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Pre-AMNOG benefit assessments scrapped, but austerity persists in Germany's new coalition
Germany's new coalition government has concluded its coalition agreement. It includes some important plans relating to public pharmaceutical care provision, and particularly the extension of austerity measures. But it is not all doom and gloom. In fact, the innovative pharmaceutical industry appears to have been spared a potentially significant headache, with the coalition partners abandoning all potential versions of the retroactive benefit assessment of on-patent medicines marketed prior to AMNOG.
Retroactive benefit assessments to be completely axed
This process of retroactive benefit assessments began in earnest this year. The G-BA set out criteria for the selection of drugs to be included in the process in April and the first benefit assessment of a pre-AMNOG drug group was completed in October (DPP4 inhibitors). The G-BA identified drug groups for the retroactive process primarily on the basis of their sales. Many blockbuster drugs were not selected--due a lack of an appropriate comparator. The process was strongly criticised by Germany's pharmaceutical industry associations. They questioned the sense of carrying out such a complex and labour-intensive process when the medicines which were to be assessed would see their prices fall anyway as they neared patent expiry and new products undercut their market share.
It seems that the coalition partners, and even the chairman of the G-BA, agreed with the industry. However, initially the coalition partners envisaged the possibility of implementing a 'back-up' retroactive benefit assessment process. It is proposed in the same section of the regulations as the one already in progress, which was based on putting pre-AMNOG on-patent drugs through benefit assessments if they were directly in competition with medicines marketed after AMNOG (which are automatically obliged to undergo an early benefit assessment). The pharma industry associations suggested that this would likely mean that nearly all pre-AMNOG on-patent drugs would have to undergo benefit assessments, as most of them are in competition with AMNOG-assessed drugs.
Finally, the coalition decided to completely scrap the retrospective assessments - this decision is due to come into effect by the end of the first quarter of 2014.
Austerity measures to be extended
The coalition agreement is by no means all good news for the industry. On the basis of the agreement the mandatory discount on non reference-priced drugs (i.e. innovative, on-patent drugs) will be re-set rather than revert to 6%, as it was intended to under the original terms of the 2010 law, under which the mandatory discount was raised to 16% from August 2010 until the end of 2013. The government was unable to push this change through the legislature before the end of 2013, and so temporarily, the mandatory discount has gone back to 6%. The text of the coalition agreement states that from 2015 the mandatory discount will be reviewed annually. And depending on the financial situation of the statutory health insurance funds, it will be decided whether an adjustment is required. There is one fixed stipulation though: the mandatory discount cannot go below 6%.
While the coalition was not able to push through the legal changes regarding the mandatory discount, it managed to push through the extension of the price moratorium on all reimbursed drugs paid for by the GKV funds (place since August 2010 and due to come to an end at the end of 2013) under an expedited legal process, until the end of March 2014. Thereafter, the price moratorium is set to be extended for another three years. Under this price moratorium, the GKV fund pays only up to the level of the prices of drugs in August 2009.
New requirements to ensure drug supply security put forward
The coalition's plans relating to the pharmaceutical industry also mention new requirements for the parties involved in discount contracts. Statutory health insurance funds (or their representatives) and, for the most part, generics producers will include in their agreements measures which insure against supply shortages, with particular emphasis on vaccines. In recent months and years, there have been an increasing number of reports in the German media about supply shortages.
Meanwhile, the discount contract system has itself been associated by the generics industry with the increasing scarcity of supply. The supply of many drugs have been contracted to a limited group of generics producers, leading to what the generics industry association has described as an increasing level of market concentration.
The coalition's proposal does not seem to be addressing a likely important cause of the problem - i.e. the nature of the discount contract system. It rather seeks to impose further conditions on the participants in those discount contracts, which, they are likely to argue, are not able to fulfil within the system as it stands today.
The generics association has also come out with strong criticism of the continued price freeze. they point to the important role its members play in supplying the majority of the medicines consumed within the public healthcare system in Germany. And they question how secure this supply can continue to be with all the financial restrictions they continue to be put under.
Coalition agreement is a "mixed bag" for the innovative industry
For the innovative pharmaceutical industry, the price freeze and mandatory discount continuation are certainly unfavourable, but the complete abandonment of the retroactive benefit assessment process will be a relief. The coalition also promises a new inter-ministerial dialogue, with the participation of the pharmaceutical industry, intended to strengthen research and production in Germany. Although there are no concrete promises associated with this, it demonstrates at least the recognition of the industry's important role in Germany's economy.
The German pharmaceutical market grew in mid-single digits year-on-year in the first nine months of 2013--with innovative medicines the drivers of growth. The industry also has the benefit of a growing market to balance concerns about the ongoing austerity measures. However, it is unlikely that any potential change to AMNOG (the possibility of which is mentioned in the coalition agreement) will be favourable for the industry.
The government--with the new coalition partner, the Social Democratic Party--is potentially less well-disposed to support the interests of the industry than the previous coalition partner--and is likely to seek new measures to cool growth in pharma spending.
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