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Upcoming cost-containing measures in Germany—How will they affect the biopharmaceutical industry?

By HTA Quarterly

By: Werner Kulp, PhD; Sandra Billig, PhD
This articles appears in the Fall 2022 edition of HTA Quarterly. Subscribe to receive future issues. 
Reform in front of money
Reform in front of money
Multiple factors have combined to create a large and growing deficit in statutory health insurance (SHI) contribution revenue vs healthcare expenditures in Germany. In this article, we consider whether the new proposed SHI Financial Stabilization Act will deliver the structural reforms needed to reverse this trend, focusing specifically on measures affecting the biopharmaceutical industry.
Reform in front of money

In 2020 and 2021, in addition to the longstanding trend of rising costs, healthcare expenditures increased immensely due to the pandemic, thereby significantly exceeding the sum of all premiums paid to SHI funds. This will result in a deficit of about €17 billion in 2023. In addition, demographic change in Germany is expected to lower the contribution revenue for the SHI system in years to come, which will contribute to a significantly growing financing gap in the SHI system from 2023 onward. To close this gap, on July 27, 2022, the Federal Cabinet adopted a draft of the SHI Financial Stabilization Act (GKV-FinStG) that is intended to provide stable and reliable financing for the SHI system. Although the draft has no legislative power, it is expected that the final law will be very similar and will contain, at most, minor changes. All stakeholders (hospitals, clinicians, pharmacies, pharmaceutical industry, SHI funds, and insurees) of the SHI system will be affected by the proposed measures (Table 1). In this article, measures specifically affecting the biopharmaceutical industry are described

Table 1. Stakeholders affected by measures proposed in the draft law of the SHI Financial Stabilization Act Stakeholders affected by measures proposed in the draft law of the SHI Financial Stabilization Act

Drug pricing in general—Stricter application of established instruments

A central component of the measures affecting the pharmaceutical industry concerns measures that directly intervene with the AMNOG (Arzneimittelmarkt-Neuordnungsgesetz; English translation: Pharmaceuticals Market Reorganisation Act) system and the pricing of drugs. The existing price moratorium (a price cap) for products outside of reference price groups will be extended for another 4 years. It is worth mentioning that companies will still be allowed to increase their prices, but the rebate paid to the SHI will be increased accordingly. This measure alone is estimated to avoid expenditures amounting to €1.8 billion. In addition, the period of free pricing will be reduced from months after launch.

The preceding draft considered a “solidarity contribution payment” totaling €1 billion based on the biopharmaceutical company’s share of the SHI’s actual expenditure in the previous year. In the actual draft this measure was replaced by an increase in the manufacturer’s rebate from 7% to 12%. However, this regulation is only valid until the end of 2023.

AMNOG system—Tougher rules for orphan drugs

The most prominent measure affecting the AMNOG system is the anticipated dramatic change in how orphan drugs are assessed. The main privilege afforded to orphan drugs in Germany is that an additional medical benefit is deemed to be proven by the marketing authorisation. Until now, the manufacturer was only obliged to provide evidence against an appropriate comparator therapy (ACT) defined by the G-BA (Gemeinsamer Bundesausschuss; English translation: The Federal Joint Committee, a group of German public health agencies) if annual costs to SHI exceeded €50 million. This threshold will now be lowered to €20 million. As a consequence, the legal presumption of the existence of an additional benefit for those drugs above the €20 million threshold will be lost. Of note, this new regulation affects already-assessed orphan drugs which might thereby lose the additional benefit granted in the initial assessment.

Price negotiation—Substantial strengthening of the payer side

Firstly, there will be a clearer link between the extent of the additional medical benefit and the achievable price in price negotiations.

For drugs with no additional medical benefit and for which a patent-protected ACT was defined by the G-BA, the price must be at least 10% lower than that of the ACT. For drugs with no additional benefit and an off-patent ACT, price must not be higher than that of the ACT (Table 2).

In cases of a minor or non-quantifiable additional benefit, the price of the drug must not exceed that of the ACT, provided that the comparator drug is still under patent protection.

Table 2. Dependency of the extent of the additional benefit and the price in the price negotiations Dependency of the extent of the additional benefit and the price in the price negotiations

Secondly, the importance of the price-volume agreements will be strengthened. While these instruments have been optional in the past and, therefore, rarely used, they will be mandatory in future.

Furthermore, wastage has to be considered in the price negotiation. If the waste of inefficient (too large) package sizes exceeds 20%, the cost of the waste must be considered in the price negotiation, reducing the achievable price accordingly.

Another component that is unique in drug pricing worldwide affects pricing of combination therapies. This mostly concerns conditions where combination regimens are common (e.g. oncology). This is worth mentioning as the price negotiation not only affects the new drug to be assessed but also the other drug(s) used in combination, with the respective combination drug(s) to be rebated by 20% when used in the indication of interest. Hence, companies not directly involved in the benefit assessment will be affected by the price negotiation as well. 

What do the new legal measures mean for biopharmaceutical companies?

Despite the sheer scale of the projected savings, there are no surprises in the pricing measures used; established instruments are only applied more rigorously. Thus, the German system is in line with other industrialised countries, even though the mix of instruments used may differ.

The most far-reaching instruments undoubtedly concern the handling of orphan drugs in the AMNOG system and the more mechanistic approach in explicitly linking the extent of the additional benefit with the final price after negotiation.

While in the past the risk of a full evaluation of an orphan medicinal product was rather rare, occurring in 30 out of 212 evaluations (18.8%), it is likely that due to lowering the threshold for a full evaluation to €20 million, the majority of orphan drugs will be fully evaluated in the first years of their life cycle. There is also the risk of losing the additional medical benefit granted in the initial orphan drug assessment. One reason might be the absence of head-to-head evidence in comparison to the ACT due to small patient populations and the ethical considerations inherent in clinical trial design for orphan conditions. The consequences for biopharmaceutical companies are twofold. Firstly, and in the short term, this means that companies need to identify the potential ACT and plan the generation of comparative data, e.g. through indirect or historical comparisons. Secondly, and more in the medium to long term, there is a need to thoroughly investigate whether randomised controlled trials against the ATC are possible, even though single-arm trials might be sufficient for regulatory approval.

Whereas the new regulations for orphan drugs affect only a limited spectrum of drugs, the link between the extent of the additional medical benefit and highest achievable price affects a wider spectrum of drugs (non-orphans and orphans with annual sales greater than €20 million). In addition, it will not be sufficient to gain at least a minor additional (or non-quantifiable) medical benefit to achieve a premium price relative to the ACT; rather a major or considerable benefit is needed. With that, a stronger focus on quality of life, morbidity and mortality is implemented in the AMNOG regulation. In most cases, to show an additional medical benefit in safety alone will not be sufficient to overcome this hurdle. Similar to orphan drugs, it is advisable to also consider these HTA-specific evidence requirements in future study planning. 

In general, the requirements and regulations will become tougher for biopharmaceutical companies in Germany. It should be noted, however, that all developed countries face the same cost pressures and potential macroeconomic headwinds and will therefore undertake more thorough patient-centered assessments of drugs and further strengthen price regulation measures.

What most likely remains unchanged is the fact that Germany continues to be one of the countries with the shortest delay between regulatory approval of drugs and market access/availability of new drugs, with immediate reimbursement after market access. 


  • German Federal Ministry of Health. Press release: The act to stabilise SHI fund finances; 2022. Accessed August 4, 2022.
  • German Federal Ministry of Health. Draft law of act to stabilise SHI fund finances. [Entwurf eines Gesetzes zur finanziellen Stabilisierung der gesetzlichen Krankenversicherung (GKV-Finanzstabilisierungsgesetz – GKV-FinStG) ]; 2022. Accessed July 25, 2022.
  • German Press Agency (DPA). Press release: Additional contribution for health insurance funds to rise by 0.3 points in 2023. [Zusatzbeitrag für Krankenkassen soll 2023 um 0,3 Punkte steigen]; 2022. Accessed August 10, 2022.