On 10 September 2020, the German Federal Social Court (Bundessozialgericht – “BSG”) has issued an important decision with significant impact on the drug pricing and reimbursement system. It ruled that a pharmaceutical company can file a direct legal action against the early benefit assessment in the so-called AMNOG process. This was not possible so far. The decision therefore significantly broadens the legal redress possibilities of pharmaceutical companies under the German drug pricing and reimbursement regulation.

For drugs with new active substances, the pricing and reimbursement process has three steps: First, an early benefit assessment is performed by the Joint Federal Committee (Gemeinsamer Bundesausschuss – “GBA”) to assess the drug’s “additional benefit” against the relevant comparator therapy. Second, the drug company negotiates the reimbursement price with the health insurances association based on the outcome of the early benefit assessment. If they cannot agree to a price, the third step is an arbitration process. The applicable Social Code V (“SGB V”) allowed legal actions against the arbitration decision and excluded isolated legal actions against the early benefit assessment (Section 35a (8) SGB V).

In this lawsuit, a drug company had launched a prescription drug with an off-patent generic active substance for a skin disease based on own clinical trials. The GBA took the view that the drug has a new active substance and must undergo the early benefit assessment and the AMNOG process. However, the drug company took the position that the product does not have a new active substance and did not submit a product dossier for the early benefit assessment. The GBA nevertheless conducted the early benefit assessment and came to a negative benefit assessment decision. The company filed an action against this decision but during the lawsuit it agreed on a reimbursed price with the health insurance association in order to prevent disadvantages and enable the reimbursement of the drug.

The first instance court (Landessozialgericht Berlin Brandenburg – “LSG”) rejected the action of the company as “inadmissible” and referred to the above mentioned Section 35a (8) SGB V. In contrast, the BSG ruled that despite Section 35 (8) SGB V, a drug company must be allowed to file a legal action against the early benefit assessment even if the company has subsequently agreed to a reimbursement price. Therefore, the BSG annulled the earlier decision of the LSG and referred the matter back to the lower court. The LSG will now have to decide whether the drug indeed had a new active substance and was rightly subjected to the AMNOG process.

The BSG’s full decision has not been published yet but in its press release about the decision, the BSG has summarized its view by referring to the significant legal effects of this benefit assessment to the drug company and finds that Section 35a (8) SGB V does not generally exclude all legal redress options against early benefit assessments in each scenario.

For this particular case, the BSG also noted that it appears possible that the active substance of the drug is not a new active substance. Against this background, the BSG found that blocking all legal redress against an early benefit assessment in all scenarios would violate the constitutional rights of the pharmaceutical companies. In contrast to earlier decisions of German courts in other pricing and reimbursement disputes, this decision appears to put a lot more emphasis on the constitutional rights of the pharmaceutical companies.

Before this decision, a pharmaceutical company could not seek separate legal redress against the early benefit assessment even if it was already contested whether the drug has a new active substance or not. The GBA had the power to just make that assumption and to subject a medicine to the AMNOG process without facing the risk of being exposed to direct legal action. The system required the drug company to wait until the entire AMNOG process of benefit assessment, price negotiation and arbitration is completed before it could file a lawsuit against the arbitration decision. That caused the companies to lose significant time before it could seek legal redress. Further, a drug company had to tolerate that throughout this time and until it obtained a court decision, the negative benefit assessment was made public and harmed its product plus the product was only reimbursed at a low price level because of the negative benefit assessment.

Overall, this new judgment of the BSG clearly strengthens the position of pharmaceutical companies in the AMNOG process and offers a new opportunity to legally challenge the early benefit assessment. The court has particularly stressed the constitutional rights of the pharmaceutical company. It will be interesting how this particular case will continue and which claims the company could make if the lawsuit finds that the drug was unlawfully subjected to the AMNOG process. Further, and beyond this particular case, it appears possible that the principles and arguments of this BSG decision can also be invoked in other disputes in the German drug pricing and reimbursement system.

This BSG decision will have a significant impact to the German drug pricing and reimbursement system and the respective judicature of social courts. Pharmaceutical companies should carefully analyze the full reasoning of the BSG as soon as the complete judgment is available.

The Covington team in Frankfurt, Germany, will continue following and discussing these and other developments on the “Inside EU Life Sciences” blog.

 

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Photo of Dr. Dr. Adem Koyuncu Dr. Dr. Adem Koyuncu

Adem Koyuncu is double qualified as a lawyer and medical doctor and a partner in our Brussels and Frankfurt office. He is a chair of the firm’s “Food, Drug & Device” practice group and also a member of our Compliance practice. Adem is…

Adem Koyuncu is double qualified as a lawyer and medical doctor and a partner in our Brussels and Frankfurt office. He is a chair of the firm’s “Food, Drug & Device” practice group and also a member of our Compliance practice. Adem is recognized as a “leading lawyer for pharma and medical devices law” (JUVE 2021).

Adem helps clients on a wide range of EU and German law issues, including regulatory, compliance, privacy and liability matters. He also provides strategic advice. He knows the life sciences sector also from his earlier work in the pharmaceutical industry and as a medical doctor. He represents clients before courts and authorities and assists them in contract negotiations, investigations and transactions. For years, Adem is listed in various lawyer rankings.

See some Accolades from Clients and Surveys:

  • “He is one of the most detail-oriented and client-focused partners I have ever encountered.” (Client, Chambers 2021)
  • „Great professional and human competence, good team player.“ (Client/Adverse Party, JUVE 2022)
  • “I find him to be one of the most pragmatic regulatory lawyers. He was a doctor before a lawyer, has been in-house, worked on lots of stuff that I have to handle in-house, which helps when getting advice. He is really good at saying it’s a complex situation and your best option is to do this.” (Chambers 2022)
  • “He always comes through with extremely helpful advice. He brings a unique understanding and experience to his practice as both a lawyer and medical doctor.” (Chambers 2021)
  • “Adem Koyuncu is not only a lawyer but also a doctor and has worked in industry. He knows the perspectives that also move in-house lawyers.” (Legal 500 2022)
  • “He is very sharp and quick, while at the same time having a good sense of humor and nerves of steel. Very pleasant to work with.” (Legal 500 2022)
  • He is described as “versatile competent, reliable and high quality” (JUVE 2021) and “incredibly fast.” (JUVE 2018)
  • Provides advice at “an outstanding level.” (Legal 500 2015)
  • “Very strong negotiation skills.” (JUVE 2011)
  • Clients appreciate his “very broad knowledge and long-standing expertise” (JUVE 2021/22) and that “he is approachable, knowledgeable and really easy to talk to over the various issues. He is calm and has seen most problems before.” (Chambers 2020)
  • Peer lawyers described him as “highly competent” and a “very good and pleasant lawyer” (JUVE 2014) and as “the off-label-guru, substantively very good, creative.“ (JUVE 2022)

Adem is the author of numerous publications (e.g., in leading books on pharma law, product liability and clinical trials) and frequent speaker at different events. As such, he will soon speak at following events:

  • “Medical Device Liability and Risk Transfer 2.0 | A liability issue for the Management?!,” BVMed, Webinar (3/24/2023)
  • “Data Protection Requirements and Open Issues in the Pharma Sector – Status quo,” Speech at conference, 26. Marburger Gespräche zum Pharmarecht, Marburg (3/16/2023)
  • “Vendor Oversight & Vendor (Quality) Management in the Pharma Industry,” FORUM-Institut, Online Seminar (4/19/2023)