Germany is typically prioritized by the pharmaceutical industry: it remains a market with relatively high drug prices, offers extensive commercial opportunities and has an important position as an international reference country to 17 markets.
The implementation of AMNOG in 2011 sought to reduce drug prices and relieve the healthcare budget, yet financial pressure remains, particularly from high-priced novel agents in Hepatitis C, and Oncology. As a result, in July 2016, the German Ministry of Health put forth a legislative proposal to reduce pharmaceutical spending and perceived exorbitant prices, as well as improve the AMNOG process and patient access, “Entwurf eines Gesetzes zur Stärkung der Arzneimittelversorgung in der GKV”.
We highlight three key changes in the proposal that all pharmaceutical manufacturers should be monitoring to prepare for successful launches in Germany: 1) Patient Group Exclusion 2) A limit to first year free pricing based on budget impact 3) The confidentiality of rebates.
1) Patient Group Exclusion
The proposed legislation gives the GBA the opportunity to exclude patient sub-groups from reimbursement if the Added Benefit is not evident. GBA analyses of subgroups has been common practice for some time for example with Fingolimod in RRMS and Kalydeco in CF, excluding those subgroups from the reimbursement will be new. This change will influence the treatment choices available to the physician and patient. For companies in Germany, planning for extensive subgroup analysis will become essential to be prepared for contingencies with limited reimbursement.
2) If first year sales exceed €250 million, the negotiated GKV rebate will take effect
The proposal introduces a first year budget impact threshold €250 million, instead of the current first year free pricing environment, after which the rebate negotiated with the GKV will occur. This change will allow the Sickfunds to more effectively plan for budget expenditures on pharmaceuticals, and ensure broad patient access. Recent estimates from German pharmaceutical trade bodies suggest that about 50% of all agents that go through AMNOG would be subject to this changeiii. For manufacturers, additional scenarios should be modelled to anticipate the Net Present Value impact of crossing the €250 million threshold.
3) Reimbursement agreements between manufacturer and statutory health insurance will not be publicly disclosed
The reimbursement amount of a new product will not be disclosed to third parties, and will only be available to the involved parties and German institutions / agencies that formally need the information. This will maintain Germany as a priority market to launch in to positively influence price in markets that reference Germany. Given the increasing trend in pharmaceutical spending, we suspect payers will more aggressively pursue larger discounts for agents that receive a Minor Added Benefit.
Presently, there are ongoing discussions in the Parliament, aiming to finalise the legislation. We will continue to monitor and analyse the upcoming developments and discussions in particular with a focus on the impact on small (biotech-) companies and orphan drug manufacturers.
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