A Review of German Pricing Reform Legislation - 2016

February 14th 2018

After many months of speculation about government plans to reform pharmaceutical pricing in Germany, the Ministry of Health announced in 2016 its intention to pass legislation before the end of the year.

After many months of speculation about government plans to reform pharmaceutical pricing in Germany, the Ministry of Health announced in 2016 its intention to pass legislation before the end of the year. Initial proposals for a Gesetz zur Stärkung der Arzneimittelversorgung in der GKV (AM-VSG; Act to Strengthen Pharmaceutical Supply in the Statutory Health Insurance System) are built largely on the conclusions of the Pharmadialog, an extended discussion involving three government ministries, the leading pharmaceutical industry associations and several academic bodies. The key proposals are as follows:

·     A price freeze on non-reference-priced medicines that was introduced in August 2010 will no longer end in 2017, but rather will be extended until the end of 2022. By that date, all drugs launched prior to the introduction of additional benefit assessment (in January 2011) will have lost market exclusivity. Extending the price freeze is forecast to save the statutory health insurance system €1.5-2 billion. The government is, however, expected to allow price increases in line with inflation from 2018 onwards, at a projected cost of €150-200 million.

·     Manufacturers will remain free to set the prices of new medicines for the first year after launch. However, if sales in that period exceed a certain threshold, companies will immediately become liable to pay rebates on subsequent sales. The Ministry of Health has proposed a sales threshold of €250 million. In 2015, only three new medicines achieved sales beyond this level in their first year on the market. By comparison, a sales threshold of €50 million would have been exceeded by 13 drugs.

·     In future, prices could be adjusted if sales or prescription volume exceeded levels forecast prior to launch.

·     Companies that do not submit an early benefit assessment dossier, or submit incomplete documentation, face the threat of having the prices of their drugs capped below the annual treatment costs of the comparator therapy.

·     At present, the price of a drug that is deemed to offer no additional benefit is set in relation to the price of the least-expensive appropriate comparator therapy—often an off-patent molecule. This rule could be relaxed in exceptional circumstances—for example, where a new medicine might offer some patients a useful therapeutic alternative. This concession is intended to discourage companies from withdrawing drugs from the German market on the grounds of inadequate pricing.

·     The GBA (Federal Joint Committee) will have the authority to impose prescribing restrictions within the statutory health insurance (SHI) system on drugs that are judged to offer no additional benefit, but might be of value to particular patient subpopulations. By way of example, the GBA has already negotiated a deal with Amgen and Sanofi to exclude the PCSK9 inhibitors Repatha (evolocumab) and Praluent (alirocumab) from general SHI reimbursement, but to make the drugs available to patients who have a demonstrable need for them (e.g., patients with heterozygous familial hypercholesterolaemia, patients who cannot tolerate statins). This arrangement allows the manufacturers time to gather postmarketing data to support a re-evaluation of the drugs.

·     Details of drug rebates will, in future, be provided only to institutions of the German healthcare system that need this information to fulfil their legal obligations.

·     The option of creating reference pricing groups that consist exclusively of patent-protected drugs will be abolished.

·     Drugs launched prior to January 2011 might have to undergo assessment of their additional benefit if they are approved for “significantly different new indications.”

·     In an effort to increase the use of medicines that have undergone early benefit assessment, the Ministry of Health will work with pharmaceutical companies and the GBA (Federal Joint Committee) to develop prescribing software to inform physicians of the outcomes of this process.

The statutory health insurance funds are unhappy that the proposed legislation will do little to tackle what they have denounced as the “Mondpreise” (sky high prices) of many innovative medicines. The funds argue that rebates should apply from launch, and should remain in the public domain to help physicians to prescribe economically.

For its part, the life sciences industry is highly critical of the extended price freeze, the prospect of rebates on drugs that exceed a sales threshold in their first year on the market and the threat of reimbursement restrictions. Drug manufacturers want the government to provide much greater clarity with regard to precisely how it plans to implement its proposed reforms.

In a joint press release, the leading life sciences associations expressed their belief that, “for good patient care and solid economic development, dependable conditions are a ‘must.’ Without this foundation of dependability, Germany will be set back as a centre for health, research and business.”

It will be interesting to see whether the final version of the government’s pricing reform legislation accommodates the concerns of the health insurance funds or the life sciences industry.

Originally Published on 3 August 2016 by Neil Grubert

About the author

Neil Grubert

Neil Grubert

A multilingual pharmaceutical market access specialist with 27 years of experience tracking the global prescription drug and self-medication markets. Neil spearheaded the establishment and growth of Decision Resources’ international market access business. As the author of more than 150 reports covering 20 mature and emerging markets, multiple therapeutic areas and numerous industry issues, Neil has earnt a reputation for extensive knowledge of market access environments around the world. He is an effective communicator with both the written and spoken word, and an accomplished chair of international events, having delivered numerous presentations at conferences, seminars and training workshops.