Planned reduction of the free pricing period increases the importance of strategic pricing

German coalition agreement

Mon, 2021 / 11 / 29
With regard to the AMNOG and drug costs, the coalition of SPD, Grüne and FDP aims to shorten the period of free pricing after the launch from 12 months to 6 months. This will result in a substantial increase in the significance of strategic pricing for the German market as the central reference country and most important European market.

Currently, the pharmaceutical entrepreneur (pU) freely determines the launch price of the newly launched drug on the German market. This is valid during the one-year AMNOG process and is then replaced by the reimbursement amount negotiated with the GKV-SV from the 13th month onwards.

This period of free pricing is now to be reduced to 6 months. This will obviously initially lead to a reduction in revenue for the pU and cost savings for the SHI (statutory health insurances), since the discount negotiated in the second half of the year is now to be backdated to apply from the 7th month. This backdating has accounting consequences: The pU must consider appropriate accruals to reimburse the SHI for the excess amount paid during months 7 - 12. Accordingly, the negotiated discount must be anticipated as optimally as possible. This could also have implications for the choice of launch date in relation to the respective fiscal year.

After the launch, the revenue of the company depends mainly on the market penetration achieved. However, market uptake only just begins in the first few months after the drug is launched, so that often comparatively little revenue can be generated by the company in the first six months. The importance of the free pricing period for short-term sales decreases. Though, its importance for strategic pricing becomes even more important: with comprehensive preparation and anticipation of the price negotiation process, a lower launch price can lead to a better result in the price negotiation - with significantly fewer losses due to the "non-exhaustive use" of the free pricing period. This way, the business case can be secured or significantly improved in the long-term.

It remains to be seen how quickly the respective targets will be implemented. SKC follows, analyzes and anticipates the political decisions and their respective implementations in detail and incorporates these directly into the consultations with clients.

Sources:
Koalitionsvertrag 2021-2025 - Mehr Fortschritt wagen
Der Spiegel - Koalitionsvertrag der Ampelparteien

About the author

Ihr Ansprechpartner Dr. rer. nat. Ingo Hantke
Dr. rer. nat. Ingo Hantke
M. Sc. Life Science
Fon: +49 511 64 68 14 0 – 0
Fax: +49 511 64 68 14 18
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