Germany is poised for another significant overhaul of its drug pricing and reimbursement legislation, introducing a framework that incorporates “confidential reimbursement prices.” This move is designed to shield the country’s pricing data from being used as a benchmark in international reference pricing systems. The initiative is part of a broader legislative draft titled the Medical Research Act (Medizinforschungsgesetz or MFG), unveiled in January 2024. This draft is a component of Germany’s ambitious National Pharma Strategy, which seeks to bolster the country’s position as a leading destination for pharmaceutical research, development, and manufacturing. This comprehensive strategy was first revealed to the public in a detailed strategy paper on December 13, 2023.
The Medical Research Act aims to bring substantial changes across various sectors of the healthcare legal framework in Germany, particularly focusing on clinical trials, the mechanisms of drug pricing and reimbursement, and the operational dynamics of regulatory authorities and ethics committees. Among the noteworthy aspects of these reforms is the revision of the AMNOG system, which has been a cornerstone of Germany’s approach to drug pricing since 2011. The AMNOG system, which involves an initial assessment of a new drug’s benefits followed by price negotiations, is now subject to proposed changes aimed at enhancing confidentiality and reducing the international influence on German drug prices.
A key feature of the new confidential reimbursement prices legislation is the option for pharmaceutical companies to negotiate reimbursement prices under conditions of confidentiality. This provision means that the agreed reimbursement rates for new drugs would not be disclosed publicly, nor made available to pharmacies, essentially allowing companies to manage two distinct prices: the official list price and the negotiated reimbursement price. This arrangement aims to mitigate the risk of price erosion in international markets, a concern that has led some companies to withdraw their products from the German market following unfavorable price negotiations under the existing AMNOG framework.
Confidential Reimbursement Prices: Isolating Drug Pricing from EU Influence and Restricting Drug Substitutions
In addition to protecting reimbursement prices from public scrutiny, the proposed act intends to decouple German drug pricing from the prices set in other European countries. Historically, the reimbursement price negotiations in Germany have considered drug prices in other EU nations. The new legislation seeks to eliminate this practice, potentially altering the landscape of drug pricing across Europe.
Furthermore, the confidential reimbursement prices act proposes restrictions on substituting drugs with confidential reimbursement prices for medications by cheaper, imported alternatives. German pharmacies are sometimes required to dispense less expensive imported drugs as a cost-saving measure. The new legislation would lift this obligation for drugs with confidential reimbursement prices, further safeguarding these prices from exposure.
The international ramifications of these reforms are significant. Germany has long been a preferred launch market for innovative drugs within the EU, thanks to the predictability and relatively high pricing achievable under the AMNOG process. The proposed changes could, therefore, offer a new strategic advantage for pharmaceutical companies, particularly those facing challenges with the pricing outcomes of the AMNOG process.
Concerns Arise Over Complexity in Germany’s Drug Pricing Reform Amid Swift Legislative Push
Despite the potential benefits for the pharmaceutical industry, the complexity and anticipated increase in bureaucratic procedures under the new system have sparked concerns. The effectiveness of the confidentiality measures, given the proposed legal mechanisms for disclosing the “real” prices to certain stakeholders, remains uncertain, highlighting potential loopholes in the confidential reimbursement prices legislation.
The Medical Research Act is in the public consultation phase, with a key hearing scheduled for February 20, 2024. Stakeholders have until February 22, 2024, to submit their comments. This consultation process, somewhat unusually scheduled before the collection of stakeholder feedback, indicates the German government’s commitment to implementing these changes swiftly, in line with the broader objectives of the new Pharma Strategy. With the implementation date set for January 1, 2025, the coming months will be critical for stakeholders to engage with the legislative process, monitor developments, and contribute to shaping the final contours of this significant reform.
Resource: Inside EU Life Sciences, February 16, 2024
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