General political situation

In contrast to most other European countries, Germany’s economy performed very well in 2011. As a result, the social security funds – especially the health fund – are well funded and show surpluses. Due to the uncertainties induced by the European financial crisis, however, and the new constitutional debt limit for public budgets, the government still is extremely reluctant to increase its spending.

The coalition is in a bad shape, hampering the cooperation. The Liberal Party, junior partner of the Christian Democrats, remains extremely low in the polls and if there were elections now they would not get back into the Bundestag. The choice of a candidate to succeed the Federal President the Liberals upset their coalition partner by forcing him to follow their proposal which was backed by the Social Democratic Party and the Greens.

The next federal elections are scheduled for autumn 2013. In the current situation it seems likely that the next government will be formed by another Grand Coalition of Christian Democrats and Social Democrats, as in the years 2005-2009, which would necessarily entail changes in both Ministry of Economics and Ministry of Health.

Public debate still is extremely difficult for the research-based pharmaceutical industry. As a rule, public media are hostile towards the industry, and the public opinion does not react positively towards decisions perceived as being beneficial for the pharmaceutical industry. So politicians are extremely careful not to appear “friendly” towards the industry.

vfa interna
On 30 November 2011 Dr. Hagen Pfundner (Roche) was elected new president of the vfa Board which also was newly composed.

AMNOG implementation
The drug-market reform act (AMNOG) is currently being implemented. On 18 May 2011 the head association of health insurance funds and the pharmaceutical industry agreed on the members of the arbitration board which will set the rebate for the list price if manufacturer and head association of health insurance funds are unable to agree on a rebate in their negotiations.

In October 2011 the head association of health insurance funds and the pharmaceutical industry came to a compromise regarding the master agreement which shall provide guidelines for the forthcoming rebate negotiations following the early benefit assessment. The only issue which the parties could not agree on was how to implement the European price comparison stipulated in the AMNOG. On 24 November 2011 the vfa and the other German associations of the pharmaceutical industry invoked the arbitration board in order to take a decision how international price comparison should be applied in the course of the implementation of AMNOG. In its statement to the arbitration board industry pointed out that only prices of those countries should be eligible for price comparison which are comparable with Germany in terms of economic performance. Changes in currency exchange rates, differences in purchasing powers and further factors influencing prices should be considered as well. By February 10, 2012, the arbitration board came to the decision to ask the parties to enter into new negotiations about this subject, according to the following rules:

  • The reference country group should include more than four countries, but not necessarily all countries of the European Economic Area (EEA);
  • The reference country group should not be limited to the EUROcountries; instead, all countries of the EEA should be considered;
  • The reference country group should cover “ about 80%” of the population of all EEA-countries (Germany not included);
  • The reference country group should primarily contain such countries that are comparable to Germany in their economic status, calculated in GDP per capita in purchasing power parities according to Eurostat

The arbitration board also decided on February 10th that the prices which the pharma companies have to report should be net prices, reduced by any voluntary or compulsory rebates. If such information cannot be given for factual or legal reasons, the reported prices are to be estimated.

The new negotiations of the parties in this matter, meanwhile, did not result in an agreement, so the arbitration board itself made a decision on February 29. According to this, the following 15 countries are the reference countries:

Belgium, Denmark, Finland, France, Greece, UK, Ireland, Italy, Netherlands, Austria, Portugal, Sweden, Slovakia, Spain and the Czech Republic.

  • In its verdict, the arbitration board appreciated the demands of the industry to some extent:
  • reduction of the number of countries from 30 to 15;
  • elimination of small countries;
  • countries to represent “about 80%” of the population of the EEA, not “at least”.

However, the verdict causes severe problems in key issues, such as, e.g., the inclusion of a crisis country as Greece. This is mainly due to the inappropriate legal stipulations in AMNOG which gives most of the leverage to the self-administration bodies in the G-BA. vfa will continue to address these issues in its discussions with politicians and public.

Early benefit assessment
Experiences from the first early benefit assessments are available since the end of January 2012, more than a year after the Act on the Reform of the Market for Medicinal Products (AMNOG) came into force: 24 assessment procedures about products newly launched in Germany have been started; assessment results from the Institute for Quality and Efficiency in Health Care (IQWiG) are currently available for 10 of them; the Federal Joint Committee (G-BA) has published its benefit assessment decision so far in two cases.

First experiences show that IQWiG’s methods are highly biased and in many aspects scientifically questionable. As an institution of the GBA, it is not an objective institution, but clearly focused to serve the interests of the statutory health insurance.

Due to the still insufficient numbers of G-BA-decisions based on IQWiG’s early benefit assessment reports, there is not enough empirical evidence to make any judgement about the influence of IQWiG’s practices will have on the rebate negotiations.

vfa addresses the inacceptable methods and practices of IQWiG towards the public and the politicians, and supports the member companies in their dealings with IQWiG. It is our objective to align IQWiG’s methodology more with those of EMA and BfArM, in order to ensure more objective and predictable reports.

Activities and Outlook

  • Compulsory rebate:
  • After the review process regarding the necessity to keep up the increased compulsory rebate on non reference-priced medicines – as scheduled in AMNOG - the Federal Ministry of Health decided to maintain it unchanged, against the protests of the industry. The compulsory rebate was increased in August 2010 from 6% to 16%, since forecasts predicted for 2011 a deficit of 11 billion Euros. Meanwhile, the health fund shows a huge surplus of more than EUR 20 billion. There are political demands to reduce insurance premiums or to reduce the tax subsidies (up to EUR 14 bn. annually). vfa had repeatedly pointed out that considering the significant surplus in 2011 of the health fund financing the statutory health insurance there is no longer a crisis-scenario which justifies the increased rebate. vfa insists to reduce the compulsory rebate again, since the financial crisis of the health insurance funds no longer exists and considers to start a legal examination

  • Confidentiality:
  • vfa is also lobbying for better conditions to keep confidential the rebate on which manufacturer and head association of health insurance funds agree in their negotiations, in order to avoid any spillover effects in other countries referencing the price of a product in Germany. vfa and its member companies developed a concept how to improve the confidentiality of the rebates on which manufacturer and health insurance fund will agree. This concept would especially ensure that the rebated list price would not become the effective retail price. However, there will remain a number of persons - e.g. staff of health insurance funds - who will unavoidably know the rebates and who, therefore, must be pledged to confidentiality. Industry’s proposal has been communicated to and discussed with all relevant stakeholders, including the Minister of Economics, the Minister of Health and leading members of Parliament. Other industry associations (e.g. generic producers as well as small pharmaceutical manufacturers) are aligned.

  • Price negotiations:
  • First rebate negotiations for new products between individual manufacturers and the federal association of health insurance funds have started early 2012. It is too early to report any insights and experiences.

  • Political reactions:
  • Due to the apparent problems with the early benefit assessment and thanks to industry’s lobbying activities an increasing number of politicians share the view that the current market situation is not acceptable. In this context politicians start to agree that the Joint Federal Committee and the head association of sickness funds tend to implement the AMNOG inappropriately. This became clear when an internal position paper of the Christian Democratic Party was leaked to the public in January, reflecting vfa’s most important demands. Nevertheless, considering the overall political setting politicians are extremely hesitant to start a legislative process to amend the AMNOG at this point of time. Instead, they prefer the provisions of the AMNOG to be interpreted and implemented in a different way. vfa will continue to lobby for the necessary adjustments.

Market Development
Data base: Insight Health data Jan. – Dec. 2011; SHI-data including the 3rd quarter 2011

The development of the key indicators of the Statutory Health Insurance (SHI) drug market is as follows (comparison of 2010 to 2011):

  • Sales
Sales (without rebates)Changes in %
201031.9 billion EUR
201132.1 billion EUR+0.7%

  • SHI-Expenditure
SHI-ExpenditureChanges in %
201030.4 billion EUR
201129.5 billion EUR-2.9%

The gross sales in 2011 grew moderately by 0.7 % compared to 2010. The effective spending of the SHI for pharmaceuticals decreased by 2.9% due to the aggravated rebate provisions.

The manufacturers’ rebates of 3.6 € billion in total (provisional extrapolation) are divided into mandatory rebates (2.2 € billion) and contractually agreed rebates (1.4 € billion).

Ex-factory prices decreased in 2011 by 0.6 % compared to 2010 (rebates not deducted). Price reductions applied especially to generic products. Prices of patent protected products are mainly stable.

In 2011, the reference price regulated market segment has been extended several times by the Federal Joint Committee and the National Association of Statutory Health Insurance Funds. In consequence, the prescription share of this segment increased from 75 to 78 %, the sales share from 38 to 41 %.