A new law in Germany fails to adequately address “flaws” in the pricing system that are discouraging companies from launching new, innovative products on the market, warned Alexander Natz, secretary general of EUCOPE, which represents small and medium-sized companies in Europe.
Natz also warned that provisions to introduce confidential pricing were a “toothless tiger.”
Key Takeaways
- The new act contains numerous provisions to stimulate R&D in Germany.
- One provision offers companies that conduct research in Germany an exemption from controversial pricing controls, but critics say the measure does not go far enough.
- Measures to introduce confidential pricing in Germany may not be enforceable.
Germany’s Federal Council (the Bundesrat) passed the act on 27 September. The wide ranging legislation is designed to attract more research to Germany, accelerate access to new medicines and drive economic growth, and is a key part of the federal government’s pharmaceutical strategy. It includes provisions to establish specialized ethics committee for complex products such as advanced therapies and simplify and accelerate the approval of clinical trials.
The law includes many positive provisions and is a “step in the right direction,” but “is not enough to make Germany more competitive,” Natz told the Pink Sheet. He pointed to problems with the so-called guardrails introduced in November 2022 to the Amnog pricing and reimbursement system.
The Amnog Guardrails
Under Amnog’s pricing system, all new drugs are freely priced for six months following launch. The final reimbursable price is set after conducting a benefit assessment that determines how much additional benefit the new product offers compared with treatments already on the market. The comparators are selected by the G-BA, the most senior federal health care decision-making body in Germany.
The health technology assessment body, IQWiG, conducts the benefit assessment but the G-BA makes the final decision on the drug’s final rating. Possible ratings include: major benefit, considerable benefit, minor benefit, non-quantifiable benefit, no proven benefit, and less benefit than the comparator. These ratings are important as they influence the final reimbursable price.
Previously, the higher the rating, the more likely it was that a company could negotiate a favorable price with the association of public health insurers. However, the guardrails were introduced through the 2022 GKV Financial Stabilization Act to strengthen the link between the benefit ratings and price setting.
The price for products that are awarded a non-quantifiable benefit or a minor added benefit cannot now exceed that of the lowest-price comparator selected by the G-BA. Products that are deemed to have no added benefit must be priced lower than the comparator.
The Medical Research Act offers some flexibility around these guardrails. They will be suspended if the company can show that at least 5% of subjects taking part in the clinical trial supporting the product in question took part in a German clinical study. The guardrail exemption will last for three years unless the company can demonstrate it is planning further studies in Germany.
According to Natz, the measure does not go far enough and will only have a limited impact on a small number of products. “It is good that there is a first, small lifting of the guardrails, but it is not nearly enough. We have to have an open and honest discussion about whether the guard rails are really appropriate for a country like Germany, because we’ve seen innovative products opting out from Germany and this is not the way to go,” he said.
He pointed out that only up to 15% of products going through the Amnog are awarded major or considerable benefit, which means the vast majority have been subjected to the guardrails. Natz argues that the company should be able to negotiate a price with payers if the product shows additional benefit.
Opt Outs
In addition, a score of no added benefit does not necessarily reflect the value of a product, according to Natz. For example, this rating is often awarded because study designs do not match G-BA expectations, he said. This might be because the G-BA selected different comparators for the assessment than those included in a trial or because the company conducted a single arm trial.
“What do I do in a situation where an institution like the G-BA forces me to benchmark against something which I don’t think it’s a comparator, and hence I don’t have the data for it? Around half of the products don’t have the right data, hence they don’t have an additional benefit. Yet they are innovative products,” commented Natz
The situation is encouraging companies to opt out of the German market, he said, pointing to one company that decided to pull out of the market because the product had been awarded a score of no additional benefit.
This meant that the price of the drug would have to have been set at 10% lower than the low-price comparator drug. The resulting price would have been much lower than the company’s expectations and therefore unsustainable, particularly as the price would have had a domino effect in the many other countries that reference German prices, explained Natz.
Confidential Pricing
The Medicine Research Act also introduces confidential pricing for companies that can show that part of their research was conducted in Germany. For qualifying products, the actual reimbursed price will be kept confidential, but the list price will not.
However, Natz queries how this will work in practice as prices are available to pharmacists and wholesalers through databases, and patients accessing medicines through private health insurance also have access to pricing details. There are no obligations on the supply chain, or private patients to keep prices confidential, Natz pointed out.
