Life Sciences Blog

Changes to AMNOG in the Pharmaceutical Care Strengthening Act




The Pharma Dialogue – a process involving regular meetings between the German government and the pharmaceutical industry which started in 2014 - was completed early this year, leading to the publication in late April of a long list of plans for inclusion in a new legal amendment, which emerged several months later in July in the form of the Pharmaceutical Care Strengthening Act (Arzneimittel-Versorgungsstärkungsgesetz - AM-VSG).

High-cost drugs

Although statutory health insurance (GKV) funds were not involved in the Pharma Dialogue, throughout the process, they have been commenting from the sidelines and putting forward their own proposals. If the whole process were to be seen as a football match with the industry on one side and the GKV funds on the other, it would probably be a high-scoring draw; however, the industry feels that the funds have sneaked a late goal in extra time – and they may have a point.

During 2014 and 2015, the topic of high drug prices was uppermost among the concerns of the funds, hepatitis C drug Sovaldi (sofosbuvir; Gilead Sciences, United States) being the poster boy for the funds’ pleas for changes to the AMNOG law. The change most desired by the funds was for the year’s free pricing after launch for drugs undergoing AMNOG assessments to be abolished. They wanted the discounted reimbursement prices negotiated after early benefit assessment procedures to apply retroactively from the date of a drug’s entry on to the market. They argued that the industry was profiteering by setting what they described as ‘cosmically high’ prices in this first year.

EUR250-million revenue threshold proposed

The solution proposed by the government in the first draft of the AM-VSG is for a revenue threshold during this ‘free-pricing year’ of EUR250 million (USD283 million). If the revenue from the sales of a drug undergoing an AMNOG procedure exceeds this amount before the end of the free-pricing year, the negotiated discount price will apply from the time at which the threshold is exceeded. This may be a slight win for the pharma industry, considering the funds’ position on the matter.

However, when it comes to the plan in the AM-VSG to extend the price freeze in force for medicines not subject to reference pricing from the end of 2017 (it had been extended from the end of 2013) to the end of 2022, the industry is on the losing side. The government has conceded a little by offering the opportunity to increase prices by up to the rate of inflation starting in 2018.

Confidential discounted prices

The plan to make negotiated discount prices confidential, with the aim of encouraging pharmaceutical companies to offer higher discounts, would appear to have some negative implications for the industry. Under the assumption that producers offer less generous discounts because of concerns about the impact of these on prices in countries which reference Germany under IRP, the German authorities may be expecting greater discounts when this change is implemented, potentially making the negotiation process more challenging.

Flexibility in choice of appropriate comparator – in certain cases

A positive point for the industry is the plan to allow for flexibility in which appropriate comparator should be used in the setting of the price of a drug for which no added benefit has been recognised by the G-BA. This will only be allowed in certain cases when the drug is judged to be an important therapy option. Currently, if a drug judged to show no additional benefit is the subject of price negotiation, and if there are a number of possible appropriate comparators, the cheapest one has to be referred to in price setting.

Industry speaks out against plans for reimbursement restrictions before price talks

But the decisive blow for the industry may be a point which was not present at the time of the dialogue and which is certainly more beneficial to the funds, from a cost-saving perspective. It is proposed that the G-BA will be able to limit the patient groups for which a drug can be reimbursed at the same time as it makes its final decision on the extent of the added benefit of the drug. Thus, if it has not been possible to establish an added benefit for particular groups, they could be excluded from reimbursement even before they are subject to price negotiations. Considering the formal strictness of the benefit assessment process, this could mean that in future, patients who could benefit from a drug would be excluded from reimbursement because for their particular group, an added benefit could not be demonstrated. Germany’s main innovative pharmaceutical associations, the BPI and the vfa, have spoken out strongly against this proposal.

The first draft of the AM-VSG will be put to the cabinet, after consultation, at the end of September; the pharma-industry specific consultation has already been completed. 

Brendan Melck is a Life Sciences analyst for IHS
Published 6 September 2016

About The Author

Brendan Melck is an analyst in the IHS Life Sciences practice. He covers the Central and Eastern Europe region (as well as Italy and Greece). With a background as a general business analyst covering this region, he has built a solid understanding of the pharmaceutical regulatory environment and the issues affecting the industry in these countries.