Changes to AMNOG by the new coalition government

In the parliamentary elections of September 2013 the former conservative-liberal coalition failed to maintain the majority of seats. A new coalition was formed of the two largest german parties CDU (conservatives) and SPD (social democrats) and established in the end of 2013. According to the coalition agreement the new government will undertake some significant changes to the pricing and reimbursement procedures (AMNOG system). These plans form part of a legislative package (“14. SGB V Änderungsgesetz”) which shall be enacted before April 2014. Changes include a significant reduction of the 16% mandatory rebate to 7% and the abolishment of assessments of products in the existing market (“Bestandsmarktaufruf”). At the same time the price freeze at the level of August 2009 will be extended and additional financial burdens for generic products will be enacted. Please find a brief overview of the intended changes below.

Reduction of the mandatory rebate from 16% to 7% and extension to generics

In addition to the rebate negotiated between the manufacturer and the payers in the AMNOG procedures there is also a mandatory rebate (“Herstellerabschlag”) which is also deducted from the original list price. Initially, this mandatory rebate was 6% but it was increased to 16% in 2010. The coalition parties now agreed to reduce the 16% rebate to 7% in 2014. However, the parties also agreed to review the amount of the rebate on an annual basis as from 2015 and amend it if needed. The rebate shall in any case not fall below 6%.

The government’s plans also foresee to apply the mandatory rebate for the first time to generics which have been exempt of the 16% rebate so far. This will prove a significant burden for these products as they are already subject to a special 10% generics rebate which will be maintained. The measure will, however, strengthen the competitiveness of originator products towards generics.

Please note: Contrary to the initial intentions the government did not manage to submit a legislative proposal to the parliament on the mandatory benefit before the end of 2013. Thus, the new rule has not been enacted yet and does not yet apply. However, the former 16% rebate expired with the end of 2013 and was automatically set back to the initial 6% as foreseen by the law. This 6% rebate also applies to generics already now (plus the 10% generics rebate), as their exemption was only linked to the 16% rebate but not to the former – and current – 6% rebate. This rate is applicable at present until the entry into force of the new law to introduce the 7% rate. The 7% rebate is expected to apply as of 1st April 2014.

Extension of price moratorium until 2017

At present the law foresees a price memorandum freezing prices of pharmaceuticals at the level of 1st August 2009 or of the first list price applied in Germany if put on the market after this date.  This means that manufacturers of pharmaceuticals will only be reimbursed by the payer groups at the price level of August 2009/ their initial list price regardless of price increases in the meantime. The price memorandum was set to expire automatically by law at the end of 2013. However, the government passed a law in December 2013 preliminarily extending the price memorandum until 31 March 2014. The government now intends to pass a new law that will be applicable as from 1st April and will further extend the price moratorium until end of 2017. This measure is intended to balance the financial burden resulting from the reduction of the 16% mandatory rebate (see above).

Termination of assessments of products in the existing market (“Bestandsmarktaufruf”)

Although not being subject to the GBA’s assessment in general, pharmaceuticals that have been in the German market before 2011 could be called for assessment on an individual basis at any time. In practice, this was rarely applied and only very few products of the existing market were effectively assessed and had to go through price negotiations with the GKV-SV. However, the possibility of being called for an assessment posed a constant threat for products in the existing market as it could lead to a revaluation of reimbursement prices.

The government now intends to abolish the assessment of products in the existing market completely. This will be part of the legislative package also including the above mentioned changes on the mandatory rebate and the price freeze which is expected to be enacted before April 2014. The provisions ending the assessment of products of the existing market will retroactively apply from 1st January 2014. The GBA had already suspended all ongoing assessments of products from the existing market in November 2013 as a reaction to the government’s plans. These pending assessments will not be finalised.

When will the changes apply?

As mentioned before, the government’s plans are part of a legislative package, the “14. SGB V Änderungsgesetz”. The package has already entered the legislative procedure and is expected to be enacted before April 2014. This appears realistic, considering the comfortable majority the government has in the new parliament. If the adoption schedule is kept the new provisions will apply as from 1st April 2014. The provisions terminating the assessment of the existing market will retroactively apply as from 1st January 2014.

In the meantime the original mandatory benefit of 6% applies and already includes generic products now, which are also subject to an additional rebate of 10%. As the price moratorium had been extended preliminarily until end of March there will be no changes for manufacturers in this regard. As the GBA has already suspended all assessments of existing market products, the abolishment by law in March will be a mere formality.

The legislative draft for the new law can be found here (German only):

http://dip21.bundestag.de/dip21/btd/18/002/1800201.pdf.

Published 1. May 2014 in News Germany