Pricing in Germany

How is the price determined?

In Germany, free pricing applies in the 6 months. This means, at the time of launch in the German market, pharmaceutical companies are free to set the price for their product with a new chemical entity (NCE). This price is then valid for the first 6 months from the day of launch.

After the G-BA published its final resolution on the additional benefit of the product, price negotiations between the pharmaceutical company and the GKV-SV, i.e., representatives of the SHI funds, will commence. These price negotiations are confidential. The negotiated reimbursement price is valid from month 7 after the day of launch going forward. Because the price negotiations are only completed after 12 or 15 months (with arbitration), the price is applied retroactively from month 7.

Main factors considered in the price negotiations

If the G-BA identified different levels of additional benefit for different subgroups, the final price reflects the weighted average based on the size of the subgroups.

If both parties cannot agree on a price, a final decision on the price will be made by an arbitration board.

Throughout the process, both, the pharmaceutical company or the GKV-SV, have the right to commission the IQWiG to conduct a formal evaluation of the costs and benefits of the product.

Exception:
If the G-BA concludes “No additional benefit (proven)” and the product falls into a reference price group, then its reimbursement price is determined by the reference pricing system instead of negotiation.

If this drug cannot be assigned to a reference price group, the reimbursement price will still be negotiated. In this case, the negotiated price will be set such that the annual therapy costs are not higher than those for the appropriate comparative therapy.

How to find drug prices

Drug prices are shown in the Lauer Taxe. Check out this guide on how to identify these prices.

Reference price groups

The reference group pricing was introduced with the Health Reform Act in 1988 in Germany in order to counter the increase in pharmaceutical expenditure. It is a pure price regulation instrument, and neither restricts prescriptions nor does it exclude reimbursement.

The reference price dictates the maximum price that SHI funds will pay for drugs within a reference price group.

Rules for building reference price groups

• The groups only include the names of active ingredients, not branded products.
• Products can only be classed into a reference price group when medically needed alternatives are available.
• Patent-protected drugs with a novel mode of action or which offer a significant therapeutic improvement can not be classed into a reference price group.
• There are different levels for these groups. These are drugs with:
  • the same active ingredients (level 1),
  • pharmacologically and therapeutically comparable active ingredients, especially with chemically related substances (level 2) and
  • a therapeutically comparable effect, especially combinations (level 3).

Process of reference group pricing

1. The GKV-SV can propose active ingredients to be classed into reference price groups.
2. The G-BA considers these and determines groups of active ingredients for whom reference prices can be set.
3. Next, it determines the required mean daily or individual doses or other suitable comparative values, which are used later for the calculation of the reference prices.
4. The GKV-SV decides on the reference prices. Every 14 days, the GKV-SV publishes overviews of all reference group prices and any price differences to be paid by the patient themselves. These lists can be found on the DIMDI website. There currently is no document that summarises all reference price groups.

After a products gets added to a reference group

The G-BA determines the reference price group that a product falls in. If the manufacturer of one such drug does not reduce its price to the reference group price, then the price difference has to be covered by patients themselves. Alternatively, physicians could prescribe a different drug within the same reference group or another drug covered by SHI funds.

Grouping products within one reference price group does not mean that patients can be freely switched between them. Only a physician in consultation with a patient can decide whether the product can be changed. An automatic substitution at the pharmacy, such as for aut idem products, is not allowed.

Since reference price groups must reflect the current medical knowledge, they are checked at regular intervals. In addition, the G-BA is regularly updating the comparative values used for the calculations of the price based on the most recently available annual data. After these updates, the GKV-SV adjusts the reference price.