Price regulation through benefit assessment for rare diseases

In October 2022, the Statutory Health Insurance Financial Stabilization Act (GKV-Finanzstabilisierungsgesetz) reduced the revenue threshold for orphan drugs relevant for benefit assessment from 50 to 30 million euros. In light of the debate surrounding the pricing of orphan drugs, it therefore appears appropriate to examine the development of population-normalized treatment costs more closely. For this purpose, a study examining the treatment costs of orphan drugs was conducted in 2022 (1), examining the period before the introduction of AMNOG (2005 to 2010) and the period after the introduction of AMNOG (2011 to 2021). The calculations have now been validated as part of a study update using the same population. The update enabled inflation adjustment based on the 2022 price index (2) as well as complete treatment costs after AMNOG assessment and price negotiations for all orphan drugs. The result confirms the study findings. On average, the rising annual treatment costs of orphan drugs since the introduction of AMNOG have been more than offset by low patient numbers.

>> There are specific provisions under EU law for orphan drugs, with the aim of promoting the research, development, and marketing of suitable medicinal products by the pharmaceutical industry (3). In line with this, special regulations apply to orphan drugs in the AMNOG procedure, which continue the objectives of the European regulation at the national level (see Section 35a, Paragraph 1, Sentence 11 et seq., Social Code Book V), but these regulations are lifted above a certain turnover threshold. The turnover threshold of €30 million stipulated by the Statutory Health Insurance Financial Stabilization Act (GKV-FinStG), like the previous threshold of €50 million, refers to the pharmacy sales price and a period of 12 months. This increases the likelihood of negotiating higher AMNOG discounts, and the resulting savings are estimated at €100 to €200 million annually in the medium term (4). The fundamental question is whether and to what extent the AMNOG also fulfills its price regulation function for orphan drugs. To test this, two working hypotheses were examined:
1. The launch prices of orphan drugs have not increased or have increased only slightly since the introduction of the AMNOG,
2. The AMNOG discounts granted result in savings compared to the situation before the introduction of AMNOG.
For the analysis, the annual treatment costs were calculated based on the net selling price at the time of market launch. The net selling price is calculated from the pharmaceutical company's selling price less statutory discounts (price information according to ABDATA (5)). By taking statutory discounts into account, the price that most closely reflects the actual revenue of the pharmaceutical manufacturer is reflected.

Inflation-adjusted price development
Due to the long time series of 17 years, the price data were adjusted for inflation. The adjustment refers to the year 2022, based on data from the Federal Statistical Office on the consumer price index. In order to determine the budget impact of a drug, the price and, above all, the number of patients for whom the drug has been approved are crucial: If a treatment is only indicated for a very small number of patients, the total costs for health insurers are manageable despite high prices.
To account for the influence of patient numbers, this was researched for each newly approved orphan drug between 2005 and 2010 (Pubmed NCBI, Orphanet, European Medicines Agency). For the period since 2011, the data was compiled using the IGES ARA AMNOG Resolution Analyzer© (6) in accordance with the G-BA resolutions, which must be determined by the G-BA for each target population considered in the benefit assessment as part of the AMNOG process. Based on price and number of patients, the "normalized treatment costs" were determined by multiplying the annual treatment costs for each drug at the time of market launch by the SHI target population. This provides a meaningful figure suitable for comparing the costs incurred for orphan drugs in Germany in terms of budget impact.
Market entry of 145 orphan drugs by 2021

Between 2005 and 2021, a total of 145 orphan drugs were launched in Germany (Fig. 1). 133 of these drugs were included in the analysis. 12 drugs could not be considered for the following reasons: exemption or suspension of the procedure, market withdrawal, and missing price data because the drugs were only used in inpatient settings. For the period 2005 to 2010 (before AMNOG), the number of drugs was 43, and for the period 2011 to 2021 (after AMNOG), the number was 90, for which the normalized treatment costs were also calculated after price negotiations.
Decrease in treatment costs by 251 TP3T
The relationship between price and quantity is crucial for evaluating the results. While the average annual treatment costs for orphan drugs increased from €101,000 (before AMNOG) to €253,000 (after AMNOG), the SHI target populations became significantly smaller – an average of 4,586 patients before AMNOG compared to an average of 1,822 patients after its introduction. With regard to normalized treatment costs, both working hypotheses are confirmed. The costs for orphan drugs in Germany have not increased on average since AMNOG was introduced (minus 6% of the total). Taking into account the negotiated AMNOG reimbursement amounts, the normalized treatment costs after AMNOG are significantly lower than before (minus 25% of the total) (Fig. 2). The average discount after price negotiations for orphan drugs is 20.0%, only slightly below the value of the overall market of 21.6% (7).
The analysis shows that the AMNOG fulfills its function as a price regulation instrument for orphan drugs as well. Since its introduction, the inflation-adjusted normalized treatment costs for orphan drugs have decreased both in terms of the launch price and the reimbursement amount.