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Paradigm shift in the pharmaceutical market

On January 1, 2010, the Pharmaceutical Market Reorganization Act (AMNOG) came into force and with it a paradigm shift in the German pharmaceutical market. While the USA and Germany were previously the only countries in the world in which the manufacturers of new patent-protected pharmaceutical preparations were able to freely determine their prices (at least in principle), the USA now remains the only “member” in this exclusive club. Any plans by the Obama administration to change this for the USA are likely to have become unrealizable for the foreseeable future given the new majority of Republicans in the House of Representatives

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First publication date: 05.10.2012

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In Germany, on the other hand, Federal Health Minister Rösler (FDP) was surprisingly quick to put an end to free pricing. This did not happen in such a way that an authority can now set a price more or less arbitrarily or that a product may only be sold in Germany once health insurance companies and pharmaceutical manufacturers have “agreed” on a price. Rather, a much more sophisticated system was developed.
Every new pharmaceutical product can now be sold immediately after its approval in Germany, as before, and must generally be reimbursed by statutory health insurance companies and private health insurance companies at the price set by the manufacturer. However, this situation only lasts twelve months. Three months after a new product enters the market, the G-BA must publish a preliminary decision on its additional benefit - in comparison to other preparations or other treatment methods for the same disease. This assessment will essentially be based on the study protocols and results that the pharmaceutical manufacturer has previously submitted to the G-BA. The respective pharmaceutical manufacturer is obliged to forward all study protocols available to the G-BA and to make them accessible to the public. This means there is an obligation to be transparent towards the public, which in itself represents a paradigm shift.
After the publication of the preliminary assessment decision, the public - of course also the pharmaceutical manufacturer concerned - has three months to criticize the preliminary decision to the G-BA. After these additional three months have elapsed, the G-BA will publish its final decision on the additional benefit of the new preparation. If an additional benefit is denied, the drug is placed in a corresponding fixed price group or the price is set at approximately the price level of the cheapest provider.
If an additional benefit is assumed, the National Association of Statutory Health Insurance Funds and the pharmaceutical manufacturer must reach an agreement on the price of the product in negotiations within six months of the publication of the G-BA's decision. This price is then binding for both statutory health insurance companies and private health insurance companies. If the National Association of Statutory Health Insurance Funds and the pharmaceutical manufacturer cannot agree on a price, a three-month arbitration procedure is mandatory, at the end of which a central arbitration board sets a price that is binding for everyone. This price applies - at least for statutory health insurance companies - retroactively from one year after the product enters the market.
The pharmaceutical manufacturer has numerous options to challenge a result of the G-BA's additional benefit assessment/benefit decision, the agreement with the National Association of Statutory Health Insurance Funds or the arbitration board that is unacceptable to it. He can - at his own expense - initiate a cost-benefit assessment by IQWiG against the G-BA's benefit decision. Does the pharmaceutical manufacturer have data - e.g. B. health services research - which suggest a benefit decision that is more favorable to him, he can initiate a new decision from one year after the G-BA's last benefit decision was issued.
In addition, both the pharmaceutical manufacturer and the National Association of Statutory Health Insurance Funds have the right to appeal against the decision of the arbitration board and against the cost-benefit decision of the IQWiG (this was not possible so far). Both sides can also initiate a cost-benefit assessment by IQWiG beforehand to challenge the decision of the central arbitration board. This can be advantageous over legal remedies, as a court will generally only overturn official decisions in the event of procedural errors or improper or incorrect consideration of available information. However, a court will not exercise any discretion in determining prices and, as a rule, will not be able to set its own prices.
The new sophisticated system of pricing mechanism limits the costs of all customers of pharmaceutical manufacturers - especially for new products that have no or only minimal additional benefits. The new mechanism is not based on the principle of “everything” or “nothing” when it comes to cost reimbursement, which is confusing and therefore risky for manufacturers, health insurance companies and patients and which previously applied when an IQWiG cost-benefit assessment was initiated.
The new pricing mechanism also enables ongoing monitoring of the use of a new preparation and, based on this, a revision of benefit assessments or price negotiation results. All of this is happening due to significantly increased publication requirements with a high level of transparency. Decisions thus become much more comprehensible for the public and everyone involved and are easier for the latter to attack if there is a lack of comprehensibility.
This opens up enormous opportunities for comparatively balanced pricing for everyone involved. However, the extent to which these opportunities can be realized depends very much on the willingness of everyone involved to get involved with the new procedures and their possibilities and limitations. It is particularly questionable to what extent the G-BA and IQWiG (to which the G-BA can also transfer some of its competencies) will be able to meet their new responsibilities with their current capacities. It is also questionable to what extent the National Association of Statutory Health Insurance Funds and pharmaceutical manufacturers will assume their new responsibilities. If, for example, the National Association of Statutory Health Insurance Funds were to ignore a benefit assessment that was favorable for the pharmaceutical manufacturer in price negotiations and simply let it “run up” in negotiations, the manufacturer would become dependent on the arbitration board and the arbitration board would presumably be overwhelmed. Conversely, if pharmaceutical manufacturers pursue maximum demands without a sense of proportion, this could also cause the new system and its structures to collapse. It is therefore very much to be hoped that everyone involved will accept the new rules. <<

 

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