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AMNOG - evaluation of new pharmaceutical

Vollbildansicht im Layer The AMNOG procedure
The AMNOG procedure

The Act on the Reform of the Market for Medical Products (Arzneimittelmarkt-Neuordnungsgesetz – AMNOG) of 22 December 2010 aims to limit the cost of pharmaceuticals, which has risen considerably in recent years (particularly in the market segment which was previously exempt from reference prices). The Act hence obliges pharmaceutical companies to subject their new products to an early evaluation of their additional benefit by the Federal Joint Committee (Gemeinsamer Bundesausschuss – G-BA) after being launched on the market. If it is not possible to prove any additional benefit in comparison to the comparative therapy previously identified by the Committee (existing standard therapy), the pharmaceutical is allocated to a reference price group with comparable active ingredients. If there is no such reference price group, the National Association of Statutory Health Insurance Funds (GKV-Spitzenverband – GKV-SV) negotiates with the pharmaceutical company on a refund rate which does not lead to higher annual therapy costs than the expedient comparative therapy. If an additional benefit is proven to exist, the National Association of Statutory Health Insurance Funds negotiates with the pharmaceutical company a supplement on top of the price of the expedient comparative therapy. This amount then applies to all persons with statutory insurance, as well as to those with private insurance. For the first time, the AMNOG seriously tackles the price monopoly of the pharmaceutical industry in Germany with this central arrangement.

The enactment of the Act on the Reform of the Market for Medical Products (AMNOG) causes an early assessment of additional benefit to be carried out for each year from 1 January 2011 onwards for eligible new pharmaceuticals launched on the German market which have new active ingredients or new combinations of active ingredients. These are new pharmaceuticals to which patent protection, specialists speak of confidentiality protection, applies. Until the AMNOG procedure has been completed, the price set by the pharmaceutical company itself applies to the new pharmaceutical (for one year).

Additionally, the Federal Joint Committee may also have an assessment carried out for pharmaceuticals which were already on the market prior to 1 January 2011 and to which confidentiality protection also applies (“established market”) in order to evaluate the additional benefits. It is decisive for an evaluation of established market products whether the pharmaceuticals are significant for statutory health insurance or are in competition with pharmaceuticals which have already been evaluated. There are many pharmaceuticals on the established market which the pharmaceutical companies are marketing as an alleged innovation. This alleged novelty however frequently only lies in a molecule variant which is not relevant to the effect of the pharmaceutical. These spurious innovations or “me too” preparations do not entail any additional benefit when it comes to patient care, but cost a great deal of money.

Legislature has excluded pharmaceuticals from the early additional benefit evaluation which are of little economic significance (less than 1 million Euro turnover/year with statutory health insurance) or pharmaceuticals which are only used in hospitals.

When it comes to pharmaceuticals for treating rare diseases (orphan drugs), Legislature intends the additional benefit to be considered proven at the time when a pharmaceutical is licensed if its turnover with statutory health insurance is less than 50 million Euro/year. If turnover is higher, the pharmaceutical companies also need to prove an additional benefit for such orphan drugs. In both cases, the Federal Joint Committee drafts a resolution forming the basis for negotiations on a refund rate between the National Association of Statutory Health Insurance Funds and the pharmaceutical company.

Questions and answers

The Act on the Reform of the Market for Medical Products (Arznei¬mittel¬markt-Neu¬ordnungs¬gesetz – AMNOG) of 22 December 2010 focuses on ensuring that the appropriate high-quality medicinal products are supplied economically. The legislature has tasked the National Association of Statutory Health Insurance Funds with ensuring that new patented medicinal products are supplied at a suitable cost to the statutory health insurance funds. Suitable, in other words fair, means for us that the prices of the new medicinal products are orientated towards the additional benefit for patients, and not towards the wishes of the companies. The vital point for us is whether and for which groups of patients the new medicinal products have what additional benefit (“Money follows performance”). The Act hence obliges pharmaceutical companies to subject their new products to an early evaluation of their additional benefit, to be carried out by the Federal Joint Committee, after being launched on the market.

New medicinal products which are comparable in pharmacological and therapeutic terms with fixed-rate medicinal products are directly evaluated here in the context of a fixed rate. This means that the additional benefit is to be proven as a therapeutic improvement within the meaning of the fixed-rate arrangement. If it is not possible for an additional benefit to be proven as a therapeutic improvement for active ingredients which are eligible for the fixed rate, the active ingredients are directly assigned to the existing fixed-rate group.

For medicinal products which cannot be directly included in the fixed-rate arrangement, the National Association of Statutory Health Insurance Funds then negotiates with the pharmaceutical company on a refund rate. This refund rate may not lead to higher annual therapy costs than the expedient comparative therapy for medicinal products with no proven additional benefit. If several alternatives are determined for the expedient comparative therapy, the refund rate may not lead to higher annual therapy costs than those of the most economical alternative.

If an additional benefit is proven to exist, the National Association of Statutory Health Insurance Funds negotiates with the pharmaceutical company a supplement on top of the price of the expedient comparative therapy. This amount then applies to all persons with statutory insurance, as well as to those with private insurance. For the first time, the AMNOG is seriously tackling the price monopoly of the pharmaceuticals industry in Germany with this central arrangement.

The entry into force of the Act on the Reform of the Market for Medical Products (AMNOG) causes an early assessment of additional benefit to be carried out for each year from 1 January 2011 onwards for eligible new medicinal products launched on the German market which have a new active ingredient. Until the AMNOG procedure has been completed, that is in the first twelve months, the price set by the pharmaceutical company itself applies to the medicinal product, if it is the first time that an active ingredient has been placed on the market. When it comes to medicinal products for treating rare diseases (orphan drugs), legislature intends the additional benefit to be considered to have been proven at the time when a medicinal product is licensed as long as its turnover with statutory health insurance is less than 50 million Euro/year in out-patient care. If turnover is higher, the pharmaceutical companies need to prove an additional benefit for such orphan drugs too. In both cases, the Federal Joint Committee drafts a resolution forming the basis for negotiations on a refund rate between the National Association of Statutory Health Insurance Funds and the pharmaceutical company. The legislature has excluded medicinal products from the early additional benefit evaluation which are of little economic significance (less than 1 million Euro turnover/year with statutory health insurance).

The National Association of Statutory Health Insurance Funds advocates suitable refund rates for real innovations. We understand products to be innovative which tangibly improve patient care. Each new medicinal product is not automatically better simply because it is new. Products are repeatedly launched with a considerable amount of marketing activity which however do not in fact deliver in everyday care what they promised. Such medicinal products will have to put up with being in the second or third row in future – including when it comes to price. This means for us to act in a way that is fair and appropriate vis-à-vis the pharmaceutical companies, and particularly vis-à-vis insured parties, patients and contributors. Such spurious innovations may only be able to just about do what other therapeutic alternatives, which often are very cheap, can also do, so that a higher price would not be justified. Authentic innovations which constitute real progress for patient care will increase. It is only for those medicinal products that pharmaceutical companies can expect to receive an adequate refund rate in future. Concerns that research results and innovations will pass Germany by are unfounded. Expensive marketing for spurious innovations in place of research for real innovations will no longer be worthwhile for the pharmaceutical companies.

Patients and contributors of the statutory and private health insurance funds certainly benefit. In future, they will receive early-evaluated new, high-quality medicinal products which are better than the previous standard, for a suitable refund rate. Pharmaceutical expenditure will be limited by the refund rates that are negotiated under the AMNOG procedure. Where medicinal products offer no additional benefit and cannot be assigned to an existing fixed-rate group, the price level will also be limited since the refund rate may not lead to higher annual therapy costs than those of the expedient comparative therapy. If several alternatives for the expedient comparative therapy are identified, the refund rate may not lead to higher annual therapy costs than those of the most economical alternative.

Both statutory and private health insurers can presume in future that high refund rates are indeed countered by a corresponding additional benefit for patient care, and that they do not have to finance spurious innovations which all too frequently are excessively expensive, as they used to have to. Lower expenditure on medicinal products with no additional benefit means that the probability of additional contributions and contribution increases falls.

Pharmaceutical companies will benefit from the new arrangements in the medium term. Pharmaceutical companies may expect in future to receive a suitable refund rate for real innovations. Furthermore, pharmaceutical companies will now be virtually free of the risk of their products not being eligible for refund by the statutory health insurance. The legislature has almost completely restricted an exclusion procedure based on a lack of economic viability.

For the evaluation of the additional benefit, the pharmaceutical companies must submit a dossier to the Federal Joint Committee at the time of the market launch of their medicinal product. The pharmaceutical company has a right to consult on the dossier with the Federal Joint Committee at an early date (e.g. on the expedient comparative therapy determined by the Federal Joint Committee and on the inclusion of specific groups of patients in the evaluation).

On the basis of the dossier, the Federal Joint Committee examines the additional benefit of the new medicinal product as described by the pharmaceutical company. The Federal Joint Committee can commission the Institute for Quality and Efficiency in Health Care (IQWiG) or other scientific institutions with this “early additional benefit evaluation”, or it may carry it out itself. The early additional benefit evaluation is completed and published at the latest three months after the market launch of the medicinal product.

The Federal Joint Committee decides within another three months after publication how the patient-relevant additional benefit of the new medicinal product is to be classified. Prior to this, the companies in question may make a statement in a written and oral statement procedure. The Federal Joint Committee deals with the arguments that have been put forward and then adopts its resolution. This resolution of the Federal Joint Committee is published.

After the resolution of the Federal Joint Committee, negotiations on a refund rate for medicinal products with an additional benefit for patient care are taken up between the National Association of Statutory Health Insurance Funds and the pharmaceutical company (negotiations in accordance with section 130b of Book Five of the German Social Code [SGB V]). The starting point here is the proven additional benefit in comparison to the expedient comparative therapy. Negotiations are hence carried out on a supplement towards or deduction from the costs of the expedient comparative therapy in line with the proven additional benefit.

Vollbildansicht im Layer The AMNOG procedure

New medicinal products with new active ingredients which are comparable in pharmacological and therapeutic terms with fixed-rate medicinal products are directly included here in existing fixed-rate groups where the additional benefit was not demonstrated as a therapeutic improvement within the meaning of the fixed-rate arrangement. The fixed rate is a maximum refund up to which the statutory health funds assume the costs of specific medicinal products prescribed by physicians. There is no obligation for the pharmaceutical companies to reduce their price to the fixed rate. However, other medicinal products of the same fixed-rate group are available in such a case for patient care at the fixed rate or lower.

For medicinal products with no proven additional benefit, the National Association of Statutory Health Insurance Funds negotiates a refund rate with the pharmaceutical company in accordance with section 130b of Book Five of the Social Code. The refund rate for such medicinal products may not be higher than the cost of the expedient comparative group with which the new medicinal product was compared. If several alternatives are determined as the expedient comparative therapy, the refund rate may not lead to higher annual therapy costs than the most economical alternative.

The refund rate that was negotiated applies to persons with both statutory and private insurance, and to self-paying patients in Germany. The refund rates which were negotiated apply from the first day of the 13th month after first being launched on the market. At federal level, the negotiated refund rate may be followed by selective contracts between individual health insurance funds or their associations, and the pharmaceutical companies.

If no agreement can be reached within six months on a refund rate between the National Association of Statutory Health Insurance Funds and the pharmaceutical company, the proceedings go to arbitration. The arbitration body is composed of three non-partisan representatives and two representatives each of both negotiation partners.

The pharmaceutical company can apply to the Federal Joint Committee for a renewed benefit evaluation if new scientific findings are available. This is however only possible at the earliest one year after publication of the resolution on the early additional benefit evaluation. After an arbitration award has been handed down, both sides of the negotiation can apply to the Federal Joint Committee for a cost-benefit valuation.

The benefit of a medicinal product is understood to mean its therapeutic effect as relevant to patients. Major criteria are improving the state of health, shortening the period of illness, extending survival, reducing side-effects or improving quality of life. A medicinal product which wishes to distinguish itself from the expedient comparative therapy must exceed the benefit of this therapy, that is it must have an additional benefit in the stated categories. The result of the examination, and the resolution of the Federal Joint Committee based on it, then act as a barrier: Either the medicinal product is allocated to the fixed-rate arrangement, or negotiations are carried out with regard to a refund rate in accordance with section 130b of Book Five of the Social Code.

Since the AMNOG provisions came into force, legislature has presumed that a new medicinal product has a fictive benefit as a result of its approval under the law on medicinal products. When it comes to approval, however, only effectiveness, quality and safety are examined and the market launch is regulated by weighing up benefits and risks. No assessment along these social law criteria (additional benefit) is carried out on approval.

Whilst the early benefit evaluation in accordance with section 35a of Book Five of the Social Code is a differentiated finding as to the probability and extent of the benefit in comparison to the expedient comparative therapy, the focus of the evaluation in the fixed-rate arrangement is different. Here, the benefit in comparison to other medicinal products of a fixed-rate group takes on a major role in proving a therapeutic improvement.

Accordingly, in the early benefit evaluation, new medicinal products that are comparable in pharmacological and therapeutic terms with fixed-rate medicinal products are directly evaluated within a fixed-rate context (section 35a subsection (1), sentence 4, of Book Five of the Social Code). This means that the additional benefit is portrayed not in differentiated grades and probabilities, but exclusively as a yes-no decision regarding whether or not a therapeutic improvement is proven within the meaning of the fixed-rate arrangement. Indications or notes by themselves are therefore fundamentally unsuited to prove a therapeutic improvement.

If for active ingredients that are eligible for a fixed rate the additional benefit in accordance with section 35a of Book Five of the Social Code cannot be proven as a therapeutic improvement in accordance with section 35 section (1b), sentences 1 to 5, of Book Five of the Social Code, the active ingredients are directly assigned to the existing fixed-rate group. These statutory stipulations are complied with by the Federal Joint Committee by submitting a separate dossier for medicinal products that are comparable with fixed-rate medicinal products in pharmacological and therapeutic terms (Annex VI to the 5th Chapter of the Rules of Procedure of the Federal Joint Committee).

The Federal Joint Committee defines the expedient comparative therapy according to transparent procedural criteria. What criteria are applied when determining the expedient comparative therapy is described in section 6 of the 5th Chapter of the Rules of Procedure of the Federal Joint Committee. The expedient comparative therapy is the generally-recognised standard therapy in the respective area of application. Since it is the standard with which a new medicinal product is compared as to its additional benefit, it is of central importance. In accordance with the principles applied by the Federal Joint Committee, the expedient comparative therapy must comply with the international standard of evidence-based medicine and be licensed in Germany. If there are several indications, several comparative therapies may also be defined. The standard in an area of application does not necessarily have to be a medicinal product from the same class of active ingredients. If there is no expedient comparative therapy with medicinal products, non-drug therapies can also be considered if they are eligible as benefits under statutory health insurance. These therapies must also comply with the generally-recognised state of medical knowledge within in the range that is relevant to the application. It is however also possible to compare with non-treatment.

The Federal Joint Committee is the highest decision-making body of the joint self-government of physicians, dentists, psychotherapists, hospitals and health insurance funds in Germany. It takes its decisions on the basis of its Rules of Procedure. Patient representatives take part in the decisions in an advisory capacity. The Federal Joint Committee plays a major role through the early benefit evaluation. It determines, for instance, the expedient comparative therapy and, after a statement procedure, issues a resolution on the additional benefit of new medicinal products that is relevant to patients. The Federal Joint Committee has set up an overview of the evaluation procedure on its website. The public is able to read here about all active ingredients for which the Federal Joint Committee is carrying out or has already completed an early additional benefit evaluation.

Further information about the benefit assessment: http://www.english.g-ba.de/benefitassessment/information/

The Institute for Quality and Efficiency in Health Care (IQWiG) is an independent specialist scientific institution studying matters that are of fundamental significance for quality and efficiency within statutory health insurance according to the standards of evidence-based medicine. In the AMNOG process, the IQWiG can be commissioned by the Federal Joint Committee to carry out the early benefit evaluation.

The early additional benefit evaluation by the Federal Joint Committee is carried out in a transparent manner according to scientific standards. There is no reason to doubt the suitability of the Federal Joint Committee, on which representatives of the medical profession, hospitals, funds and in an advisory capacity patients’ representatives work together. The pharmaceutical companies in question can submit their objections/additions to the evaluation of their medicinal products in a written and oral statement procedure. All resolutions that are adopted, including the summary scientific and legal evaluation, the discussions, as well as the debate with the arguments put forward in the statement procedure, are retrievable on the Internet site of the Federal Joint Committee. It is not an exception for a funding organisation to carry out remuneration negotiations on the object of the evaluations subsequently to the evaluation by the Federal Joint Committee, such as the National Association of Statutory Health Insurance Funds with the pharmaceutical company on medicinal products in the case of new active ingredients.

Theoretically, a benefit evaluation could also be carried out immediately at market launch. Other countries are already doing this. The National Association of Statutory Health Insurance Funds would support such an approach.

The list price of the medicine set by the respective pharmaceutical company on launching it on the market remains unchanged. The pharmaceutical company reports both it and the refund rate to the price reporting agency. From the 13th month after market launch, the refund rate in accordance with section 78 subsection (3a) of the Medicinal Product Act (AMG) is however the relevant sales price of the pharmaceutical company, which then becomes the reference for the manufacturer’s discount, turnover tax and co-payments.

The representatives of the pharmaceutical companies and of the National Association of Statutory Health Insurance Funds stipulated conditions in the “Framework Agreement for the Negotiations” which apply as a framework regardless of the specific active ingredient or of the individual pharmaceutical company, and hence do not need to be repeatedly clarified in individual negotiations. These are, firstly, organisational questions, such as the venue of the negotiations or the intervals at which they are held. This however also includes the fundamental approach to be taken in order to calculate the refund rate and possibly the consideration of the manufacturers’ discounts. The National Association of Statutory Health Insurance Funds has even granted to the pharmaceutical companies the option that they can decide within four weeks of the resolution of the Federal Joint Committee whether to enter into negotiations as to the refund rate or to cease to sell their medicinal product in Germany (“opt out”). Amongst other things, it will emerge at this point whether the pharmaceutical companies have the patient’s interests at heart, or are focussing on their own economic interest. The Framework Agreement of the relevant associations of the pharmaceutical companies with the National Association of Statutory Health Insurance Funds is available on the web pages of the National Association of Statutory Health Insurance Funds.

The foundation for the National Association of Statutory Health Insurance Funds is formed by the statutory stipulations and by the framework agreement which it concluded with the manufacturers’ associations in the autumn of 2011. These also stipulate that the expedient comparative therapy which in each case was determined by the resolution of the Federal Joint Committee, and its annual therapy cost, are considered to be the most important aspects. In accordance with the framework agreement, the refund rate is agreed in the event of an additional benefit by a supplement on the annual therapy costs of the expedient comparative therapy. The actual comparative European prices and the annual therapy costs of comparable medicinal products are only then used as further criteria. If the new product does not show any additional benefit vis-à-vis the comparative therapy, and if it also cannot be allocated to a fixed-rate group, the Act requires a refund rate which does not lead to higher annual therapy costs than the most economic alternative. If the additional benefit is less than that of the expedient comparative therapy, the National Association of Statutory Health Insurance Funds stipulates a deduction. The refund rates negotiated for health insurance funds in Germany apply from the 13th month after the initial market launch.

The additional benefit vis-à-vis the expedient comparative therapy stipulated in the resolution adopted by the Federal Joint Committee is relevant for agreeing on the refund rate for the National Association of Statutory Health Insurance Funds. Because, previously, medicinal product prices in Germany have been higher than in most other EU States, legislature has provided that the actual sales price in other European countries is also to be taken into account in negotiations on the refund rate in accordance with section 130b of Book Five of the Social Code. This actual sales price includes statutory and voluntary discounts. For this, the pharmaceutical company provides the National Association of Statutory Health Insurance Funds with the individual prices of all medicinal product packages, not including value-added tax, which are received by the pharmaceutical company if the discounts which it voluntarily grants or which it has to grant are taken into account.

The actual comparative European prices form an aspect in the negotiations, but not the most important and not the only one, even if the pharmaceutical companies would like to see it that way. Much more important than the comparative European price is the additional benefit evaluation in comparison to the expedient comparative therapy. The new medicinal product must take this as its benchmark.

The pharmaceutical companies are obliged by law to inform the National Association of Statutory Health Insurance Funds of the actual sales prices (retail prices not including value-added tax, minus the discounts that have been or which must be granted). The “country basket” with 15 European states has now been established in accordance with the award of the arbitration body. These are: Austria, Belgium, the Czech Republic, Denmark, Finland, France, Greece, Ireland, Italy, the Netherlands, Portugal, Slovakia, Spain, Sweden and the United Kingdom. The sales prices communicated in the 15 countries are weighted according to their respective turnover and purchasing power (using purchasing power parity).

The AMNOG procedure can also be discontinued by the pharmaceutical company after the market launch and benefit evaluation, so that no refund rate is brought about. All pharmaceutical companies can do this within four weeks of the publication of the resolution of the Federal Joint Committee. The decision for the “opt-out” is taken by the pharmaceutical company on the basis of commercial considerations.

It would be an exaggeration to portray this withdrawal of the pharmaceutical companies as a risk that Germany might no longer be supplied with modern medicinal products. No one who has developed real innovations needs to be shy of the AMNOG procedure.

Yes. A cost-benefit evaluation can be carried out (section 35b of Book V of the Social Code). It cannot however be required by the two negotiation parties or by the pharmaceutical companies until after an arbitration award if no additional benefit has been found to exist for their medicinal product. In the latter case, the pharmaceutical company must pay the cost of the evaluation. The cost-benefit evaluation however does not halt the negotiations on the refund rate or suspend the setting of a fixed rate.

For the cost-benefit evaluation, the Federal Joint Committee may agree with the pharmaceutical company on a period for submission of substantiating studies, which should preferably be carried out in Germany. The maximum period is three years. The cost of the substantiating studies is to be met by the pharmaceutical company. Together with further clinical studies, the substantiating studies that have been submitted form the basis for the subsequent cost-benefit evaluation by the Institute for Quality and Efficiency in Health Care.

It was possible to make savings of 180 million Euro in 2012 and 2013. As shown by the reasoning for the Act, the legislature aims to negotiate refund rates and include them in the refund rate arrangement more rapidly, thereby saving 2 billion Euro per year. This would however be contingent on simultaneously tackling the entire established market and 100 percent market penetration by new medicinal products directly after market launch. Firstly, the inclusion of the established market intended with the AMNOG was rescinded (Fourteenth Act Amending Book Five of the Social Code [14. SGB V-Änderungsgesetz]) and secondly, new products frequently initially achieve a relatively low turnover in the introductory phase, which does not pick up strongly until the subsequent growth phase. The discontinuation of the increased manufacturer’s discount since April 2014 will impose further burdens on statutory health insurance in the years to come.

The National Association of Statutory Health Insurance Funds is aware of its responsible position. It has a special status, but is not the only player in the AMNOG process. With the Fourteenth Act Amending Book Five of the Social Code, the legislature provided that in addition to the Association of Private Health Insurance, which in accordance with section 130b of Book Five of the Social Code is involved in the negotiations on the refund rate as a guest, a representative of each health insurance fund attends the negotiations. The negotiations make it possible for the first time in Germany to break the one-sided ability of the pharmaceutical companies to dictate price. Unlike in most European countries, statutory health insurance previously had to accept any price that was demanded for new products, regardless of whether or not the active ingredient was a gain for patients. Even after the AMNOG, the pharmaceutical companies continue to set their starting price, but now only for the first year where an active ingredient is placed on the market for the first time. Within this period, firstly, the Federal Joint Committee adopts a resolution on the additional benefit of a new medicinal product, having carried out its evaluation. Secondly, on this basis the National Association of Statutory Health Insurance Funds negotiates with the pharmaceutical company on a refund rate (section 130b of Book Five of the Social Code). Subsequently, further possibilities are open to the pharmaceutical company for contracting with individual health insurance funds (section 130c of Book Five of the Social Code).

The National Association of Statutory Health Insurance Funds engages in the AMNOG negotiations in the interest of 70 million people with statutory insurance and nine million with private insurance. Stable contributions for the community of insured parties are a major asset.