The era of full transparency in pharmaceutical pricing in Germany has ended officially with the introduction of the Medical Research Act (MFG) at the end of October 2024.

This act was part of an action plan to counter the erosion of the attractiveness of Germany as a country for R&D and production of pharmaceuticals and, while most of the law focuses on reducing bureaucracy and accelerating approval procedures for clinical trials and marketing authorization procedures, certain elements touch upon pricing.

One of the key changes brought about by the MFG is updates to the stringent pricing guardrails introduced during the GKV Stabilisation Act (GKVFinStG) in 2022. Specifically, drugs where more than 5% of the trial population is from Germany can be priced using the more flexible “old” pricing framework. According to the “old” rules, it is possible to negotiate a premium over the appropriate comparator therapy for all products, except for those without added benefit. Authorities will review the eligibility for greater pricing flexibility after three years, potentially leading to price re-negotiations under the GKVFinStG guardrails.

Additionally, the MFG provides manufacturers with the choice to select confidential pricing. This decision is independent of the pricing negotiations or the arbitration process; manufacturers must determine whether they wish to keep their post-AMNOG price confidential within 5 days following the conclusion of the price negotiation or arbitration process. To be eligible for confidential pricing, manufacturers must provide evidence of significant R&D activity in Germany and accept a 9% discount on the price. It is also important to caveat that generic manufacturers are granted a right to information about the confidential reimbursement price.

Considering the strategic importance of achieving an optimal German price, due to its transparency and impact on International Reference Pricing (IRP), one might have expected that the introduction of confidential pricing would have generated excitement in the industry. However, in the first 9 months, no manufacturer has opted for this possibility. Only end of July (22nd), the first company announced to make use of this - it is Eli Lilly for its product Mounjaro, an injectable solution for type 2 diabetes and obesity.

Mounjaro was found by G-BA to offer only minor added benefit for 1 of 8 subpopulations, with no added benefit for the other 7. This could have restricted its pricing potential. To minimize any impact from international reference pricing (IRP) related to a lower reimbursed price in Germany, Eli Lilly selected price confidentiality.

Whether others will follow will need to be seen. What we know is that latest laws do lead to further complexity. It is in the responsibility of each manufacturer to fully understand whether the advantages of a confidential price in DE will outweigh the disadvantages (e.g., additional 9% discount). With the possible implementation of the Most Favoured Nation (MFN) Executive Order in the US, it will become even more complicated, as a confidential price in DE may become more favourable than it is today.

The myth of transparent pharmaceutical pricing in Germany is clearly challenged. We will be discussing these considerations in our dedicated podcast “Debunking P&MA myths: Pricing in Germany is always transparent” – available soon.