At a recent advisory board meeting with payers and a payer advisors panel from the major European markets, we discussed potential upcoming changes in their healthcare systems. The strong movement in Germany to reform AMNOG (The Pharmaceuticals Market Reorganization Act) related provisions was an interesting part of the discussion.
Below we have outlined some of the primary areas that are under discussion for overhaul. The German representatives identified critical developments in this evolving landscape that are designed to mitigate the currently anticipated €17 billion deficit faced by the statutory health insurance companies. Four of the key areas stood out in our discussions.
It is quite likely that the AMNOG process will no longer allow one year of free pricing. It appears likely to be reduced to 6 months with any price difference beyond this date to be paid back by the manufacturer. Also, drugs with conditional approval and/or a “weak” evidence package may not have any free pricing period. Instead, their price might only be related to comparative therapies. While this has been a driving element for price-setting since AMNOG came into effect, it would be applied differently without a free price period. If there are no comparator products, it is not yet clear how the price would be determined. The advisors felt that it may be possible that in this instance, an additional payment could be made by the health insurer to the manufacturer if over time positive evidence is provided, effectively this might reduce agreed rebates.
There have been discussions of changes to the mandatory rebate that companies must pay on sales of outpatient drugs. For instance, one proposal was an increase from 7% to 19% in 2023 with subsequent reductions. The proposal met with stiff resistance from the pharmacy associations.
The “orphan drug loophole” was initiated when AMNOG was implemented in 2011. This exception in the law assumes an “additional benefit” applies to any drug approved with an orphan designation. This provision was controversial from the start with calls for it to be changed throughout the years. Such a change now seems more likely than ever. The most relevant possible changes would narrow the applicability of the exceptions to all orphan drugs. One potential change is that the exception would only apply to a smaller subset of orphan products based on set criteria such as the first orphan entrant in a therapy area and not to other drugs that come to market/indication later (not yet clearly defined). They speculated that this might reduce the applicability to as little as ~10% of the existing orphan drugs.
Lastly, it seems likely that the requirement of a full benefit assessment when a product reaches the threshold of €50 million in sales, will likely be reduced to ~€20 million in sales. This could lead to earlier re-assessments of the few products where the exception would still apply. In our discussion, it did not seem that patients and patient groups had full recognition yet of the possible implications of these types of changes as well as the potential for them to lead to access issues. German authorities would still reimburse for the drug under this revised system, but manufacturers might look at the viability of launching in Germany very differently under these revised rules.
A new 15% discount is likely to be included in the AMNOG rebate negotiation for certain combination therapies selected by the GBA. This clause recognizes the need for a different framework for pricing combination therapies. However, the actual methodology to address this issue remains uncertain. For example, understanding what the definition/selection criteria will be and how the discounts would be applied in practice. This is of particular importance for high-cost therapies used in combination, in particular in the oncology therapy area where most new medicines being launched are for use in combination.
More recently it seems that the timing of implementation has shifted to later 2022. We will continue to monitor these and other future developments in Germany and the other major European markets, and add to this story as things change.
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