Germany Amends and Approves the New Medical Research Act

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On 3 July 2024, the Health Committee of the Bundestag amended and approved the Federal Government’s Medical Research Act (Medizinforschungsgesetz or MFG) (1). The new legislation will impact national laws to simplify clinical trials and approval processes for drugs and medical devices. MFG will also amend rules on advanced therapy medical products (ATMPs) and drug pricing and reimbursement laws (Arzneimittelmarktneuordnungsgesetz [AMNOG]). In addition, the new legislation will result in a reorganization of the regulatory agencies (The Federal Institute for Drugs and Medical Devices [BfArM] and Paul Ehrlich Institute [PEI]) and ethics committees (2).

Pharma may choose confidential pricing … but at a cost

The MFG allows pharmaceutical companies confidential pricing, providing they have drug research departments in Germany that can demonstrate “relevant own projects and cooperation with public institutions in preclinical or clinical drug research in Germany” (3). For instance, if at least 5% of approved study subjects participate in clinical trials in Germany, then manufacturers could be exempt from the AMNOG guardrails that were introduced with the Statutory Health Insurance Finance Stabilization Act in November 2022 (4).

Once a pharma company has completed price negotiations with the National Association of Statutory Health Insurance Funds (GSK-SV), they will have five days to decide whether to keep the pricing of new patent-protected drugs confidential or transparent. Within seven days of receipt, the GSK-SV will decide whether ‘sufficient’ proof has been provided. If a pharmaceutical company requests confidential pricing, an additional discount of 9% will be imposed on the agreed sales price (not the pharmacy sales price) (3).

Companies that opt for confidentiality will also be obligated to reimburse the health insurance funds and other payors the overpaid difference between the ‘public’ and the ‘real’ price and will also have to reimburse the health insurance funds the overpaid portions of the mandatory surcharges for pharmacies and wholesalers and value-added tax (VAT) (3). Therefore, the final price negotiated by companies to keep drug prices secret could result in more than the 9% discount. The new rules for confidential reimbursement prices shall apply as of 1 Jan. 2025 and will be enforced until 28 June 2028 and reviewed in late 2026 (3).

Concerns over confidential drug pricing

Confidential pricing has proved a contentious issue among stakeholders in Europe. On one hand, the pharma industry in Europe has been keen to move towards confidential pricing because German reimbursement prices are regularly used as reference prices in other European countries, and an unfavourable price in Germany can have a significant impact on the price achieved in other European countries and abroad. In the past, this has led manufacturers to withdraw drugs from the German market; for instance, Bristol Myers Squibb decided not to launch the cancer drug Opdualag (nivolumab/relatlimab combination) in Germany, due to pricing pressures (5). If a company chooses to keep the reimbursement price confidential, it would not be listed in public sources or disclosed to pharmacies and could lead to differential pricing, the ‘public’ price, and the ‘real’ or agreed (discounted) price (3).

In 2022, the ‘AMNOG guardrails’ regulations were introduced to protect against excessive prices for patent-protected drugs with no or only a small or non-quantifiable benefit (6). These regulations will be deleted and replaced by the economic development goals laid out by the German Government in its new Pharma Strategy (6,7). However, the GSK-SV fears the lack of transparency could lead to increases in pharmaceutical expenditure (8,9). This is a major concern given that more than 73 million German citizens with statutory health insurance have already witnessed a significant increase in health insurance contributions earlier this year, and there is pressure on the Federal Ministry of Health to raise contributions further (6).

The new Pharma Strategy aims to make Germany more attractive to the pharma industry

The MFG is part of the German government’s National Pharma Strategy to strengthen Germany’s position as a business and pharmaceutical location (10). The Strategy Paper 4.0–Improving the General Conditions for the Pharmaceutical Sector in Germany lists several specific reform ideas all of which will have a significant impact on the pharmaceutical industry and aim to improve market access and pricing environment in Germany (Figure 1).

Germany is the fourth largest pharmaceutical market in the world and the largest European market generating €56.5 billion in 2022 and growing by 5.4% per annum (11). According to Marcus Schmidt, Germany Trade & Invest Director of Chemicals and Health, “The pharmaceutical strategy underlines the great importance of this sector for the federal government. Together with the laws that have already been introduced, Germany will expand its leading role in Europe in the areas of research and development as well as production” (10). Several pharma companies—Daiichi-Sankyo, Eil Lilly, and Sanofi—have all increased their investment in Germany in the past nine months (12).

The latest reform could have a significant impact on drug pricing and will link it more closely to local investment in clinical trials and R&D in Germany. However, the MFG will not come into force until it has received the seal of approval from the German Federal Council (Bundesrat), and this is unlikely to occur until the fourth quarter of 2024 (3).

References

1. German Bundestag. Gesetzentwurf der Bundesregierung. Entwurf eines Medizinforschungsgesetze Drucksache 20/11561. 29 May 2024.
2. Covington. Germany Amends Drug Pricing and Reimbursement Laws with the “Medical Research Act”–Drug Pricing Becomes Intertwined with Local Clinical Research Expectations. Blog. Insideeulifesciences.com. 12 July 2024.
3. German Bundestag. Health Committee Approves Medical Research Act. Bundestag.de. 3 July 2024.
4. Simon-Kucher. Germany: How the GKV-FinStG Law is Transforming the Pharma P&R Landscape. Simon-kucher.com. 24 Feb. 2023.
5. Cohen, J. Are German Drug Pricing Regulations Chasing Some Drug Makers Away, Causing Them To Not Launch Products In The Market? Forbes.com. 5 Apr. 2023.
6. Stoff-Ahnis, S. Health Insurance Companies Should Support the Pharmaceutical Industry. GKV-spitzenvergand.de. 4 July 2024.
7. Koyuncu, A. German Government Pursues New Pharma Strategy with Significant Reform Ideas. Blog. Covington. Insideeulifesciences.com. 21 Nov. 2024.
8. Stoff-Ahnis, S. Secret Prices Make Care More Expensive Without Improving It. GKV. GKV-spitzenverband.de. 6 June 2024.
9. Navlin Daily. What are the Implications of Confidential Rebates in Germany? Navlindaily.com. 5 Dec. 2023.
10. Schmidt, M. Big Changes Coming in German Health, Pharma, Pharmaceuticals. Germany Trade and Invest, GTAI. gtai.de 14 Dec. 2023.
11. Albrecht, J. The Pharmaceutical Industry in Germany. Germany Trade and Invest, GTAI. gtai.de (accessed 12 July 2024).
12. Lin, J. Germany’s New Medical Research Act Will Allow Pharma Companies Confidentiality on Price. Euractiv. 5 July 2024.

About the author

Cheryl Barton, PhD, is director of PharmaVision, info@pharmavision.co.uk.

Article details

Pharmaceutical Technology Europe®
Vol. 36, No. 7
July/August 2024
Pages: 9–10

Citation

When referring to this article, please cite it as Barton, C. Germany Amends and Approves the New Medical Research Act. Pharmaceutical Technology Europe, 2024, 36 (7), 9–10