Savings through AMNOG discounts

With the Pharmaceutical Market Reorganization Act (AMNOG) in 2011, the German legislature enshrined the principle of benefit-based pricing in law. Since then, price negotiations have been largely based on the additional benefits of a medicine, in addition to the annual therapy costs of comparable medicines and retail prices in other EU countries. The aim of the law was to negotiate the price of new drugs with patent protection or new document protection following an additional benefit assessment. The benefit assessment is carried out compared to the appropriate comparator therapy (zVT). This determined additional benefit, together with the previously mentioned criteria, forms the basis for the reimbursement price negotiation, which is conducted between the pharmaceutical company and the umbrella association of health insurance companies (GKV-SV) on the basis of the resolution of the Federal Joint Committee (G-BA). The resulting price discount on the introductory price is the basis for calculating the AMNOG savings in accordance with Section 130b SGB V. These are calculated using the sales difference between the real sales considered (price corresponding to reimbursement amount negotiation x quantity) and a “fictitious” sales (price without Reimbursement amount negotiation x quantity) which would have been reimbursed without the AMNOG price negotiations. The official statistics from the Federal Ministry of Health (BMG) do not show any discount values that result from price negotiations. There are therefore currently different figures circulating about the savings achieved so far. There are calculations that assume a volume of 3,900 million euros in 2020 (Maag 2020). Other sources speak of 3,700 million euros in savings in 2020 and 4,900 million euros in savings in 2021 (Ludwig et al. 2022). A recently published report mentions a total of around 14,000 million euros in savings that were granted over more than ten years (Techniker Krankenkasse 2023). However, it can be stated with certainty that the annual savings target of 2,000 million euros (Bundestag 2010) stated in the AMNOG draft law has already been exceeded.

>> The process of early benefit assessment was again subject to legal adjustments in the recent past, which came into force in particular through the Act on the Financial Stabilization of Statutory Health Insurance (GKV-FinStG) (Bundestag 2022). A number of measures were adopted in the GKV-FinStG that have a direct impact on the amount of AMNOG savings, such as the validity of the reimbursement amount from the 7th month after market launch or the manufacturer's discount increased by 5 percentage points in 2023. Furthermore There were structural changes in the pricing of new drugs that have little or no additional benefit, and the orphan sales threshold was lowered to 30 million euros.
methodology
The data basis for calculating the savings from the early benefit assessment is the statutory health insurance billing data from the National Prescription Information (NVI) from INSIGHT Health as well as information from the IGES ARA® (IGES ARA 2023), the AMNOG database of the IGES Institute, which is linked to the ABDATA ( ABDATA Pharmadatenservice 2023) were linked at the pharmaceutical central number (PZN) level.
The AMNOG savings achieved were calculated at the active ingredient level. This ensured that all subsequent processes for an active ingredient could be taken into account in the analysis. Since the discounts achieved in the price negotiations take effect during the year, it was necessary to look at sales on a monthly basis. The turnover considered referred to the selling price of the pharmaceutical company (ApU) and was determined by linking the PZNs with the respective ATC code, according to the ATC index of the AOK Scientific Institute (Fricke et al. 2023), for each active ingredient determined individually.
Since April 1, 2014, the negotiated discounts (§ 130b SGB V) have been applied to the ApU following the early benefit assessment (§ 35a SGB V) and are therefore included in the sales according to pharmacy sales price (AVP).
The overall effect of AMNOG savings was calculated using three components, which are described in more detail below:

1. Discount on the introductory price (manufacturer)
In a first step, the savings achieved were determined through the reimbursement amount negotiation as part of the benefit assessment for all AMNOG active ingredients. The calculated discount factor results from the price change between the time the active ingredient was placed on the market and the price that could be observed after the reimbursement amount was negotiated. In order to identify the discounts on the introductory price on a monthly basis, the price change recorded in accordance with IGES ARA® (IGES ARA 2023) after the price negotiation was completed was used. The identical methodology was used for subsequent procedures. This meant that a time series of discount factors could be created for each active ingredient.
As of November 15, 2022, the negotiated reimbursement amount applies retroactively from the seventh calendar month after market entry and no longer after 12 months (Bundestag 2022). The start of the AMNOG procedure was taken into account as the reference date for calculating the price of the active ingredients, according to information from the Federal Joint Committee.
In the present study (observation period 2011 to 2022), an average price discount after the initial assessment for the entire market of 21.6% was calculated. For this purpose, the real sales were compared with the fictitious sales, which would have been achieved without the discounts from the reimbursement amount negotiations. The resulting difference reflects the savings due to the AMNOG price negotiations in relation to the ApU. This savings volume forms the calculation basis for the trading levels and the legal discounts.
A value of 26.2% was calculated for the period from 2011 to 2015 (Hammerschmidt 2017). A value of 22.1% was determined for the years 2011 to 2020 (Greiner et al. 2022). The results can therefore be described as robust and are above the savings rate of 16.0%, which was stated in the justification for the AMNOG draft law (Bundestag 2010).

2. Levels of trade (wholesale, pharmacist and VAT)
With the reduction in the ApU due to the price negotiation, the remuneration for wholesalers and pharmacies as well as the VAT payable on the pharmacy sales price are automatically reduced, which in turn has an impact on the overall effect of the AMNOG savings.
The amounts used only refer to the sales difference that was “lost” due to the calculated discounts. These can only be determined approximately as only the percentage surcharges could be taken into account. Therefore, the emergency service surcharge and the subsidy surcharge for pharmaceutical services were not taken into account. The same applies to the fixed values of the wholesale and pharmacy surcharges. The values determined for the trading levels are therefore slightly underestimated.
For the wholesale surcharge, the percentage is 3.15%, measured at the ApU. If the ApU and the wholesale surcharge are offset, the resulting pharmacy purchase price is the basis for the pharmacy surcharge of 3.0%. The next step results in the net pharmacy sales price (net AVP), which is the basis for determining the VAT of 19%, although a reduced VAT rate of 16% applied in the second half of 2020 due to the corona pandemic (BMF 2020).

3. Replace statutory discounts (including former manufacturer discounts)
Furthermore, the manufacturer's discount to be paid is reduced in accordance with Section 130a Paragraph 1a, as this is also a percentage of the ApU. For the manufacturer discounts shown in the study, the manufacturer discount of 7%, which has been in effect since 2014, was still applicable, which increased to 12% in 2023 (Bundestag 2022). A significant increase in this item is therefore foreseeable for 2023.
The overall effect of the AMNOG savings results from the interaction of the items described, whereby the replaced statutory manufacturer discounts were subtracted from the trade levels and the discount on the introductory price.

population
Only active substances whose decision date was before January 1, 2023 were taken into account in the study. There were also several criteria that led to exclusion from the population. These were: market withdrawal or opt-out, exemption of the active ingredient from the benefit assessment or discontinuation of the procedure, active ingredients without PZN, no or canceled price negotiation or price negotiation had not yet been completed as of December 31, 2022. The evaluation also took into account that there may be several products with the same active ingredient.
The criteria mentioned reduced the population of 403 active ingredients (IGES ARA 2023) in the period from 2011 to 2022 to 365 active ingredients, which were included in the analysis. Figure 1 shows the number of active ingredients with price negotiations concluded for the first time and the introduction of generics for the years 2018 to 2022.
Active ingredients with expired patent protection were removed from the population from the month in which the first generic was introduced. In April 2021, a generic for an AMNOG-rated active ingredient, namely cabazitaxel (“Jevtana”), was brought onto the market for the first time. In 2022, seven additional active ingredients and two active ingredient combinations with metformin, a total of nine additional active ingredients or combinations, were affected by the introduction of generics (fingolimod, fampridine, pirfenidone, abiraterone-
acetate, sitagliptin, sitagliptin/metformin, vildagliptin, vildagliptin/metformin and dimethyl fumarate).

Results
The savings for the years 2018 to 2022 are explained in detail below. The discounts on the introductory price form the largest item of the calculated savings (see Table 1) and amounted to 5,501 million euros in 2022, which corresponds to an increase of 18.9% compared to the previous year. The growth dynamic was therefore declining after the savings volume had increased by 29.2% in 2021 and by 27.9% in 2020.
The decline in momentum can be explained in particular by the introduction of generics for former AMNOG active ingredients. In 2022, a total of 190 million euros in calculated savings were no longer taken into account because active ingredients lost their patent protection and generics came onto the market. This slowed the increase in discounts by around four percentage points, with the active ingredient combination vildagliptin/metformin accounting for the largest share.
Since the trade levels and the manufacturer discounts refer to the reductions in the introductory price, the rates of increase are identical. In 2022, the calculated volume of the trading levels was 1,454 million euros. The replaced statutory manufacturer discounts were included in the calculation at 385 million euros. With a view to 2023, a significantly higher value can be expected, which will be influenced by the five percentage point increase in the manufacturer's discount.
In total, there is a total effect of 6,570 million euros for 2022, which corresponds to an absolute increase of 1,044 million euros compared to the previous year. In 2021, AMNOG savings reached a volume of 5,526 million euros.
The increasing number of active ingredients with savings in accordance with Section 130 b SGB V, in connection with the price reduction and the prescription quantity, leads to an increasing volume of savings, as the inflow (approval of innovative active ingredients per year) is the outflow (loss of the property rights of active ingredients) of the AMNOG- active ingredients exceeds.

Conclusion
The AMNOG, which came into force over 12 years ago, achieved its annual savings target of 2,000 million euros (Bundestag 2010) as stated in the draft law in 2018. Since then, the discount volumes have increased significantly again and amounted to around 6,570 million euros in 2022. The discount volume has thus far been significantly underestimated in the literature (Maag 2020 and Ludwig et al. 2022). For comparison, it should be mentioned here that the relief for the GKV through manufacturer discounts, discount agreements, pharmacy surcharges and statutory co-payments in 2022 was an estimated 10,865 million euros (BAH 2023), which represents a share of 19.6% of the gross expenditure on medicines of 55,417 million Euro corresponds.
For 2023, the total effect of the AMNOG savings will be an estimated 8,300 million euros, with the item of replaced statutory manufacturer discounts increasing noticeably. The calculation is carried out as part of an extrapolation and is therefore subject to uncertainty.
Despite their volume, the AMNOG savings are often not sufficiently considered in the discussion about relief from statutory health insurance. Since these are calculated from the difference between the introductory price and the reimbursement amount, the price at launch, the amount of the discount and the prescription quantity are decisive for the volume of AMNOG savings.
Various studies show that there has not been a systematic increase in introductory prices since the introduction of AMNOG. This can be seen both when comparing the average discounted prices in the USA (Berkemeier et al. 2019) and when looking at the calculated population expenditure in Germany for orphan drugs (Maag et al. 2022). The AMNOG savings are therefore real savings that make a significant contribution to the affordability of pharmaceuticals in Germany and will continue to increase in the next few years.
The increase is due to the positive net increase in AMNOG active ingredients, which is also evident in 2022, which shows slightly weaker growth dynamics in AMNOG savings compared to previous years. The reason for this is nine generic drug launches, which slowed the discount growth by four percentage points.
The analysis therefore clearly shows that the AMNOG, as a price regulation instrument, fulfills the function desired by the legislature and makes a significant contribution to the financial viability of the pharmaceutical supply. <<

Author's statement
The study was financed by the Association of Researching Drug Companies (vfa). Conflict of interest: Kathrin Pieloth is employed by INSIGHT Health. Lukas Maag, Dr. Ariane Höer and Stefan Hargesheimer are employed by IGES Institut GmbH, which received financial support from the Association of Researching Drug Companies for this research project.