Changing German Market Depresses the Pharma Industry - Pharmaceutical Technology

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Changing German Market Depresses the Pharma Industry
Germany has shifted from a market where the pharmaceutical industry could enjoy considerable pricing freedom to a sensitive market influenced by cost-containment policies. However, pressure is being placed upon the country to change its pricing policy once again.

Pharmaceutical Technology Europe
Volume 24, Issue 8

Industry concerns

One of the irritations for the pharmaceutical industry is that it believes it has already demonstrated the value of its product by receiving regulatory approval in Germany, and yet is now being asked to compile an independent set of information to convince another official body to obtain a price. Companies see the measures as additional bureaucracy and a means by which the government can steadily pressure the industry into reducing its prices to curb spending. Now when companies prepare for product launch in the German market, they must also plan ahead and invest in the compilation of a cost–benefit dossier, as well as construct value arguments to satisfy the designated experts at the G–BA and IQWiG. They must proactively source a range of information, which they may be called upon to justify, from clinical therapeutic data and product costs through to information on potentially comparable products. For smaller companies, this process is particularly burdensome and there is little experience that they can draw upon. A further complication is that there continues to be legal debate in Germany about whether the new cost-benefit methods are consistent with federal social law (4).

According to the current system, if it is decided that a product does not demonstrate medical value, then the reimbursement amounts are set by the G–BA at prices for a selected "comparably effective drug." If the G–BA decides that a product demonstrates medical value then companies must enter into negotiations with the Federal Association of Statutory Health Insurance Funds to set the price. Although full details of the pricing negotiations are not made public, it can be presumed that a higher level of benefit being granted by the G–BA should give companies greater negotiation power in such discussions. This is likely to have been the case for AstraZeneca's antiplatelet treatment Brilique (ticagrelor), which was deemed cost-effective for people with acute coronary syndromes.

If agreement is not possible in pricing negotiations then the decision goes to arbitration, during which period the price is capped at a level dictated by the price in other European markets. This aspect is worrying because many other European countries use Germany as a reference when considering what is appropriate for their markets. In the past, with free pricing, companies benefitted from inclusion of the high German price. However, if a product is capped during arbitration, other countries could use the lower price as a reference rather than waiting for a final German pricing decision.

In June 2012, the European Federation of Pharmaceutical Industry Associations (EFPIA) called for a revision of the new German system after consultations with its member companies (5). EFPIA stated that Germany had previously been a leader in Europe in providing quick access to new treatments and that the new system was threatening this benefit (5). It cited its members' opinion that early experience with AMNOG had been disappointing and that the underlying law around this legislation was flawed and ambiguous (5). EFPIA also called AMNOG inflexible and stated that there was unwillingness on the part of the authorities to consider creative solutions for the problems it was creating. A particular criticism centred on the choice of comparators needed to convince assessors in the cost benefit dossiers. EFPIA noted that this often differed from the comparator selected after consultation with the EMA when planning ahead for regulatory approval. They argued that by choosing comparators that had little relation to those selected for a drug's development programme, the German authorities were in effect trying to drive prices of innovative products down towards those of generics. EFPIA has called for more consultation and discussion on how decisions are reached.


The change in the German pricing environment brings the country in line with developments elsewhere in the world, where prices are being linked to cost–benefit analyses. Companies have become concerned that these systems bear no relation to requirements in seeking regulatory approval for a product, but have a huge bearing on the success of a product when launched. They consider these measures to be bureaucratic and confusing. At an early stage in a drug's lifecycle, the availability of information on a product's benefit in different populations is limited, but companies are being asked to generate this information almost in parallel with regulatory approval. Furthermore, if Germany reaches an unfavourable pricing decision then this may have a bearing on the prices in countries that use the German market as a reference point. Critics, however, will point to the benefits that companies can derive from the system. If they can impress the assessors in Germany, as may be the case with AstraZeneca and Brilique, they will have a powerful argument in convincing other countries that their drug is of value and merits a higher price.


1. Business Monitor International, "Germany Pharmaceuticals and Healthcare Report Q3 2012" (Business Monitor International, 2012).

2. V. Paris et al., "Pharmaceutical Pricing and Reimbursement Policies in Germany" (Organisation for Economic Co-operation and Development website, 2008)., accessed 25th June 2012.

3. vfa, "AMNOG: Key Issues and Consequences" (vfa website, 2010)., accessed 25th June 2012.

4. The International Society for Pharmacoeconomics and Outcomes Research (ISPOR), "Germany – Pharmaceutical" (ISPOR website, 2009)., accessed 25th June 2012.

5. EFPIA, "EU Pharmaceutical Industry Leaders Call for Revision of German Model for assessment of New Medicines" (EFPIA website, 2012)., accessed 25th June 2012.


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