News Alert: VFA Says Germany’s Innovation Environment “Unnecessarily Jeopardized” by Coalition Government’s Plans

PRICENTRIC BRIEF

  • Various industry bodies in Germany have weighed in on the new coalition government’s pharmaceutical pricing policy amendments after it detailed plans of a potential AMNOG reform, suggesting that negotiated rebated prices would apply from seven months after market entry – cutting the current year of free pricing in half.
  • The German Association of Research-Based Pharmaceutical Companies (VFA) responded to the news, citing concerns that “the rapid availability of new drugs is unnecessarily jeopardized” by the decision.
  • The National Association of Statutory Health Insurance Funds (GKV-Spitzenverband) called the planned retroactive effect of the reimbursement amounts from the seventh month an “important signal for more profitability in the supply of drugs” and added, “What is regrettable, however, is the discontinuation of the discussed lowering of the VAT rate for pharmaceuticals. Obviously, tax revenues are more important than relieving the contribution payers.”

 THE DETAILS

BERLIN, Germany — Various industry bodies in Germany have weighed in on the new coalition government’s pharmaceutical pricing policy amendments.

Last week, the new government detailed plans of a potential Arzneimittelmarkt-Neuordnungsgesetz (AMNOG) reform, suggesting that negotiated rebated prices would apply from seven months after market entry – cutting the current year of free pricing in half.

The finalization of the coalition means that these prospects are now more likely to happen, potentially inhibiting pharmaceutical companies from seeing Germany as an immediate launch market. Shortening the duration of the free pricing allowance under AMNOG would most assuredly impact Germany’s standing as a first-launch market in Europe and have downstream effects, given Germany’s inclusion in many countries’ reference baskets.

Industry Opinion

The German Association of Research-Based Pharmaceutical Companies (VFA) responded to the news, citing concerns that “the rapid availability of new drugs is unnecessarily jeopardized” by the decision.

VFA President Han Steutel continued: “[COVID-19] has shown how important the regulatory framework is for supply. If, for example, new drugs are only available in limited quantities, the ability to plan the reimbursement conditions also determines where delivery is made.

“It is also clear that a coalition agreement cannot regulate everything. That is why we are counting on the traffic light coalition to dare to modernize more than has been set out in writing over the next four years.”

The National Association of Statutory Health Insurance Funds (GKV-Spitzenverband) called the planned retroactive effect of the reimbursement amounts from the seventh month an “important signal for more profitability in the supply of drugs.”

The group added, “What is regrettable, however, is the discontinuation of the discussed lowering of the VAT rate for pharmaceuticals. Obviously, tax revenues are more important than relieving the contribution payers.”

Coalition Government Proposes 6-month Free Pricing

Germany’s Social Democratic Party (SPD), Greens and Free Democratic Party (FDP) have officially signed a deal to become the country’s next coalition government. Twenty-one representatives from the three parties met to finalize negotiations, ultimately deciding that Olaf Scholz will likely take over as chancellor.

The document from the three parties states: “We will develop AMNOG further. We will strengthen the health insurance funds’ options for limiting pharmaceutical prices. The negotiated rebated price will apply from the seventh month after market entry.” The document does not go any further into detail regarding the logistics of slashing the free pricing time in half.

German Policy

As it stands in Germany, for new originator medicines, manufacturers can set drug prices freely at market entry and distribute them unregulated for the first year. However, at the time of market launch, they must submit a dossier with the necessary data to the G-BA.

The result of this assessment is then published, and external stakeholders are given the opportunity to submit written and verbal statements on the result. The resolution determines how the reimbursement price is set after the first year of marketing.

If the drug has some added therapeutic benefit, the manufacturer and the national association of statutory health insurance funds (GKV-SV) negotiate a reimbursement price within another six months. If parties cannot reach an agreement, the reimbursement price is set by arbitration.

Germany’s Influence

Germany is considered to be an influential market in Europe, and other countries in the EU bloc often look to Germany for inspiration for their drug pricing policies and mechanisms.

For example, France’s President Emmanuel Macron recently suggested that France should follow Germany’s approach to pharmaceutical cost containment.

In a more formal action, France’s Senate recently approved a measure within the Social Security Finance Bill (PLFSS) 2022 that could pave the way for faster reimbursement for some drugs under an interpretation of the German model. Going forward, the French government is proposing a new system of access to transitional reimbursement and temporary one-year access to guarantee rapid access to innovation while requiring companies to provide the data necessary to further assess reimbursement of the drug. This is in addition to the already existing Authorized Temporary Use (ATU) schemes in place in France.

This year marks the tenth anniversary of Germany’s AMNOG system. According to a G-BA statement earlier this year, the process has been “financially effective,” leading to savings of around EUR 3.2 billion per year for the statutory health insurance system. Another plus: Through data collection from studies, the system makes available much more clinical data and boosts transparency.

However, AMNOG has not been without its problems, and according to Professor Josef Hecken, Impartial Chairperson of G-BA, there are two challenges currently facing Germany’s drug assessors: the evaluation of drugs, for which there is a “thin database” of supporting evidence, and gaps in the new examination and treatment methods (NUB) in hospitals.

Despite G-BA typically knowing within six months whether a drug offers additional benefit, free pricing is enabled for one year. Hecken supports the desire to shorten the decision time to six months, adding, “It doesn’t go together. Personally, I am in favor of allowing negotiated prices to apply from the time the G-BA decision is made, i.e., after six months.”

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