Interim report on experiences so far with AMNOG

The Medicines Market Reorganization Act (AMNOG) has been in force since January 1, 2011. The introduction of this legal system represents a paradigm shift, comparable to the fixed price regulation introduced in 1989. The background to the AMNOG was the legislature's desire to counteract the “cost explosion” in the health system while at the same time ensuring an adequate supply of medicines. The implementation of the AMNOG regulations primarily means the implementation of the early benefit assessment in accordance with Section 35a SGB V. This system is based in particular on comparable models from the Scottish Medicine Consortium (SMC) and the English National Institute for Clinical Research (NICE).

The first experiences with the AMNOG (Act on the Reform of the Market for Medicinal Products) were felt immediately after its introduction and continue to spark heated debate. The first early benefit assessment procedure was initiated by the Federal Joint Committee (G-BA) on January 1, 2011; more than 60 further procedures have been opened to date, with approximately half having already been completed. There was also considerable anticipation surrounding the extent to which the G-BA would utilize other instruments of the AMNOG. In particular, the debate centered on whether the G-BA should venture into the option of an existing market review pursuant to Section 35a Paragraph 6 of the German Social Code, Book V (SGB V), and which drug classes might be affected. Two years later, this question became the subject of legal proceedings for the first time, culminating in a ruling by the Berlin-Brandenburg State Social Court on February 28, 2013, in expedited proceedings.
Recently, pressure mounted on the G-BA (Federal Joint Committee) regarding the criteria it uses to select the drug classes to be included in the existing market review. With its decision of April 18, 2013, the G-BA has now identified the relevant selection criteria; these are to be examined more closely.
The benefit assessment under the AMNOG (Act on the Reform of the Market for Medicinal Products) was described as a "learning system" from its inception. The need for adjustments to the legal texts and administrative procedures is already evident; the following discussion will also focus on the most recent developments in this area. This article will primarily concentrate on how the interaction between the stakeholders, mainly the G-BA (Federal Joint Committee) and the pharmaceutical companies, has developed. The practicality and the key procedural decisions made to date within the framework of the AMNOG will therefore be examined. Due to current events, the issue of the existing market survey and the related legislative amendments planned under the Third Act Amending Pharmaceutical and Other Regulations will also be addressed.
Early benefit assessment
pursuant to Section 35a Paragraph 1 of the German Social Code, Book V
Since January 1, 2011, the reimbursement amount for a new drug has been determined by the manufacturer's submission of a benefit dossier demonstrating the drug's added benefit. Free market access for newly approved drugs with new active ingredients remains unchanged. Instead, the assessment now focuses on the appropriate comparator therapy of an already approved drug to determine whether it offers additional benefit compared to that comparator. Pharmaceutical companies can no longer freely set the drug's price. The benefit assessment determines whether and to what extent such added benefit exists. Based on this assessment, the National Association of Statutory Health Insurance Funds (GKV-Spitzenverband) either decides on the drug's classification within a fixed reimbursement group according to Section 35 Paragraph 1 of the German Social Code, Book V (SGB V), or agrees on a reimbursement amount for the drug according to Section 130b Paragraph 1 Sentence 1 of the SGB V. The agreed price applies from the thirteenth month after the drug's market launch, thus allowing for free pricing during the first year after market introduction.
The regulations of the AMNOG (Act on the Reform of the Market for Medicinal Products) are rightly described as an instrument for reversing the burden of proof; now the pharmaceutical company must refute the presumption that the new drug offers no additional benefit compared to the appropriate comparator therapy. If it fails to submit a dossier, the additional benefit is considered unproven.
For drugs used to treat rare diseases (so-called orphan drugs), the added benefit is considered proven by the marketing authorization. Further evidence demonstrating added benefit is therefore not required. A drug remains an orphan drug as long as its sales volume in the last 12 calendar months does not exceed €50 million. Exceeding this limit necessitates the submission of a complete dossier.
status quo
In the two years since the AMNOG regulations were implemented, the G-BA (Federal Joint Committee) initiated 65 early benefit assessment procedures, of which 41 have been completed. The results of these procedures warrant closer examination: In six of the 35 completed procedures, the tested drug was found to have a considerable added benefit. Ten substances were found to have a minor added benefit, and fifteen drugs showed no advantage compared to the respective comparator therapy. In two cases, there was an indication of an added benefit. Furthermore, two drugs with orphan drug status were tested; one of these was found to have a minor added benefit, while the benefit of the other was not quantifiable (see www.b-ga.de, accessed April 19, 2013). As a result, the majority of the tests showed an added benefit compared to the comparator therapy, leading to price negotiations.
After 62 initiated and 35 completed benefit assessment procedures, it is clear that the AMNOG (Act on the Reform of the Market for Medicinal Products) is no longer in its infancy and the previously predicted learning effect of the system is nearing completion. This is particularly true because, two years after the introduction of AMNOG, significant decisions have been made with immense economic repercussions for pharmaceutical companies; substantial strategic decisions depend on the respective assessments of the G-BA (Federal Joint Committee). This is also because Germany continues to be considered the reference market for pharmaceuticals, meaning that the decisions made here have a considerable spillover effect. If an added benefit is not demonstrated and the respective drug must be sold at a low price, pharmaceutical companies may, if necessary, play the so-called "opt-out" card and no longer make the unprofitable drug available to German insured persons in order to prevent price dumping in other countries.
This demonstrates the power of the G-BA, whose discretion regarding the choice of instruments for price regulation otherwise remains; procedures for the formation of fixed reimbursement groups according to § 35 SGB V are still being opened and the possibility of therapy recommendations or prescription exclusions also exists.
Inventory market call § 35a para. 6 SGB V
The call for the review of existing market data, and thus the benefit assessment of drugs approved before January 1, 2011, has recently come into sharp focus for the public, as significant cost savings are expected. This review of existing market data deserves attention, among other reasons, because – unlike the mandatory benefit assessment under Section 35 Paragraph 1 of the German Social Code, Book V (SGB V) – pharmaceutical companies were not required to prepare a benefit assessment dossier upon market launch; however, the preparation time for submitting the dossier is now short. A benefit dossier must be prepared and submitted within three months of the Federal Joint Committee's (G-BA) decision being served.
The call for a benefit assessment of existing medicinal products, i.e., those that were already approved before January 1, 2011, and which still enjoy data protection, is possible, according to Section 35a Paragraph 6 of the German Social Code, Book V (SGB V), "primarily" for two reasons. Firstly, if these medicinal products are relevant to healthcare provision (Section 35a Paragraph 6, first alternative, SGB V). Secondly, if they compete with a medicinal product that has been assessed within the framework of the mandatory benefit assessment (Section 35a Paragraph 6, second alternative, SGB V), i.e., if the mandatory benefit assessment results in a direct comparator therapy with an existing medicinal product.
The Federal Joint Committee (G-BA) has so far issued a request for information on one class of active ingredients, the gliptins (decision of June 7, 2012). This initial request for information on existing market conditions has met with considerable criticism. An affected pharmaceutical company contested the request to submit a benefit assessment dossier with various arguments. A closer look at the preliminary injunction proceedings decided in this matter is worthwhile, as the decision of the Berlin-Brandenburg Higher Social Court (LSG) of February 28, 2013 (Case No. L 7 KA 106/12 KL ER) was crucial for the draft of a Third Act Amending Pharmaceutical and Other Regulations, which the Federal Government recently published. Significant insights can already be gained from the preliminary injunction decision of February 28, 2013:

Legal nature of the individual procedural steps
The main point of contention in the aforementioned preliminary injunction proceedings was whether the G-BA's decision to call up the existing market analysis or the request to submit a dossier for the existing market benefit assessment constituted an administrative act and whether the individual procedural steps could each be challenged independently by way of an objection or an action for annulment. The court denied this; the G-BA's decision was merely a preparatory act and served to initiate a regulatory procedure; this was comparable to the planning resolution pursuant to Section 2 of the German Federal Building Code (BauGB), which also merely initiates the procedure for binding urban development planning, according to the Berlin-Brandenburg Higher Social Court (LSG).
The legal dispute also concerned the fact that Section 35a Paragraph 8 of the German Social Code, Book V (SGB V), which stipulates that no separate legal protection is granted against the individual procedural steps of the benefit assessment pursuant to Section 35a Paragraph 2 SGB V, the decision pursuant to Section 35a Paragraph 3 SGB V, and the inclusion of a medicinal product in a fixed reimbursement group pursuant to Section 35a Paragraph 4 SGB V, does not, according to its wording, apply to the existing market survey pursuant to Section 35a Paragraph 6 SGB V. Consequently, the regular legal remedies against the (adverse) administrative act of the existing market survey should be applicable. According to the affected pharmaceutical company, the applicant, these are an objection and an action for annulment.
The constitutional background of the dispute (still pending in the main proceedings) is to what extent the affected pharmaceutical company must be granted effective legal protection already during the benefit assessment procedure, or whether there is an inadmissible interference with Article 19 Paragraph 4 of the Basic Law if legal action can only be taken against the arbitration panel decision pursuant to Section 130b of the German Social Code, Book V.
One problem is that the right to request access to existing market rights is only possible as long as data protection exists for the respective existing drug. During this period, the pharmaceutical company generates the majority of its revenue with new drugs before generic competition arises – a crucial and limited timeframe in which the effectiveness of a pending lawsuit against the access request depends significantly on its suspensive effect. Therefore, if the legal proceedings do not have suspensive effect, the possibility of filing a lawsuit against the arbitration panel's decision, which is subject to judicial review, is ineffective; a corresponding court decision would only be issued after 4-6 years and would thus come too late for the pharmaceutical company. A considerable amount of time would potentially have elapsed, and the affected drugs would be exposed to generic competition in a timely manner.
Furthermore, it must be considered that the costs estimated by the legislator for submitting a benefit dossier, amounting to €5,000, are significantly exceeded in practice. For example, the translation of studies published worldwide regularly incurs costs of approximately €550,000. In the case presented to the Berlin-Brandenburg Higher Social Court (LSG Berlin-Brandenburg), the pharmaceutical company employed six staff members for a year to compile the benefit dossier, thus constituting a considerable cost burden due to the existing market inquiry.
Furthermore, it goes without saying that compiling a dossier within three months is impossible and that this deadline – which is not subject to procedural challenge – can cause significant problems for the pharmaceutical company; not least because the legal consequence of a late dossier submission is the unconfirmed additional benefit.
In the expedited proceedings, the LSG Berlin-Brandenburg, in its decision of February 28, 2013 (file number: L7 KA 106/12 KL ER), however, ruled against the administrative law character of the request to submit the dossier, so that, according to the LSG Berlin-Brandenburg, the ordinary legal process can only be pursued after the procedural steps have been completed.
Due to the court's decision that the request for a benefit dossier does not constitute an administrative act, it subsequently became irrelevant whether Section 35 Paragraph 8 of the German Social Code, Book V (SGB V) applies to the call for information on the existing market. However, the court called upon the legislature to clarify these provisions, as the wording of the list of procedural acts omits any mention of Section 35 Paragraph 6 of the SGB V (call for information on the existing market).

Legal protection against the listing of existing stock on the market
In response to the decision of the Berlin-Brandenburg Higher Social Court, the legislature has, "for the sake of clarity," included in the draft of the Third Act Amending Pharmaceutical and Other Regulations that a separate legal action against the existing market inquiry will also be inadmissible. Accordingly, in the future, within the framework of the existing market inquiry pursuant to Section 35 Paragraph 6 Sentence 1 of the German Social Code, Book V (SGB V), "a separate legal action against the instigation pursuant to Sentence 1 will also be inadmissible" (see draft of a Third Act Amending Pharmaceutical and Other Regulations, Article 3 No. 3 a).

Selection of the called active ingredient groups
Based on the above, it is clear that for pharmaceutical companies, it is of considerable economic importance whether a dossier for benefit assessment must be prepared and, ultimately, whether a product already on the market is subject to comparative benefit assessment. In this respect – particularly in light of competition law requirements – it is crucial that the G-BA's criteria regarding the existing medicinal products to be reviewed are transparent and follow a consistent, predictable logic.
Unlike the mandatory benefit assessment, the call for data on the existing market is designed as a discretionary measure. The Federal Joint Committee (G-BA) has the authority to decide both whether to conduct a call for data on the existing market and which drug classes are subject to a comparative benefit assessment. However, the selection of drug classes must not be arbitrary.
On April 18, 2013, the G-BA (Federal Joint Committee) recently decided which additional drug classes will be subject to the existing market review in the near future. In particular, the G-BA published and explained the criteria according to which the selection of the respective drug classes will be made.

Criteria for the call
Firstly, the "sales volume of a drug with statutory health insurance (SHI) reflects its economic weight" (Resolution of the Federal Joint Committee (G-BA) of April 18, 2013, pp. 2 and 3) and is therefore one of the two criteria for selecting the drugs to be included in the review. Secondly, "the number of prescribed drug packages serves as a criterion for assessing the extent of the drug's therapeutic significance for the care of insured individuals in the approved indications" (ibid.). In this respect, the decision is also based on which drugs are prescribed most frequently.
According to the Federal Joint Committee (G-BA), these selection criteria, due to their significant importance for patient care, should be balanced in a way that is appropriate to the purpose of the regulation in Section 35a Paragraph 6 of the German Social Code, Book V (SGB V). In this regard, the G-BA referred to the 2012 Drug Prescription Report, which examined the fact that 892 new active ingredients and combinations of active ingredients were launched between 1986 and 2011 (see Schwabe/Paffrath, Drug Prescription Report 2012, pp. 189 et seq.). Those preparations that were withdrawn from the market prematurely—for example, due to serious defects—or that are still under patent protection were excluded. As a result, the authors of the Drug Prescription Report had 188 active ingredients to evaluate, based on which they determined sales and prescription trends over the product life cycle. These life cycle projections formed the basis for the assumed development of sales and prescriptions of active pharmaceutical ingredients already available on the market (Resolution of the G-BA of April 18, 2013, p. 3). In this context, the sales volume of the drug is to be considered at 80 % and the prescription frequency at 20 %, with the prescription frequency being reflected equally in the sales calculation. All non-generic, healthcare-relevant products are now to be successively subjected to a benefit assessment.

Drug classes to be called up
The Federal Joint Committee (G-BA) announced that six additional drug classes will be called for review in 2013. These classes cover the following therapeutic areas: severe, chronic pain; osteoporosis and bone metastases; anticoagulants; type 2 diabetes; depression; and finally, rheumatoid arthritis. Manufacturers of the respective substances will be invited to submit dossiers between July 15, 2013, and December 1, 2013, in the order listed, and will then have three months to prepare their dossiers.
The pain reliever tapentadol (Grünenthal) will be the first drug to be launched as the lead compound. The next drugs to be launched will be denosumab (Amgen), strontium ranelate (Servier), parathyroid hormone, and teriparatide (Lilly). Following this, the two anticoagulants rivaroxaban (Bayer) and dabigatran (Boehringer Ingelheim), with their shared indication of stroke prevention in atrial fibrillation and deep vein thrombosis, will be launched. Next on the agenda are the antidiabetic drugs liraglutide (Novo Nordisk) and exenatide (Lilly). At the end of the year, the antidepressants agomelatine (Servier) and duloxetine (Lilly) are expected to follow, and finally the arthritis antibodies toclizumab (Hoffmann-La Roche), golimumab (MSD), and certolizumab (UCB).
The first active ingredient listed is considered the substance that triggers the activation of the subsequent active ingredients. These are then activated regardless of how long their data protection lasts, for reasons of competitive equality.

Equal treatment of manufacturers
Despite the newly granted insight into the decision-making criteria for the existing market review, the accusation of unfair competition and unequal treatment of rival pharmaceutical companies remains. It is still open to challenge the argument that complete equal treatment of all drug classes is impossible simply because the resources of the G-BA (Federal Joint Committee) and IQWiG (Institute for Quality and Efficiency in Health Care) will not be sufficient to review all (relevant) drug classes within the available timeframe, even if the G-BA's tight schedule sets ambitious targets. The fact that the existing market review is only possible within the transitional period until the expiration of data protection for drugs approved before January 1, 2011 – the cut-off date for the mandatory benefit assessment – effectively puts a stop to the possibility of reviewing existing market data and means that manufacturers are spared direct comparison with comparable products solely due to the expiration of this deadline. The pharmaceutical companies will certainly not accept the statement by the chairman of the G-BA, the published criteria and the active ingredient groups to be called up in the near future as "legally sound", without scrutiny.
Even after the announcement of the selection criteria for the active ingredient classes to be accessed, the argument remains unchallenged that a selective access to the existing market does not meet the requirements of Article 3 Paragraph 1 of the German Basic Law. For this reason, for example, the respective institutions in Scotland and England have deliberately refrained from accessing the existing market. Accessing the existing market is considered both costly and legally questionable. In this respect, it is deemed sufficient that, after the expiration of data protection, competition among generic drugs regulates prices.
Conclusion
All sides are showing openness to adjustments to the AMNOG regulations, recognizing that this is a major project with immense economic significance. However, it must be noted that it is not enough to simply tweak the regulations. Essential questions regarding the legality and constitutionality of, for example, the retroactive intervention in the pharmaceutical market by calling up existing market information remain unanswered; this is not even true given that the legislature – after the first group of active ingredients had already been called up – has published its criteria.
It is also concerning that the call dates for the next groups of active ingredients have now all been published, and that manufacturers are given only two and a half months, and in some cases seven and a half months, of lead time before the start of the administrative procedure. As already explained, this time is crucial for compiling a benefit dossier and can determine the outcome of the procedure.