Germany's Price Reform Revolution - Pharmaceutical Executive


Germany's Price Reform Revolution

Pharmaceutical Executive

Make use of the hearing procedure. Besides the value dossier itself, the pharmaceutical company has one other window of opportunity to shape decision-making: the hearing procedure. In its assessment, IQWiG rates the extent of a drug's additional benefit over the designated comparator product. However, the final decision on additional benefit is taken by the G-BA. Before this decision is taken, an official hearing enables all affected players to be heard. In several cases, IQWiG's proposed rating has been altered by the G-BA, both up and down, based on arguments that were put forward in the hearing procedure. The transparency accorded here is an opportunity for companies to make their own case with arguments that embellish the dossier.

For successful negotiations pharmaceutical companies have to excel in four dimensions.
Build a stakeholder management map. By understanding the interests of all the relevant stakeholders, the pharmaceutical company can ensure that both the health context and the clinical benefit of its product are understood prior to the hearing. Detailed knowledge of the local realities and practices of care and the different perspectives of patients, payers, and physicians can foster coalitions to bolster the case for an optimal outcome in the assessment and the negotiation process; this alone makes a comprehensive stakeholder management strategy worthwhile.

Preparing and conducting the price negotiation. In contrast to the decision-making process on additional benefit, only two players are involved in the price negotiations: the statutory health insurance body and the pharmaceutical company itself. Currently, both parties have little experience when it comes to working within the new price framework under AMNOG, but the payer side is gaining experience at a much faster pace

Preparations for the price negotiation have to start early, ideally before the value dossier is handed in, to ensure that all essential information is included in the documents. The available internal resources and expertise have to be planned and interconnected to form a multidisciplinary negotiation team. The team has to excel both in terms of content and negotiation techniques. A clear and congruent story line should bring together the arguments from the dossier over the hearing procedure to the price negotiation and a potential arbitration. Qualitative and quantitative war gaming, mapping different scenarios, are tools to develop strong and resilient arguments.

However, good arguments must be accompanied by a strong presentation and that in turn demands a team that can function with confidence under conditions of intense emotional pressure. Therefore, roles in the team have to be clearly set out and rehearsed, as there is little room for improvisation. Team building exercises, training in negotiation and rhetorical skills, and anticipatory definition of each team member's leeway in decision-making are all important in securing a positive result.

Finally, although the reform primarily targets the pharmaceutical industry, it reinforces the importance of a close interdependence of all players in the healthcare sector. Recognition and incorporation of multiple perspectives optimizes the prospects of success in the process created by AMNOG. It is vital that pharmaceutical companies open up, strengthen their networking, and develop their understanding of the views of their counterparts in the new pricing-process. It is the lack of an overall strategic view of the healthcare market that will limit the capacity to manage the new environment in Germany.

Melanie Hager and Thomas Temme are senior consultants at the strategy consulting firm SKC Beratungsgesellschaft in Hannover, Germany. Matthias Schönermark is Professor of Manage-ment at the Hannover Medical School and CEO of SKC. He can be reached at


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