Pharmaceutical companies are now able to take immediate legal action against additional benefit assessments in the AMNOG (Arzneimittelmarkt-Neuordnungsgesetz or Pharmaceuticals Market Reorganization Act) process for new prescription drugs if arbitration proceedings are not initiated. This was decided by the German Federal Social Court (Bundessozialgericht or BSG) on September 10, 2020, bringing significant changes to the practice of the German drug pricing and reimbursement system.
The AMNOG process
Medicinal products with new active pharmaceutical ingredients (API) introduced to the German market must follow a specific evaluation and price negotiation process, commonly referred to as the AMNOG process. It generally consists of two steps: first, an additional benefit assessment conducted by the Joint Federal Committee (Gemeinsamer Bundesausschuss or GBA), and second, based on the assessment, price negotiations between the marketing authorization holder (MAH) and the Health Insurances Association (GKV-Spitzenverband). In case such negations fail, the pharmaceutical company may file for arbitration proceedings. Notably, only medicinal products with an additional benefit (compared to existing products) enjoy a favorable reimbursement price.
To date, it had not been considered possible to appeal an additional benefit assessment by the GBA, even if the concerned MAH deemed the API not to be new and thus ineligible for the AMNOG process. Rather, MAHs have been forced to go through the entire AMNOG process, including potential arbitration proceedings, before being able to launch a lawsuit against that arbitration decision.
On September 10, 2020, the BSG brought significant changes to this when it ruled that MAHs must be able to take immediate legal action against negative additional benefit assessments, if arbitration proceedings are not initiated.
The BSG’s landmark decision
In the present case before the BSG, the plaintiff MAH had launched an approved medicinal product for skin diseases with the API Ivermectin in Germany. The MAH did not consider the API to be new and did not submit a dossier for the additional benefit assessment, while the GBA considered the API as new and accordingly initiated an additional benefit assessment procedure. The GBA finally issued a negative additional benefit assessment decision. So as to not suffer further disadvantages, the MAH reached an agreement with the GKV-Spitzenverband on the reimbursement amount for the drug in dispute and, due to time constraints, did not conduct an arbitration proceeding under the AMNOG process.
In parallel, however, the MAH took direct action against the negative benefit assessment decision (i.e., the first step of the AMNOG process) at the Regional Social Court Berlin-Brandenburg (Landessozialgericht Berlin-Brandenburg or LSG). As expected, the lawsuit initially remained unsuccessful on the grounds that the company should have conducted arbitration proceedings following the AMNOG process. However, on appeal the BSG ruled in favor of the MAH.
The BSG found that conclusions of the additional benefit assessment have a significant and immediate market control function as they determine which medicinal products are considered effective treatment options and thus prescribed by healthcare professionals; as such, incorrect conclusions stand to directly affect an MAH’s basic rights under the German Constitution and distort competition.
Thus, according to the BSG, legal action must be available against additional benefit assessments of the AMNOG process. While section 35a(8) of German Social Code V declares a “separate action” against the additional benefit assessment decision inadmissible, the BSG found that section 35a(8) presupposes that arbitration proceedings are actually conducted, which the BSG appears to have concluded is by no means a given: In the case at hand, the BSG found that the MAH could not have been expected to initiate arbitration proceedings as those would have resulted in significant delay of market access. Therefore, according to the BSG, MAHs must be able to take direct legal action against additional benefit assessment decisions in court, that is, if no arbitration proceedings are initiated.
The full decision of the BSG is not yet available. As a result of the BSG’s decision, the case is referred back to the LSG, which now has to decide whether the API was truly “new” and an additional benefit assessment procedure thus rightfully initiated.
The decision of the BSG strengthens the position of the pharmaceutical companies and has far-reaching effects on practice in the drug pricing and reimbursement system in Germany. With the right to take direct legal action against additional benefit assessments, new possibilities arise for the pharmaceutical industry to influence the pricing of drugs.
Sidley Austin LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers.
Attorney Advertising—Sidley Austin LLP, One South Dearborn, Chicago, IL 60603. +1 312 853 7000. Sidley and Sidley Austin refer to Sidley Austin LLP and affiliated partnerships, as explained at www.sidley.com/disclaimer.
© Sidley Austin LLP