euros) - following the model calculations - can be assumed to be in a range that is approximately the same as in principle The savings volume achieved through the use of biosimilars corresponds to 1 (211.18 million euros) at ApU level or is even significantly higher. Thus, the range of actual savings for the statutory health insurance through biosimilars in the market segment under consideration, taking into account the publicly visible auxiliary tax discounts and the non-public discounts in open house contracts, is in a total range between 441.47 and 515.98 million euros.
Accordingly, the range of effective costs at ApU level for the seven active ingredients is reduced from the initially assumed 2,062.49 million euros to 1,757.69 to 1,832.20 million euros.
discussion
The calculations of the actual savings volumes achieved through the use of biosimilars, which were carried out by the authors as part of the underlying project, have shown that the actual savings volumes currently achieved are far above the level shown by other publications (Vogler et al. 2019 ; Schröder et al. 2019). Since only seven of the 13 biosimilar-capable active ingredients and a different period of time compared to previous calculations of savings through biosimilars were considered in this report, it is important to note the following: The calculations by the WIdO authors (Schröder et al. 2019) are based on the Systematics of the first calculation made here on the savings volume 1 through the use of biosimilars.
The result of this savings volume 1 for the period considered here at ApU level can be estimated at 211.18 million euros. If this savings volume is shown as the actual savings volume of the statutory health insurance through biosimilars, essential factors are neglected. As the calculations show and the following Fig. 1 makes clear, in this case significant additional savings volumes are achieved through the discounts in accordance with the relief tax (savings volume 2: 29.65 million euros) as well as savings volumes through discounts from open-house contracts (savings volume 3: 200.64 to 275.15 million euros) embezzled. Figure 1 makes it clear that this results in the underreported savings volumes already realized contributing to the area of unused savings being currently greatly overestimated. This in turn could give more emphasis to a political demand for exclusive discount contract tenders in the biosimilar market.
It can also be seen from Figure 1 that the WIdO is also promising additional savings potential of around 2,000 million euros to over 2,800 million euros in this context (Schröder et al. 2019). Since auxiliary tax deductions and discount agreements must also be taken into account here and the savings potential cannot be derived using selected foreign market conditions, the realistic savings potential can be assumed to be significantly lower. This fact also contributes to a reduction
area of unexploited savings opportunities (see Fig. 1). The calculations carried out during the project were able to
thus answering the research question by creating a clearer picture of the actual savings volumes and potential achieved through biosimilars for statutory health insurance.
The above-mentioned savings volumes that are already achieved today through biosimilars are also in relation to the introduction of exclusive discount contracts in the GSAV
Biosimilar market to see. The starting point of the argument here is the observation that the biosimilar market segment is characterized by the specifics of the preparations in terms of development, production and approval as well as the resulting high market entry hurdles. As a result of these market entry hurdles, the number of competitors is relatively small, especially compared to the generics market. The key to more (price) competition and to exploiting economic reserves through the solidarity system is to stimulate this competition through market access (Altin et al. 2017). Exclusive discount agreements are not compatible with the aim of providing economic incentives for such market entries. Especially for markets that are only supposed to establish themselves after the patent has expired, there is a risk that potential suppliers will be deterred by the price level expected in exclusive discount agreements and will not enter the market. As a result, this means that the desired competition between several providers does not even occur. This means that economic potential could ultimately not be realized and used for the benefit of the solidarity community (May et al. 2019).
The view, partly expressed by the GKV side, that exclusive discount contract tenders are suitable for inducing more competition through market entry is therefore economically incomprehensible. Accordingly, a survey of experts from the pharmaceutical industry shows that such tenders have a negative impact on the willingness to develop biosimilars or introduce them into the German market (Kramer et al. 2017, Bauer et al. 2018).

limitations
For the calculations, only seven of the 13 biosimilar-capable active ingredients in Germany were considered for the given period. In addition, in order to ensure that the survey is up to date, a different period of observation was chosen than in previous publications on savings volumes through biosimilars. These factors limit direct comparability with other calculations.
Conclusion
As an example, it was calculated for a selected group of seven highly supply-relevant biosimilar-capable active ingredients that the savings in the period under consideration amount to 211.18 million euros based only on the publicly available ApU. Based on the calculations expanded to include the savings volumes according to the auxiliary tax and taking into account the confidential discounts from open-house contracts, the total savings volume induced by biosimilars amounts to a range between 441.47 and 515.98 million euros. The comparison of the two values makes it clear that the figures usually reported exclude a discount volume that amounts to 52 to 59% of the total savings volume in the example calculation.
This means that the actual savings volume through biosimilars for the statutory health insurance is more than twice as high as previously estimated. What has not yet been taken into account is that when patents expire, the resulting biosimilar competition can lead to price reductions and thus to the realization of economic potential for the reference medicines. The justification of the demand for exclusive discount agreements in the biosimilar market is partly put into perspective on the basis of this more comprehensive data basis. However, it is still crucial to note in this regard that such tenders significantly inhibit the incentive for biosimilars to enter the market and are therefore incompatible with the goal of sustainably functioning competition.
Rather, the health policy goal must be to tap economic reserves in the growing market for biological medicines in the medium and long term and to ensure broad access to the best possible care for all patients concerned. This longer-term goal is incompatible with the desire, which is understandable from a short-term perspective, to maximize today's savings volume by exploiting price reductions through exclusive discount agreements. <<