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EF: Could you elaborate on the priorities and agenda of BAH at the moment?

EK: In the context of our founding member companies, we are proud of having a 360 degree view of the entire spectrum of pharmaceutical supply. We include companies of different sizes and sectors. From small-sized going through mid-sized, to global players. Companies in the chemical sector as well as herbal and homoeopathic product manufacturers. For example original and generics manufacturers and a lot of service providers involved in the pharmaceutical sector such as publishing houses and lawyer companies. Having a 360 degree view is positive and also a challenge, as we group the diverse interests of our stakeholders. With this background, we have strong support in politics and we provide great value for the partners and stakeholders.

We are also representing manufacturers with prescription-only and OTC (Over The Counter) products, another example of the 360 degree perspective. The priorities vary depending on the sectors.

On one side, the focus is on healthcare insurance companies. We have a statutory health insurance system with a public-driven and private-driven part, and products and prescriptions are reimbursed within this context, where there is a strong pressure to decrease the cost, just as in other countries. The economic framework of our industry is the key priority in this sector area. We have numerous instruments for price regulation and price decrement in Germany. One of them is a price moratorium which fixes a part of the pharmaceutical market to the price level of August 2009. In 2019 there was an adjustment for inflation. In addition, we have fixed prices for large parts of the German pharmaceutical market and discount contracts for companies with health insurance, and our minimal goal is to ensure compensation for inflation in these various areas. This is one of the key issues in the RX market. Another key challenge is to ensure that appropriate procedures for innovative products are still in place; The market for innovative products was well-driven over the past year. A proposal for new legislation will have a direct impact on innovative products, and we need to ensure that the new policies do not affect the conditions for innovative products. The key priorities of the BAH are on fixing price regulations for the different categories and the general procedures of the market access conditions for innovative products. 

In the OTC sector, it is different. Since 2004, OTC products are not valid for reimbursement in general, with some exceptions. Here there is another key concern. Our challenge is to facilitate switches, meaning the change from prescription-only to non-prescription, and there is a tenuous procedure for this switch based on ingredients instead of products. We feel this is a negative scenario granting no incentives for the company to apply for the switch, as all others will benefit. We are discussing at the European level the incentives for switching from prescription-only to OTC in the context of more than just one year of data exclusivity. In Germany, we have this 1-year legislation, based on European Law. However, there has not yet been a company that got this incentive up to now. We are discussing the potential for the upcoming review of the European pharmaceutical law together with our European umbrella organization, AESGP. Furthermore, we are discussing the potential of real-world data/evidence studies and their value in relation to randomized clinical trials and other studies. 

We are incorporated with our pharmaceutical partners in supporting the local community pharmacies. The role of local pharmacies is very important in Germany as there are no big pharmacy chains.

EF: What are the challenges that BAH members face today in becoming more sustainable?

EK: Digitalization and Sustainability are the two cross-functional main challenges. We are assessing the regulatory framework at the national and European levels, for example regarding the obligations on the supply chain. There are updates in the European legislation coming up. We are analyzing how this will potentially impact the industry, and we share the information and evaluate the consequences in discussion with our members. 

Depending on the provisions of national or European law, we share best practice examples for technical solutions within the industry. Providing best practice examples to other companies will inspire them, e.g. regarding investments to reduce costs, save energy or - more generally - become more sustainable. Furthermore, another focus of our service lies in creating joint documentation on the supply chain, and human rights provisions within the supply chain which need to be fulfilled by companies. Therefore we provide a comprehensive questionnaire in English and German language that can be used by our members avoiding to reinventing the wheel. 

We also have comprehensive communication strategies with traditional and modern channels to increase awareness of the current challenges and to share best practices. We are presenting the efforts of the industry in the social media environment by creating movies with examples of best practices. The scope of our work is broad: from technical to social issues. The key point is to evaluate, assess, and inspire our member companies with best practice-examples. 

EF: Could you elaborate on how you are overcoming the current supply chain issues?

EK: One of the key learnings from the pandemic was that the pharmaceutical supply chain is long and complicated. A significant amount of the ingredients we are using within pharmaceutical manufacturing are produced in China and in two states in India. Due to the impacts of climate change and global warming, we are facing increasing problems in the supply chain. I want to highlight that production could also be sustainable in China and India as well as in Germany or Europe based on international standards. But it is evident, that reviewing your supply chain is much easier when you are producing locally. But due to the various price-reducing instruments, large parts of drug manufacturing are located nowadays in countries outside of Europe.

Active ingredients for antibiotics are another example of sophisticated supply chains, with a lot of steps in the production of these ingredients mainly taking place in China only. Currently, there is no alternative to this sourcing. To create a robust supply chain, we are supporting API sites across Europe and Germany, but this shift is limited due to prices and whether health insuring companies are willing to pay a significantly higher price for RX products sourced by these sites. There is no simple solution, complex problems require complex solutions. 

For one of the basic antibiotic products, doxycycline, the fixed price of a package is 38 cents. In addition, this price will be reduced significantly by discount contracts, which end up at a price of a few cents per package. The manufacturing of such a medicinal product from the API to the finished product in Germany or Europe would be very difficult. 

EF: What are the challenges that you see regarding AI (Artificial Intelligence) and technology specific to the medical industry?

EK: Digitalization is not a project with a fixed starting and endpoint; it is a continuous process. We are part of working groups on the electronic submission of regulatory documents and electronic common technical documents (eCTD) as well as the electronic submission of adverse drug reports for decades, to name a few. Nowadays we are collaborating with other stakeholders on issues such as E-prescriptions and E-patient files. AI is a different matter as we are discussing real-world data or real-world evidence. These data could be used for example to assess the off-label use of medicinal products with the meaning of expansion of the authorization to those indications, or for switches from prescription to non-prescription status. Many people are regularly carrying a data-collecting tool, such as a cell phone or a fitness bracelet. The information gathered by assessing these data could be used for various regulatory purposes. We are currently discussing the proper use of these data with the authorities at the national and European levels. We are expecting that in due time we’ll get a guideline on this, or this will be included in the review of the European pharmaceutical law. 

The key thing we have learned from the pandemic was to use digital tools in everyday communication. The pandemic was a boost for digitalization in every manner. We have two sites at BAH, one in Bonn with 35 employees and the other in Berlin with 15 employees, so we had to recreate our technical environment to communicate when we could not travel. Furthermore, during the pandemic schools, kindergartens, and daycare were not available intermittently. Therefore, the colleagues must cope with a new situation where business and family work has to take place mostly at home. The solution was full digitalization with remote work at a suitable time for them. We must digitalize our communication processes within a short period, it needed to work instantly, and it did. 

EF: BAH made a survey which showed that 51% of people under the age of 29 trusts the pharmaceutical industry, compared to 38% in the previous year. What are the main factors contributing to this increase?

EK: I believe it was the experience of the pandemic and the fast development of Covid vaccines. That was a boost in trust, and hopefully, we can keep it. Coming from a basic level of 38% it’s a good improvement, but we still have a way to go reflecting that German physicians and pharmacists got a trust level of 80%. The role of the pharmaceutical industry during the pandemic was recognized quite positively. The companies make every effort to be able to supply the market at any time, and this was well recognized by the public. Trust in vaccines also improved significantly. We had low flu vaccination rates in Germany before the pandemic, which increased significantly, and we have a much better recognition of the importance of vaccinations, especially against diseases like flu or COVID. 

EF: What steps can be taken to make Germany a better hub for innovation and manufacturing? 

EK: Generally speaking, we have a good situation for innovative products in Germany. Innovative products have fast access to the market in Germany. But on the other hand, the generic market suffered from enormous price pressure. According to the data published by the German Generic Industry Association (ProGenerika), generic product manufacturers represent 78% of all packages sold in Germany but only 8% of the costs for Statutory Health Insurance. The balance between both sides, the generic and innovative products, needs to be fixed day by day. We are currently facing a new discussion about cost-reducing legislation. Here there is a risk that the conditions for market access for innovative medicines will be significantly impaired for the next decades to achieve comparatively small savings.

EF: What would you like to be celebrating 5 years down the line? 

EK: One goal could be becoming climate neutral, but I am not sure this could be achieved within 5 years. But goals need to be ambitious. Within a continuous process, the proportion of emissions of harmful greenhouse gases must be reduced so that a smaller proportion needs to be compensated. Furthermore, it would be helpful if some general requirements, such as the inclusion of emissions from Scope 3, could be standardized.

Within the next 5 years, appropriate compensation for inflation covering all kind of fixed prices need to be fixed.

October 2022