Changes to German pricing and market access laws

German pricing and reimbursement changes are in the air following results of the German Pharma dialogue


In 2011 Germany introduced the Arzneimittelmarkt-Neurodnungsgesetz (AMNOG) law to regulate drug pricing and introduce benefit assessments of pharmaceutical products. Since then, few changes have been made to the AMONG law. However, the recent German Pharma dialogue has proposed changes to AMNOG and to the German pricing and reimbursement landscape that may have significant implications for pharmaceutical companies. The Pharma dialogue (a discussion between the government, industry, and research institutions) was initiated in autumn 2014 with the aim to make Germany an attractive place for the pharmaceutical industry. As a result of these discussions, a number of changes, related to drug prices and patient access, were proposed, including:

  1. Visibility of reimbursement prices
  2. Introduction of a financial threshold during the 1-year free pricing period
  3. Information transfer between GB-A and physicians.

From public to confidential negotiated reimbursement prices

Reimbursement prices for new drugs are negotiated between the manufacturer and the Health Insurance Funds following a benefit assessment. Currently, the negotiated reimbursement prices are publically accessible. However, this might change as a result of the Pharma dialogue, which proposes to keep negotiated reimbursement prices confidential.

Benefit to the pharma industry: It could potentially increase patient access, by allowing manufacturers to make confidential discounts, in order to increase access to a broader patient population. Lower confidential German prices would not influence prices in other countries as a result of international reference pricing, as they would not be visible to other countries.

Drawback for the pharma industry: Price negotiations could be tougher as Health Insurance Funds might try to secure lower net prices.

Our opinion: While this proposal enjoys high endorsement among the Pharma industry, it is unlikely to be implemented in its current form as there are some potential hurdles. Firstly, there is strong opposition from a number of German politicians. Secondly, there are reservations from some pharmaceutical companies, as they anticipate that price negotiations with Health Insurance Funds will become even tougher. Thirdly, physicians and pharmacists need to be informed of the prices in order to guide prescription decisions, it is not clear how this will be achieved if prices are confidential.

Linking the 1-year free pricing period to a financial threshold level

Under the AMNOG system, pharmaceutical companies can price their products freely in the first 12 months following launch. During this time, a reimbursement price, often lower than the initial price, will be negotiated between the manufacturer and the Health Insurance Funds. This negotiated reimbursement price will take effect one year after launch. Recently, new innovative high cost drugs have accumulate high sales figures during the initial 12-month free pricing period, putting financial pressure on the Health Insurance Funds. In order to curb the high budget impact, the MoH intends to introduce a financial (turnover) threshold during the 12 months of free pricing. For drugs that exceed this threshold the negotiated reimbursement price should come as soon as the threshold is reached. The German Minister of Health, has suggested a threshold figure of around €250 million, however, this would only result in drug savings of ~3% of sales for drugs sold within their first 12 months.

Benefit to the pharma industry:We do not see any benefit for the pharma industry.

Drawback for the pharma industry:The free pricing period might end earlier for high cost, high volume drugs. The number of drugs and companies affected by this proposal will depend on the actual level of the turnover threshold.

Our opinion: This proposal is likely to be implemented as it will lead to potential cost savings for the Health Insurance Funds. However, implementation might be challenging. It is not clear whether the negotiated reimbursement price will come into effect as soon as the threshold is reached or whether manufacturers are asked to repay at the end of the 12-months period. Introduction of a threshold will be resource intense on the Health Insurance Finds, as they will need to monitor potential high cost drugs throughout the 12-month period. In addition, it is not clear what threshold will be set. We envisage the threshold to be between €50 – 100 Million in order to secure meaningful savings (>10% of the first year of sales for drugs).

Timely information transfer between GB-A and physicians

Once an early benefit assessment has been conducted by the GB-A, the results and recommendations are publicly available on the GB-A website. However, the Chairperson of the Verband der Ersatzkassen (vdek) (largest groups of statutory health insurance funds in Germany), Ulrike Elsner, has criticised that the findings of early benefit assessments do not reach everyday medical practice. The Pharma dialogue proposal suggest better implementation of AMNOG results in physicians’ software, to ensure that medical treatment is based on high-quality, evidence-based findings.

Benefit to the pharma industry: Potentially improves patient access for innovative medicines, particularly with added clinical benefit through increased physician product awareness.

Drawback for the pharma industry: It hinder patient access for products with low benefit ratings. Even if additional data obtained after publication of the early assessment show a clear benefit physician perception will already be influenced by the results of the early assessment and are difficult to overcome.

Our opinion: This proposal is likely to be implemented. However, implementation will be challenging and time intensive due to the diversity of physicians’ software currently utilised.In summary, the German Pharma dialogue proposes significant changes to the pricing and reimbursement landscape in Germany. However, when and how these changes come into effect is still unclear. Discussions are still ongoing around the confidentiality of the reimbursement price with strong opposition from national and international politicians. It is not clear what financial threshold should be set and how to implement information transfer between the GB-A and physicians. It is expected that the AMNNOG law will be updated, with the proposed changes incorporated, by Q1 2017.

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