The reform program—Arzneimittelmarktneuordnungsgesetz, or AMNOG for short—was approved on November 12, 2010. It marked the end of free pricing of new pharmaceuticals in Germany. Pushed through at very short notice, the legislation was designed principally to cut costs to the drugs bill, for an estimated €2 billion ($2.78 billion) in annual savings. The sick funds and legislators have every reason to be happy, as AMNOG has generated more than €1 billion ($1.4 billion) in savings through compulsory rebates in its first four months. Those savings occurred before negotiations on prices for new drugs had even started.
The AMNOG process and its various decision steps are illustrated in the graphic on page 36. For any new drug launched after Jan. 1 and for subsequent new indications, a pharmaceutical company needs to submit a dossier to the G-BA, which then conducts a benefit assessment. If the G-BA concludes that the drug does not offer an additional benefit, it will be transferred into a reference pricing cluster that includes low price generics or, if no reference group exists, subjected to reimbursement negotiations. In the reimbursement negotiations the price for the drug will not be allowed to exceed the costs of "comparable" drugs, including generic equivalents.
If the G-BA decides that the drug offers an additional benefit, the manufacturer will be allowed to sell the product at a freely set price for one year, commencing from market launch. At the same time, price negotiations for the future Statutory Health Insurance (SHI) reimbursement price will take place. If no agreement on the SHI reimbursement price can be reached, a central arbitration board will decide the price. Every party is allowed to appeal the decision and ask for a formal cost effectiveness analysis. In this case the G-BA would ask IQWiG to perform the analysis, which could take up to three years—a long time to wait.
AMNOG apparently requires evidence of a new drug's cost-effectiveness to secure a reasonable price at launch. Absent this, a company cannot be confident that the process will yield an acceptable price. However, EMA rules for approval of market authorization are not compatible with real-life performance tests of drugs that must demonstrate real value. Interestingly, France seems to be moving towards implementation of cost-effectiveness reviews at a later stage of a drug's life cycle. This seems much more reasonable, as a company has a chance to prove a drug's value in a naturalistic treatment setting. The biggest problem for industry in this context is that payers insist on setting price first, rather than deciding whether they will fund it, as price has international implications. In any other industry, customers simply do not buy a product they don't like; they don't insist on a lower price.