Drug price, how German system works: some information

The drug price issue has been at the heart of many debates in the US over the last few months and has also played its role in the presidential campaign. It is clear that US politicians agree to place a limit on drug price increase. It is now interesting to determine which model can prove optimal to tackle the issue. Health Affair Blog has examined the Germany’s model, suggesting it can be effective in controlling prices. It is called AMNOG (Arzneimittelmarktneuordnungsgesetz) and has successfully performed since 2011. The blog points out that the system rewards innovative drugs that provide genuine breakthrough clinical benefits, provide immediate access to treatments, use non-governmental, non-profit organizations for review, with the pharmaceutical manufacturers bearing much of the costs. In addition, it determines prices only after determining clinical benefits, and by negotiating them with pharmaceutical companies and stakeholders, not government bureaucrats. Historically, Germany has had a reputation for high drug prices. Before AMNOG was implemented, pharmaceutical product prices in Germany were as much as 26% higher than in the rest of the European Union. AMNOG was launched in 2011 and, by August 2016, it allowed to assess 146 new drugs, 63% of which were determined to have a real clinical benefit, though half of those only for selected patient populations. As a result, in 2015 alone, Germany achieved savings of $1 billion, with discounts averaging 21%. The system has also allowed to reduce public pharmaceuticals expenditure per capita (-0.7% vs +2.7% in the US). AMNOG comprises some key stages. Firstly, once the drug has been approved by EMA, the drug maker may introduce the product into the German market at any initial price of its choosing, fully reimbursed by all German insurance plans for the first 12 months. Secondly, during that first year, the G-BA and some patient representatives commission an effectiveness review by the IQWiG (Institut für Qualität und Wirtschaftlichkeit im Gesundheitswesen). IQWiG evaluates the results and compares them with existing standard treatments. Thirdly, within six months, the G-BA determines the new drug’s added benefit over available treatments, including a classification of benefits for specific patient subpopulations. Fourthly, early negotiations on the price are started. Lastly, if a drug offers no additional value over a previously available drug, payers will reimburse at prices currently paid for the available drugs or therapies. If drugmakers choose to set a higher price, patients who want to benefit from the newer drug must pay the difference. Importantly, if a drug company charges a high rate for a drug in the first year of availability, the extra revenues must be returned to payers. (Source Health Affair Blog)