On 1 January 2025, important legal amendments relating to drug pricing in Germany that were included in the Medical Research Act (Medizinforschungsgesetz, MFG) came into legal force.
The most often reported of these amendments is the introduction of the option of confidential discounted reimbursement prices for therapies undergoing benefit assessment procedures. Supporters of confidential pricing had long argued that manufacturers would be willing to offer much greater discounts in Germany if their reimbursement prices could not be publicly accessed and used for international reference pricing (IRP) in countries where Germany is a reference market. Eventually, this argument persuaded Federal Minister of Health Karl Lauterbach, but pressure from the statutory health insurance (Gesetzliche Krankenversicherung, GKV) meant that the final form of the confidential pricing arrangements in the law was less enticing than might have been hoped.
The provisions for confidential discounted reimbursement prices included in the final version of the MFG are so unappealing that they were described by industry-backed news website Pharma Fakten as “an irrelevance”. A 9% mandatory discount is to be applied on therapies for which confidential reimbursement prices have been chosen, and confidential prices are only open to companies with R&D departments in Germany that are involved in projects and cooperations with public institutions in preclinical or clinical pharmaceutical research in Germany. Manufacturers opting for confidential prices face additional expenses due to the requirement to cover overpaid trade surcharges and sales taxes associated with the higher list prices that would have to be paid initially by the GKV funds for their products before they pay back the difference between the list prices and the discounted prices to the funds. These additional costs, the huge weight of additional bureaucracy created by the system for settling the repayment, and worries about the security of confidential prices with so many different groups and individuals being able to access them mean that the industry expects the option of confidentiality to be taken up only in a small number of cases.
The other major pricing change introduced on 1 January is the removal of IRP as one of the criteria used in price negotiations. From the beginning of 2025, Section 130b of book five of the German Social Code (Sozialgesetzbuch Fünftes Buch, SGB5), which contains regulations on price negotiations between the pharmaceutical industry and the National Association of Statutory Health Insurance Funds (GKV-Spitzenverband), no longer includes “actual” sales prices in other European countries among the criteria to take into consideration when negotiating prices after benefit assessments. This removal of IRP was described by the Federal Ministry of Health (FMoH) as a natural consequence of changes allowing confidential discounted reimbursement prices. If the actual, realised prices being paid by the GKV funds are not available to payors in other European countries, then, by extension, prices in those European countries should not be used to set prices in Germany. However, it is hard to see how that argument will hold up, considering the anticipated low uptake of confidential pricing.
The provisions for IRP have been removed from the SGB5 Section 130b, but no new framework agreement on price negotiations between the GKV-Spitzenverband and the main pharmaceutical manufacturer associations in Germany has been announced. Additionally, the existing framework agreement from 2022 still includes IRP (actual sales prices in selected European countries) as one of the four main criteria. However, based on information from a German pharmaceutical industry source, only the elements of the framework agreement that are compliant with the provisions of the law are valid, and this is now not the case concerning IRP.
The GKV-Spitzenverband was supportive of the proposal to remove IRP from price negotiations. In its position paper on the MFG from June 2024, the GKV-Spitzenverband stated that if the option of a confidential discounted price was introduced, then the provisions on using prices in other European countries as a reference could not be maintained. It argued that this would lead to higher prices in Germany, because the German manufacturer-set list price would be used by payors in other European countries to set their prices, and these prices would then have to be used for setting German discounted prices at the stage of price negotiations. The GKV-Spitzenverband emphasized that Germany is often the first market in which newly authorized therapies are launched because of the initial free-pricing period and the lack of an initial hurdle to reimbursement, so there are often very few, if any, prices in other European countries to reference at the time of price negotiations.
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By GlobalDataThe GKV-Spitzenverband’s argument against IRP seems to assume that most manufacturers will opt for confidential prices, although this is highly unlikely. In its position paper on the MFG, the GKV-Spitzenverband also stated that historically, some manufacturers have not fulfilled their obligations to provide actual sales prices in other European countries, or have only done so partially. However, since the introduction of the Pharmaceutical Market Restructuring Act (Arzneimittelmarkt Neuordnungsgesetz, AMNOG) benefit assessment and price negotiation system in 2011, discounted prices in Germany have moved closer towards the European average. While it may be true that there are few prices available to reference after the launch of a new drug in Germany, this changes with the addition of new indications at later stages, and IRP has formed a part of a system that has demonstrably resulted in lower prices and significant savings for the GKV funds.
Currently ongoing benefit assessment procedures, which were launched prior to the beginning of 2025, are likely to be carried out in line with the law as it applied when they were initiated. Therefore, it is unlikely that there will be any IRP-free price negotiations for approximately five or six months, and the implications of the removal of IRP are unlikely to be clear until then. Price negotiations without IRP will be focused on other criteria contained in the framework agreement, such as the annual costs of therapy of comparable medications, the contents of the dossier submitted by the manufacturer for the benefit assessment, and the decision of the Gemeinsamer Bundesausschuss (G-BA) on the benefit assessment. Notably, the GKV-Spitzenverband would not support the removal of IRP if it was not convinced that it would have no negative impact on its ability to make savings on pharmaceutical reimbursement. For the vast majority of new therapies undergoing AMNOG procedures after January 1, 2025, discounted reimbursement prices will continue to be publicly available. For the small number of therapies put forward for confidential pricing, the implications for IRP in countries that reference Germany are significant; if the confidential discounted prices remain confidential, it could inflate prices for this limited number of therapies in referrer countries.
This article is produced as part of GlobalData’s Price Intelligence (POLI) service, the world’s leading resource for global pharmaceutical pricing, HTA and market access intelligence integrated with the broader epidemiology, disease, clinical trials and manufacturing expertise of GlobalData’s Pharmaceutical Intelligence Center. Our unparalleled team of in-house experts monitor P&R policy developments, outcomes and data analytics around the world every day to give our clients the edge by providing critical early warning signals and insights. For a demo or further information, please contact us here.
