Germany's draft Pharmaceutical Care Strengthening Act contains positives and negatives for pharma industry

The first draft of the Pharmaceutical Care Strengthening Act (Arzneimittelversorgungsstärkungsgesetz) was presented on 25 July. The draft contains many measures that came out of the pharma dialogue, the negotiating process between the government and the pharmaceutical industry that concluded earlier this year. In keeping with its pharmaceutical policy to date, the draft act strikes a balance between the aspirations of the pharmaceutical industry on one hand and the statutory health insurance (GKV) on the other. The most important aspects of the draft act, from the perspective of innovative pharmaceutical companies, are outlined below, based on a press release from the Barmer GEK statutory health insurance fund, which can be accessed in full here, in German.

• A revenue threshold is planned to be introduced for new medicines coming into the market that undergo the benefit assessment process introduced in the Pharmaceutical Market Restructuring Act (AMNOG) in 2011. The threshold would be imposed in the first year of the drugs' presence in the German market, during which they enjoy free pricing under the existing regulations. Under the AMNOG system, a negotiated discount on the reimbursement price of originator drugs comes into effect in the 13th month of their presence in the German market. With concerns about the rate of the increase in spending on innovative drugs, the government intends to impose a revenue threshold of EUR250 million (USD280.9 million) during this first year. If spending on the drug by GKV funds exceeds this threshold in this first year, the negotiated discounted reimbursement price is to be retroactively applied from the point when the threshold was crossed.
• Discounted reimbursement prices negotiated between producers and the National Association of Statutory Health Insurance Funds are to be made confidential, under the government's plans. This is intended to prompt producers to offer higher discounts during negotiations because with the negotiated discount prices being public, they can be used as the basis for price setting in other countries through international reference pricing – meaning that producers do not want to offer discounts that would have an overly detrimental effect on their prices in other countries.
• The price freeze on medicines that are not subject to a reference price (Festbetrag), which has been in place since August 2010 and was initially supposed to expire at the end of 2013 but is now set to expire at the end of 2017, is set to be extended until 2022. However, in a concession to the pharmaceutical industry, it will be possible from 2018 for producers to increase prices by the rate of inflation.
• Benefit assessments of medicines marketed before the introduction of AMNOG will be made possible in exceptional cases, when an active ingredient is reintroduced into the market in an indication that differs drastically from its previous one.
• The Federal Joint Committee will, under the changes in the draft act, be able to limit the indications and sub-indications for which a drug is reimbursed at the same time as it makes its decision on the extent of the drug's early benefit assessment. This would mean that any restrictions in the patient groups for whom a given drug is indicated can be reflected in the price negotiation process following the completion of the benefit assessment.
• In exceptional cases, it is intended for there to be flexibility in terms of the comparator therapy that forms the basis of the price of a medicine that the G-BA has decided does not show an additional benefit. Under the current AMNOG system, such prices are set based on the cheapest comparator, but it is planned that there would be the possibility for this stipulation not to be applied in certain cases.
• Information on outcomes of benefit assessment processes for medicines is to be made available more quickly to doctors in their everyday practice. According to the draft, it is necessary to provide information on the applicability of the G-BA's resolutions in daily practice.

Outlook and implications

Compared with the plans for the draft that were made public before its official publication, there are favourable and unfavourable proposals for the pharmaceutical industry. Although the extension of the price freeze – which could mean that prices of non-reference-priced drugs would effectively be frozen at their August 2009 levels until 2022 – is unfavourable for the industry, allowing at least for price increases at the rate of inflation from 2018 will provide at least some relief. On the negative side, formalising exemptions for reimbursement would not so favourable, and the danger is that doctors would be unsure of the indications for which they are able to prescribe new medicines, and may opt not to prescribe them at all. It is a moot point to what extent the new drive to improve information on the G-BA's resolutions will help this.

The draft needs to undergo a long legislative process and could be subject to changes. Submissions of the views on the draft by the pharmaceutical closed on 15 August, and the approval of the cabinet draft is set to follow, after which it is set to come before the Federal Council for the first time. The eventual adoption of the act and its implementation into law is planned for the beginning of 2017.