E Point Perfect
Law \ Legal

Germany significantly tightens Drug Pricing and Reimbursement Laws


The German regulation of pricing and reimbursement of pharmaceuticals is probably one of the most complicated legal areas in the entire world of life sciences laws. Now, the German government is adding another layer of complexity to the existing rules.

On 20 October 2022, the German Parliament has accepted the draft Act for the Financial Stabilization of the German Statutory Health Insurance System („GKV-FinStG“). The new act was subject to month-long controversial discussions within and outside of the Parliament and affected stakeholders. This was due to the fact that the new rules will affect almost all players within the healthcare system, including the health insurers, doctors, hospitals, pharmacies and, especially, the pharmaceutical industry. The new law encompasses significant cost-containment measures as the German healthcare system faces increased costs while, at the same time, the system suffers from a reduced inflow of funds.

According to the explanatory memorandum of the GKV-FinStG, the cost increase is particularly due to the disproportionate increase of expenditures for medicinal products. Correspondingly, a number of new rules specifically target the pricing and reimbursement of pharmaceuticals. Key elements of the GKV-FinStG that apply to the pharmaceutical industry include the following measures:

  • Changes to the AMNOG market access rules: In the future, the reimbursement price for new medicines agreed in the so-called AMNOG market access process will apply already after the seventh month after product launch – and no longer after twelve months post launch. Hence, this reduces the period during which the pharmaceutical company is free to set its price for a new drug to six months.  
  • The AMNOG process typically ends with an agreement on the reimbursement price of a new medicine. The GKV-FinStG revises the rules governing these agreements. The revised rules especially provide the health insurances with more powers and flexibility. According to the new law’s explanatory memorandum, the German government expects that based on the GKV-FinStG, the reimbursement price negotiations will also consider price-volume components or prescription volume caps in the future. Hence, the system is expected to include more negotiation elements and provide for some more flexibility. 
  • The new rules around the AMNOG reimbursement price agreements also allow for provisions to sanction uneconomic package sizes.
  • Orphan drugs will be subject to stricter rules in the AMNOG system. The pricing and reimbursement of orphan drugs have been a long-standing subject of controversy within the German healthcare system. The sales threshold up to which orphan drugs are partly privileged and only subject to an abbreviated AMNOG process will be lowered. In the future, orphan drugs will be subject to the full AMNOG process if their annual revenue exceeds €30 million (instead of €50 million currently). If the revenue of an orphan drug stays below this threshold amount, the AMNOG system will continue to deem the “additional benefit” of an orphan drug to be established upon its marketing authorization.
  • Combination therapies will become subject to the AMNOG rules and also subject to a new “combination markdown”. Like with the orphan drugs, the expenditures for combination treatments have been a similar hot topic in the German healthcare system. Under the GKV-FinStG, when the Joint Federal Committee (Gemeinsamer Bundesausschuss or “GBA”) determines the “additional benefit” of a new medicine, it will in the future also list the pharmaceuticals that can be used in combination with the new drug. For all drugs with new active substances that are used in such a combination listed by the GBA, the health insurance funds shall receive from the respective pharmaceutical company a markdown payment of 20% of the company’s sales price. The law sets forth a possibility to escape this mandatory 20% markdown payment but that requires that the actual combination has been subject to an AMNOG benefit assessment by the GBA and came out at least with a significant benefit (“beträchtlicher Zusatznutzen”).
  • The German reimbursement laws require a general mandatory markdown payment from all pharmaceutical companies to the statutory health insurances (often also referred to as the “mandatory discount”). This general mandatory discount applies to all medicines and is currently at 7% of the company’s sales price. With the new GKV-FinStG, this mandatory discount will be increased by 5% to 12% for the year 2023. In addition to this general mandatory discount, the specific discounts for generic drugs and the above mentioned mandatory discount for combination therapies (20%) will also apply. Initially, the government had even planned an extraordinary “solidarity contribution” of €2 billion from the pharmaceutical industry. This idea was eventually dropped in the course of the legislative deliberations. Instead of this measure, the 5% increase in the manufacturer’s discount was finally agreed upon.
  • In addition, the mandatory “pharmacy discount” that pharmacies have to pay to the health insurance funds will be increased from €1.77 to €2.00 per Rx-drug package for a period of two years. The new law also requires the pharmacies to contribute to the financial stability of the German healthcare system.
  • Furthermore, a price freeze on medicines has been in effect in Germany since August 2010 (so-called “price moratorium”). This price freeze has always been a very controversial measure but was originally scheduled to expire on 31 December 2022. Now, the GKV-FinStG extends the price freeze until the end of 2026. The GKV-FinStG sets forth a new potential exemption from the price freeze for those medicines that receive a new marketing authorization for either a new indication or a new patient group and promise an improvement of the medical care. Hence, the potential exemption is subject to a  specific qualifiers that the pharmaceutical companies need to demonstrate.
  • Several provisions of the GKV-FinStG also aim to strengthen the local production of medicines in Germany and the EU by, for example, considering this as a factor in the evaluation of the new AMNOG provisions.

As part of the legislation process, now the Federal Council of the German States (Bundesrat) will discuss the adopted draft GKV-FinStG. If the Federal Council has no objections, the GKV-FinStG will be approved by the German President and published in the Federal Gazette to become applicable.

With the new GKV-FinStG, the German drug pricing and reimbursement laws will become even more complicated. For the pharmaceutical industry, the GKV-FinStG will have significant consequences. As the new act leaves a number of questions open and as the GKV-FinStG uses certain qualifiers and criteria that require further legal clarification, pharmaceutical companies should carefully analyse the new laws and their implications for their business and products.



Source link

Related posts

NYDFS Amends Cybersecurity Rules for Financial Services Companies

Environmental Justice in Focus: Why EPA’s New EJ Office and EJ FAQs Guidance Matter

NLRB Finds Restriction on Wearing Union Insignia In Workplace Unlawful

The Best Briefcases for Lawyers and Legal Professionals Alike

New California Legislation Will Not Allow Employers to Prohibit Off-the-Job Marijuana Use for Much Longer

What Of The Hamline University “Snitch”?