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  • Melanie Senior

Could Germany’s free-pricing period be cut in half?

Updated: Jul 29, 2022

As more orphans and ATMPs reach the market, Germany will not be the only country seeking to limit their budget impact.

Post by Melanie Senior, Senior Consultant

Drug-makers currently enjoy a year of free pricing in Germany, before the impact of an added-benefit assessment kicks in. According to Josef Hecken, chairman of the G-BA, which does the assessments, that’s far too long. “G-BA makes its decision [on whether a drug has added benefit] in just six months,” he says in a January 28 interview with Deutsches Aerzteblatt, an online clinical medicine and public health journal. “Negotiated prices could apply retrospectively from the time of that decision.”

In reality, even pre-negotiated prices aren’t strictly “free” – drug-makers know that going too high would simply block uptake and send the wrong signal ahead of formal price negotiations.

Germany’s added-benefit system for new drugs is already saving the country’s health insurers over €3 billion annually – 50% more than anticipated when the system was introduced a decade ago. Most of the over 270 drugs scrutinised during that period have been found to lack any added benefit over a chosen comparator, typically due to gaps in evidence.

Hecken may not get his way on the six months - he can’t change the rules single-handedly. In the meantime, though, G-BA is apparently not content with the higher savings already achieved. It is flexing other new-found muscles.

A 2019 law (designed to improve drug supply safety) empowered the HTA body to mandate specific data collection for some medicines, in particular orphan drugs that are approved on the basis of limited evidence. Just days ago, G-BA required Novartis to collect (and fund the collection of) specific data on its gene therapy Zolgensma. If the pharmaceutical firm doesn’t comply, it could face lower prices.

Other orphans, too, may face higher reimbursement hurdles in Germany. The €50 million annual sales threshold, below which new products are automatically deemed to have added benefit, used to be calculated on the basis of out-patient prescriptions only. Now, in-patient and private insurance scrips will count, too – making it more likely that new therapies exceed the limit and are assessed (and that prices fall as a result).

Hecken also wants more robust legal backing around reimbursement of other advanced therapy medicinal products (ATMPs), such as CAR-T cell therapies. Currently, hospitals that adopt such medicines – whose list prices exceed €300,000 – can apply for the right to negotiate additional fees from insurers. But those fees only cover the cost of treatment itself, not the (considerable) associated costs involved in administering these complex therapies. Clearer rules that encourage more consistent access would be welcome – but may also put downward pressure on prices. Plus, cutting the 12-month free pricing period could curb contracting creativity: CAR-T cell therapy manufacturers Gilead and Novartis agreed interim outcomes-based deals in 2019 with several of the country’s insurers during the year prior to formal assessment, agreeing to rebates if patients died following treatment.

Both manufacturers and the G-BA have learnt a lot over the decade since free pricing ended in Germany. Today, according to Hecken, despite “fundamentally conflicting interests, a certain level of trust has been established.”

That trust may soon be tested. And as more orphans and ATMPs reach the market, Germany will not be the only country seeking to limit their budget impact.

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