Benefit-driven pricing: How AMNOG strikes a balance between the financial burden on statutory health insurance and reimbursement of innovative medications in Germany

Pricing of pharmaceuticals in Germany – AMNOG, a former game changer developed into an accepted and transparent HTA procedure
In the last decades, pharmaceutical innovation has led to a significant therapeutic improvement for patients in Germany and worldwide. Simultaneously, healthcare expenditure increased considerably. Resolving the dichotomy of reimbursement for pharmaceutical manufacturers and the expenditure burden for national healthcare systems became a challenge in many countries. In Germany this issue has been addressed by the introduction of the “Arzneimittelmarktneuordnungsgesetz” (German Medicines Market Reorganization Act, or AMNOG), which regulates the benefit assessment of medicinal products. At the same time, a new, market-oriented instrument was introduced into the German system in the form of price negotiations for patented drugs, which are closely linked to the outcome of the Federal Joint Committee (G-BA)’s prior benefit assessment.

Since January 1, 2011, pharmaceutical manufacturers have been legally obliged at launch to undergo a benefit assessment in comparison to an existing standard therapy (the so-called appropriate comparative therapy). The AMNOG procedure also applies to newly authorized indications of a medicinal product that has already been assessed.

On the day of launch, manufacturers must submit a dossier to the G-BA based on the best available clinical evidence in the indication of the medicinal product compared to the appropriate comparative therapy. The benefit assessment is then conducted by the G-BA and the Institute for Quality and Efficiency in Health Care (IQWiG) based on the provided dossier. The benefit assessment is performed for all patient groups for which the drug has been approved (label population). However, if appropriate, the G-BA can also classify the label population into subpopulations, which can differ in the extent of the granted added medical benefit. Six categories are defined to assess the extent of the added medical benefit: “major,” “considerable,” “minor,” “non-quantifiable,” “no added benefit,” or “less.”

Orphan drugs (OD) are an exception in AMNOG, and specific rules apply. An added medical benefit is presumed by marketing authorization. The assessment is only based on the pivotal evidence without the need to compare against an appropriate comparative therapy. Only the extent of the added medical benefit still has to be assessed. However, if sales exceed € 30 million per year or the OD status is withdrawn, the exemption no longer applies, and the orphan drug must undergo the “standard” benefit assessment compared to an appropriate comparator therapy.

The decision on the added medical benefit by the G-BA is decisive for the future reimbursement price of the drug. The pharmaceutical company is free to set the launch price, which is reimbursed by the statutory health insurance funds for the first six months after launch. The reimbursement price from the seventh month onwards is based on the outcome of the negotiations between the pharmaceutical company and the National Association of Statutory Health Insurance Funds (GKV-SV), which begin subsequent to the benefit assessment by the G-BA. Thereby, the final list price can be influenced by multiple determinants (see below), and among which the granted added medical benefit is the key criterion. The manufacturer can only successfully negotiate a higher price than the corresponding appropriate comparator therapy if there is an additional medical benefit. However, other aspects such as the size of the label population, the different benefit levels of subgroups, the addressing of an unmet clinical need, or the prices paid in other European Union countries for the drug are also taken into account. Therefore, the influence of the level of the added medical benefit on the negotiated discount is examined in the following.

Medical benefit – What do we know from AMNOG assessments of the last decade?

In this study, a database containing all evaluated AMNOG assessments was analyzed. From entry into force of AMNOG in 2011 until November 2023, a total of 944 AMNOG assessments were completed. A qualitative and quantitative analysis was conducted to identify potential predictors impacting the price negotiations. For this purpose, the level of added medical benefit was compared with the discount, defined as the difference between the launch price and final list price. Since orphan drugs are granted exemptions in the benefit assessment and price negotiations, they were evaluated separately.

The evaluation of the level of benefit granted by the G-BA for non-orphan drugs (n=677) revealed that the majority of assessments resulted in no added medical benefit for the drug (53%). Only 41.4% were granted an added medical benefit (i.e. “major,” “considerable,” “minor,” or “non-quantifiable”). For orphan drugs (n=189), however, an added benefit is granted by law and most assessments (65%) were granted a “non-quantifiable” benefit. An additional analysis showed that the majority of orphan drugs that were obligated to undergo a “standard” benefit assessment, after exceeding the revenue threshold or after withdrawal of the OD status (n=78), were granted “no added medical benefit” (51%), while 17% were granted with a “non-quantifiable” benefit, and 33% reached either a “considerable,” “minor,” or “major” added benefit (Figure 1).

Figure 1. Highest added benefit granted for: Non-orphan drugs (A), Orphan drugs (B), and for Reassessed orphan drugs (C) in any of the assessed subpopulations within a benefit assessment

Rewarding therapeutic innovation – Benefit assessment and reimbursement

An added medical benefit attested by the G-BA pays off. A correlation was found between the added medical benefit granted and the discount following reimbursement negotiations. The highest discounts (32%) on the launch price were for those non-orphan drugs granted “no added benefit.” Conversely, a greater level of added medical benefit led to a lower discount, especially in the case of drugs granted “major” benefit (9% discount) or “considerable” benefit (20% discount) (see Figure 2 A).

In order to promote innovation in the field of rare diseases, the additional benefit for orphan drugs is already predetermined by the marketing authorization and only the extent of the additional benefit needs to be assessed. The magnitude of the discount according to the defined level of benefit is similar for both orphan and non-orphan drugs (e.g., 11% vs 9% for those granted major benefit, respectively) (see Figure 2 B). However, for orphan drugs that exceeded the revenue threshold, the reassessment of added benefit resulted in higher discounts on the launch price, e.g. up to four times higher than for non-orphan drugs at the level of a “major” benefit (see Figure 2 C). This ensures that a balance is maintained between innovation and expenditure in the healthcare system since orphan drugs are typically very expensive products.

Figure 2. Reimbursement price negotiations: The granted added benefit had a major impact on the extent of the discount on the original manufacturer price

Although critically discussed when it was first introduced, AMNOG is now an established procedure with a high degree of transparency and predictability for both the biopharmaceutical company and the healthcare system. In contrast to other countries, AMNOG enables unhindered, unrestricted, and non-delayed market access for newly approved drugs in Germany.

In principle, prescription drugs in Germany are reimbursed immediately after market launch for all patients with statutory health insurance, with free pricing for the manufacturer in the first six months after market launch. The final price is related to the added medical benefit granted by the G-BA and the annual costs of the appropriate comparative therapy. The effects of this cost containment regulation, which is the purpose of AMNOG, were apparent in our analysis. Higher discounts on the launch price were required for those products that failed to demonstrate added benefit than those with a more favourable assessment, and even higher discounts were seen for orphan drugs that were reassessed after exceeding the revenue threshold. In addition, lower discounts were granted for orphan drugs with proven additional benefits. All this is intended to reward therapeutic innovation and encourage clinical research in indications where there is a perceived high unmet clinical need. However, if the revenue threshold for orphan drugs was exceeded, higher discounts had to be provided even in the case of a proven additional benefit, which might be due to the relatively higher price level of orphan drugs.

Against the background of the high rate of availability of newly licensed drugs in Germany and patients’ fast access to them after approval in the European context, this analysis suggests that the health policy objectives of AMNOG seem to be working: striking a balance between cost containment, meeting unmet clinical needs, and promoting innovation.

Sources

Bundesministerium für Gesundheit. Die Spreu vom Weizen trennen – Das Arzneimittelmarktneuordnungsgesetz (AMNOG). December 2010. Accessed 22 March 2024. https://www.bundesgesundheitsministerium.de/fileadmin/Dateien/5_Publikationen/Gesundheit/Broschueren/Broschuere_Die_Spreu_vom_Weizen_trennen_ _Das_Arzneimittelmarktneuordnungsgesetz.pdf

G-BA. AMNOG – Nutzenbewertung von Arzneimitteln gemäß § 35a SGB V. Accessed 22 March 2024. https://www.g-ba.de/themen/arzneimittel/arzneimittel-richtlinie-anlagen/nutzenbewertung-35a/

GKV-Spitzenverband. Das AMNOG. Accessed 22 March 2024. https://www.gkv-spitzenverband.de/krankenversicherung/arzneimittel/verhandlungen_nach_amnog/rabatt_verhandlungen_nach_amnog.jsp
Lauer-Taxe®. Accessed 2 December 2023. https://portal.cgmlauer.cgm.com/LF/Seiten/ Verwaltung/Kundencenter/1.aspx

Vfa – Die forschenden Pharma-Unternehmen. AMNOG. Accessed: 22 March 2024. https://www.vfa.de/de/wirtschaft-politik/amnog

This article summarises Cencora’s understanding of the topic based on publicly available information at the time of writing (see listed sources) and the authors’ expertise in this area. Any recommendations provided in the article may not be applicable to all situations and do not constitute legal advice; readers should not rely on the article in making decisions related to the topics discussed.