Cost-Effectiveness Analysis: The German Experience

Objective: The German health care system is one of the world's most important pharmaceutical markets after the US and Japan. Similar to US policy, German legislation prohibits cost-effectiveness analysis (CEA) based on Quality Adjusted Life Year thresholds for pharmaceutical pricing regulation. The regulation of German pharmaceutical pricing has undergone a series of changes in the past 10 years. We aim to analyze the role of CEA in German pharmaceutical price regulation.

Methods: We analyze 7 regulatory acts from 2002 to 2011 for their impact on the implementation of CEA in the German health care system. We discuss CEA's current role under recent AMNOG regulation and possible alternatives.

Results: The first attempt to establish systematic health technology assessment in Germany was undertaken in 2007 with the mandate for German Institute for Quality and Efficiency in Health Care (IQWiG) to develop a method for CEA. IQWiG published its efficiency frontier method in 2009. No analysis had been finished by the end of 2010. CEA was substituted by the 2011 AMNOG act. AMNOG introduced early benefit assessments followed by pricing negotiations for all new drugs. After an initial rebate agreement, both sickness funds and manufacturers can commission IQWiG with CEA. CEA can be based on German observational data for up to three years. CEA under AMNOG has no immediate effect but new rebate negotiations can be based on its results.

Conclusions: German pharmaceutical pricing regulation aimed at randomly reducing pharmaceutical expenditure growth. Mandatory rebates, payments of solidary fees by the pharmaceutical industry, and price moratoriums were common elements in the past 10 years. Since 2007, systematic CEA has been established. However, CEA by efficiency frontiers is too complex and lengthy in application. Instead, a simple and fast process is required for successful policy implementation. Early benefit assessments are completed within 6 months after listing in Germany. Early benefit assessments have been conducted for more than 25 new drugs since 2011. Early benefit assessments are an example of successful policy implementation, while leaving CEA as an optional step.