AMNOG rebates and price premiums vary substantially and deliver savings but may not be enough to stave off growing pressure for reform

In less than 10 years, “AMNOG” has become one of the best-known acronyms in international market access. The Arzneimittelmarkt-Neuordnungsgesetz (Pharmaceutical Market Restructuring Act), enacted in December 2010, established an early benefit assessment system that transformed drug pricing in Germany and is now widely regarded as a model of health technology assessment worthy of imitation.

The AMNOG system is used to negotiate rebates on manufacturers’ list prices based on a drug’s degree of additional benefit. The rebated price is determined relative to the annual cost of treatment of the designated comparator therapy (or therapies), though prices elsewhere in Europe or prices of similar medicines in Germany may also be used as supplementary factors in setting rebates. If a new drug is judged not to offer any additional benefit over its comparator(s), it must be assigned to a reference pricing group (a rare occurrence) or have a rebated price that is not higher than that of the comparator(s). In the event that a new medicine is deemed inferior to its comparator(s), the rebated price must be lower than that of the comparator(s).

Substantial rebates on treatments for CNS disorders and cancers

DAK-Gesundheit, Germany’s third-largest health insurance fund, has recently published its latest annual review of the AMNOG process. As of 1st April 2020, the Gemeinsamer Bundesausschuss (GBA; Federal Joint Committee) had assessed 264 drugs, of which 234 (89%) were on the market and 30 (11%) had been withdrawn from sale in Germany. Rebates had been negotiated with manufacturers for 200 drugs (76%), while the arbitration service had set rebates for 16 products (6%). Negotiations were still in progress for 8 medicines (3%) and reference prices had been imposed on five products (2%).

Across the pharmaceutical market as a whole, rebates average 21.4%. However, there are enormous variations by therapeutic area, ranging from an average of 11.2% for infectious diseases to 32.9% for diseases of the central nervous system (Table 1).

Rebates vary more modestly based on drugs’ level of additional benefit. Figure 1 shows that the mean rebate is 15.3% (range 0-45.9%) for medicines with a considerable level of additional benefit and 26.3% (range 0-70.7%) for drugs that do not have proven additional benefit. The relatively small disparity in the mean rebates between drugs that have such widely differing levels of additional benefit may seem surprising, but it is important to bear in mind that rebates are calculated in relation to the list prices that manufacturers set in the first 12 months following launch, when they have pricing freedom. Manufacturers of drugs that are likely to receive more modest additional benefit assessment ratings probably moderate their list prices at launch.

Interestingly, the AMNOG-Report 2020 did find greater variation in rebate levels depending on whether rebates were negotiated between the GKV-Spitzenverband (National Association of Statutory Health Insurance Funds) and the manufacturers, or imposed by the arbitration service. Negotiated rebates average 20.2% compared with imposed rebates averaging 32%. Note, however, that drugs referred to arbitration have generally been judged to offer no proof of additional benefit.

Oncology drugs command the largest price premiums

The AMNOG-Report 2020 also analyses price premiums over comparator therapies (calculated on the basis of annual therapy costs)—albeit with the important caveat that such an exercise is complicated by the existence in some cases of multiple comparators, diverse patient groups and treatment options, and personalised dosing requirements. The average premium is 307% (range -88% to +6,368%). If only products judged to have proven additional benefit are included in the analysis, the average price premium is 518%. Table 2 shows that average unweighted price premiums range from 4% for treatments for respiratory disorders to 445% for oncology drugs.

Drugs that are deemed to offer substantial or considerable additional benefit have average price premiums of 637%, whereas the price premium for medicines with minor additional benefit averages just 451%. Products that are judged to offer additional benefit in all indications have average price premiums of 509%, compared with average premiums of 522% for drugs that have variable levels of additional benefit and are subject to mixed pricing.

Growing pressure for reform of AMNOG to reduce the cost of new medicines

Savings from AMNOG rebates have grown steadily year on year as more drugs undergo early benefit assessment. IQVIA reports that AMNOG rebates saved the German healthcare system €3.153 billion in 2019—considerably more than the government’s original target of €2 billion per year. Cumulative savings since the creation of the AMNOG system amount to €9.466 billion. The German healthcare system also benefited from savings of more than €4.882 billion from voluntary rebate contracts and €1.356 billion from mandatory manufacturer rebates in 2019.

Despite these savings and the fact that pharmaceutical spending has remained at a steady 16% of total healthcare expenditure in recent years, politicians and the health insurance funds see the need for measures to reduce the cost of new medicines. The AMNOG-Report 2020 notes that the average annual therapy cost of new medicines that have undergone the AMNOG process increased from approximately €40,000 in 2012 to €152,000 in 2019. Andreas Storm, the Chairman of DAK-Gesundheit, believes “we must develop the instrument [i.e., the AMNOG system] so that patients continue to have access to high-quality care without overburdening the healthcare system.”

The following questions will likely be critical in determining the future shape of the AMNOG system:

• Will cost-effectiveness—long resisted in Germany—become a routine element of the AMNOG process?
• Will free pricing in the first year of marketing be curtailed, possibly by making rebates retroactive to launch?
• Will concessions granted to orphan drugs—most notably, the automatic presumption of some level of additional benefit—be eroded?
• Will the new physician prescribing information system, which will provide summary information on AMNOG assessments and guidance on economical drug choices, have a material impact on physicians’ prescribing behaviour?
• Will managed entry agreements, a relatively new phenomenon for new medicines in Germany, become more commonplace for high-priced drugs?
• Will the collection of real-world evidence help to tackle issues around the cost of orphan drugs and advanced therapy medicinal products?

Some of these questions have been discussed for several years, but the combination of the enormous cost of the COVID-19 pandemic and federal elections in 2021 could lend new urgency to this debate. The pharmaceutical industry and other stakeholders will wait anxiously to see how the AMNOG system evolves in the coming months and years.