Bibiane Schulte-Bosse – How to fight well in AMNOG negotiations.

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In this Podcast episode, Dr. Stefan Walzer is explaining the details of the price negotiations within the AMNOG process together with negotiating expert and lawyer  Bibiane Schulte-Bosse. 

Get into the hot areas of AMNOG – the negotiations and let us know in case you might have any questions.

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Dr. Stefan Walzer: Welcome to MAP, the biweekly Market Access Podcast provided by MArS Market Access and Pricing Strategy, your healthcare consultancy in the German-speaking markets. MArS makes it as easy as possible for you to get your pharmaceutical, MedTech, or digital health product to the market and, of course, get the price it deserves.


Dr. Stefan Walzer: My name is Stefan Walzer. I'm the founder of MArS and a health economist by training and working in the fields of market access, reimbursement, pricing, and health economics already since 2004, and now let's learn about the market access and reimbursement systems around the globe.


Dr. Stefan Walzer: One of the core aspects of the AMNOG process is, of course, price negotiation. That's the second component and part of the AMNOG process. The first one, I think that's also what we have had already in various episodes and within our MArS webinars, is the benefit assessment with the G-BA. Once that is passed, we assume here a positive added benefit for the product we're discussing. Then the doors are being opened for the pricing negotiations. How does that look like?


Dr. Stefan Walzer: The price negotiations are done with these so-called head associations of the Statutory Health Insurance Fund- the German word for this is Spitzenverband der gesetzlichen Krankenkassen - leading the price negotiation from the payer side.


Dr. Stefan Walzer: On the other side, we have the pharmaceutical company, the industry. Each side can come with up to five participants to the negotiation rounds. So, there are four rounds of negotiations. The days are given by the head association directly after the benefit assessment has been decided on. Those days and negotiation rounds need to be taken by the pharmaceutical industry. So this is not up for negotiations at the end of the day.


Dr. Stefan Walzer: Who should participate? You need to have a negotiation lead. You should have a lawyer for sure. Today, we will hear that with our guest: Bibiane Schulte-Bosse, one of the core lawyers in the AMNOG negotiation processes. Also, you should have one person who is aware and can also speak about the international European prices, and the price anchor — any comparative kind of products available in the indication. Very important still are the current sales, which can happen after launch, meaning within the first six-seven months before the first negotiation round, because that's the free pricing during the benefit assessment with the G-BA, and that is what is also being assessed and compared with as also obviously the payer side have their kind of data, and that's also up for discussion.


Dr. Stefan Walzer: Finally, very important, you need to come up with a contract not only agreeing on the price itself, but also on other components like, for example, practice exemptions or the duration of the contract and many other things that need to be agreed on. So you see that there might be already quite good number of negotiation mass as well within that kind of process.


Dr. Stefan Walzer: How does that really look like? You need always to be very prepared. The first negotiation round is rather still a kind of, welcoming, get to know each other as well that the company is normally taking the opportunity to present again the value of the product. Not to forget the benefit itself is and should not and no more be really discussed as this has been granted already by the G-BA. But you should put that foot again into the door to say: listen, this is where we see the value. Please no cost-effectiveness data, just whoever is not that familiar within the German context.


Dr. Stefan Walzer: Then you have negotiation round two and three. What we normally see; this is the real differentiation phase where also let's say the kind of arguing starts. The discussions are really getting hot, sometimes content-based hot right, where you see also that each side is taking that kind of role and also their kind of clear position. Within that phase, it's very important that you have also the so-called face-to-face meetings between the negotiation leads. So it's normally just those two who are then trying, let's say, to find a solution. You also need to learn and train beforehand which kind of tactics might also work from a negotiation strategy perspective.


Dr. Stefan Walzer: Then negotiation round four is where the two sides agree to the price and the contract, but that's rarely happening. That's also what we will hear in the next couple of minutes by Bibiane. Normally, each side is taking the opportunity to further put some pressure on the other side, because at the end of the day, the real hot end point, let's say, is the 12-month period, because that is when the free pricing basically ends. You need to keep in mind three weeks beforehand, you would need to file as well your case with the arbitration board just in case it will need to go there if there might be no agreement.


Dr. Stefan Walzer: How the arbitration board looks like? We'll now hear, besides the negotiations perspective, especially from a legal and contracting perspective, from Bibiane Schulte-Bosse, one of the core lawyers in Germany, with respect to the healthcare market.


Dr. Stefan Walzer: Thank you very much, Bibiane, our lawyer from the German healthcare system, if you want to call it like that. You have already fought a lot of different fights for your different clients, especially around and in the AMNOG context.


Bibiane Schulte-Bosse: You too.


Dr. Stefan Walzer: Yes. We want to focus today also a bit on the legal aspect. Would you describe the outcome of the price negotiation in the AMNOG context especially from the legal perspective?


Bibiane Schulte-Bosse: Yes, of course. Stefan, I have to elaborate a little bit on this question. In the reimbursement amount negotiated at the end with the GKV, we present the monetization of the additional benefit awarded by the G-BA. In Germany, this has been the law since 2011, so it's now the 10th year of the AMNOG.


Bibiane Schulte-Bosse: The pharmaceutical company has to submit a dossier to the G-BA at the time of the first marketing authorization of its new drug in Germany. In this dossier, the pharmaceutical company has to demonstrate the additional benefit of this new active substance compared to the appropriate comparator therapy.


Bibiane Schulte-Bosse: The G-BA or the IQWiG then reviews this dossier and publishes the dossier evaluation within three months. The company then has the chance to comment on this: submit a written and oral comment in the oral hearing and, of course, other companies or other interested parties such as professional societies, etc. Another three months later, the G-BA then makes a decision on this additional benefit of this new active substance and this new drug in the form of a resolution.


Bibiane Schulte-Bosse: This resolution becomes then part of the so-called pharmaceutical guideline and is thus binding for the GKV and the GKV-accredited physicians. This resolution by the G-BA is the most important basis for these price negotiations in the AMNOG context from a legal perspective. This decision and its content and supporting reasons for this decision are the basis from which you jump off in the negotiations.


Bibiane Schulte-Bosse: For drugs with additional benefit, the European prices are also relevant, and the cost of the so-called comparable drugs also play a role. The price that is ultimately negotiated and applied from the 13th month after the laws is, therefore, a conglomerate of many different factors. Of course, the most important basis is the G-BA decisions, the supporting reasons of the G-BA, as well the European prices and the costs of the comparative therapies.


Bibiane Schulte-Bosse: The reimbursement amount is relevant to the GKV and other payers such as private health insurance companies, etc. It applies both to the outpatient and inpatient sector. So the price you negotiate is for the whole system in Germany and binding for everything. Of course, this only represents the maximum price, but it's possible to undercut the price. But who does this in the end?


Bibiane Schulte-Bosse: The agreement and the outcome of the price negotiations, as you've asked, is also relevant for the questions of the so-called efficiency of the drug. The agreement the pharmaceutical company makes with the GKV ensures the economic efficiency of this new drug.


“and the reasons for the law for the AMNOG say: it specifies the appropriateness and the cost-effectiveness of the drug. It does not mean that every prescription of this new drug is always appropriate and economical in each and every case. Of course, the doctor who prescribes the drug has to look at the individual case and always decide the treatment in the individual case. It means if several active ingredients are available for the therapy, the doctor is required to look into Section 12 of the Social Code of Justice Book V and then select the right drug, which is appropriate and efficient for the patient. That is the most important legal perspective that affects you. You can talk about the outcomes of the price negotiations.


Dr. Stefan Walzer: That's perfect. That's nicely summarized, Bibiane. I also remember you said once, obviously in German, as something like, “I love contracts as they define the frame of our doing,” which was very interesting for me because, as you know, I'm an economist, so I'm not so close to a contract. Taking your quote there, what are the main components of the contract from your perspective, again, in the AMNOG context?


Bibiane Schulte-Bosse: It sounds a little bit odd to say, "I love contracts." It sounds weird, but it's the way it is. That's my job, and you always have to love what you do. The components of the contract: an agreement with GKV is quite shortened compared to the Anglo-American legal system. There are usually only eight paragraphs in the reimbursement amount contract between the GKV and the pharmaceutical company, but some of those paragraphs are quite lengthy. The most important part is the regulation of the price amount and from when it applies, of course. The so-called framework agreement [“Rahmenvereinbarung”] further stipulates that the parties must also agree on quantities of the prescribed drug and what happens if there's a deviation from the agreed quantities.


Bibiane Schulte-Bosse: These quantities are not the maximum quantity that is agreed upon. Ultimately, the quantities aren't negotiated based on the company's estimates of how much of the new drug will sell in the coming year or the coming years. In the vast majority of the reimbursement amount agreement, the GKV reserves itself/himself a right of a special termination of the agreement if the agreed quantities are exceeded.


Bibiane Schulte-Bosse: The consequences if the GKV would terminate the agreement are that the reimbursement amount is renegotiated, sometimes on the premise that the cost burden on the health insurance funds was higher than originally assumed when contracted because the quantities were exceeded. If you agree on such a premise, it means the kind of penalty discount for the company at the contractor's expense. That's why I, for example, always try to negotiate this clause out of the contract again. However, special terminations due to this quantity exceeds are, from my experience, extremely rare in the practice. I've seen a few, but it's not the rule.


Bibiane Schulte-Bosse: It has recently become clear that the GKV also would like to have regulations in the contract on what happens with the reimbursement if the information in the expert information and the so-called Fachinformation on dosages change, for example. This is also a matter of negotiation, whether this is agreed upon or not. It's not legally required, but it's something the GKV would like to have. That's what we can see from the past couple of months.


Bibiane Schulte-Bosse: Of course, the contract also contains regulations on how to deal with the notification of the price and how the subsequent reimbursement will take place. Such subsequent reimbursement situation always arises, for example, if an agreement is reached after the reimbursement amount has long since been due because the arbitration board has to make a decision, or maybe because you negotiate longer than you should have negotiated. For this constellation, the contract also contains certain regulations on how you do this and handle this subsequent reimbursement. In particular, how excess manufacturer's discounts paid are to be handled and paid back or forced, who has to prove what to whom, and how much interest is to be paid in the event of a default, etc.


Bibiane Schulte-Bosse: It's also important, especially and only for drugs with an additional benefit. It is possible to negotiate with the GKV that the prescriptions of your drug with the additional benefit may be recognized as so-called practice specialties. In Germany, you would say, “Praxisbesonderheit”. I don't think that's a real translation for this word. It's unique.


Dr. Stefan Walzer: Agreed.


Bibiane Schulte-Bosse: Yes. I would translate it as practice specialties which means that these drugs are privileged when prescribed by the physicians and ultimately not subject to a later performance audit or efficiency audit. The GKV is very cautious on this point, as we've seen in the past years. You have to actively demand, as a pharmaceutical company, to include this in the contract. In the end, we've been successful in this point in most parts. That's it: the contract is, as I've said, quite short but has its difficulties.


Dr. Stefan Walzer: Exactly. Sometimes it has a taste of pepper as well.


Bibiane Schulte-Bosse: That's true.


Dr. Stefan Walzer: Perfect. You have been part of many negotiations in a lot of different products and have negotiated some contracts around the frame of the AMNOG. Generally, probably not even mentioning the product, what has been the most challenging negotiation you have been part of and why?


Bibiane Schulte-Bosse: Every negotiation is challenging in its own way, and it's quite difficult to single out one negotiation here. We've handled almost one-third of every AMNOG negotiation from our law firm since 2011, so we've seen a lot of cases. What I would highlight is the negotiation of the children's medicines, so-called PUMA medicines. I have negotiated most PUMAs with the GKV-SV. The first PUMA was in the form of Hemangiol, which at that time had been granted a considerable additional benefit by the G-BA.


Bibiane Schulte-Bosse: A particularly difficult challenge was perhaps the negotiation of the drug, Alkindi, with the active ingredient hydrocortisone, a PUMA. However, regrettably, it did not receive an additional benefit from the G-BA. Alkindi has a new dosage form, an active ingredient relief, which makes the drug particularly suitable for very young children from the very beginning for babies and toddlers. But there was no additional benefit for this important product which means that the reimbursement amount by law should not be higher than the annual therapy costs of its appropriate comparator therapy.


Bibiane Schulte-Bosse: The comparative therapy, in this case, was hydrocortisone, which has generally been available for decades and with a dramatically low price because there are generics on this market for hydrocortisone, which in no way justifies the innovation that Alkindi represent. So then the inevitable happened. We didn't reach an agreement with the GKV in the negotiations, and the arbitration board had to decide upon this.


Bibiane Schulte-Bosse: It is known in the market that we represented the company and this drug. That's why I can talk so freely about this. The negotiations also in the arbitration board had been tough. In the end, I'm quite happy that it was possible to agree that in this special exceptional case for a PUMA with no additional benefit, the so-called 'should' rule was applied. We call it in German, the “Soll-Regelung”, which means that the reimbursement amount in very special cases may exceed the annual therapy costs of the comparative therapy, which means Alkindi did get a price which was higher than the generic hydrocortisone: this ensured, of course, the availability of this drug on the German market and for the children, which was quite a highlight of all the negotiations that I had.


Dr. Stefan Walzer: That sounds already not only challenging, but ultimately also with a good outcome at the end. Right?


Bibiane Schulte-Bosse: Yes, that's what I mean. Sometimes, the outcome of such procedures makes you happy, and it's always good to do something for children. That's wonderful. Of course, negotiations are challenging in other ways, too. You have to remember that the employees of the AMNOG department of the GKV do nothing else all day through but negotiate prices. So they have a very special negotiating experience, of course, now skilled at it. There, you have to be prepared for a lot of things that can happen to you outside of those legal and technical aspects. So you have to be good at negotiating. You have to be prepared for dirty tricks sometimes.


Dr. Stefan Walzer: You're absolutely right. I think negotiation is a negotiation, not just a discussion or maybe some legal aspects or price aspects. Both sides try to get the best out of it. As you said, sometimes, you or the other side also play dirty tricks. I fully agree with you.


Bibiane Schulte-Bosse: Mm hmm.


Dr. Stefan Walzer: You have also mentioned in your answer to your most challenging kind of negotiation, the arbitration board. Can you also elaborate here on the process, especially the dynamics of the arbitration board negotiations, because that's ultimately a separate, maybe even a third step within the AMNOG process?


Bibiane Schulte-Bosse: You may call it a third step. That's true. An arbitration board procedure is incredibly time-consuming and stressful. I got a lot of grey hair there, even though it's wonderful for me as a lawyer. I have to say that I always negotiate to avoid the arbitration board as an outcome, if possible. Of course, what does a pharmaceutical company want? They want to have a negotiated price as soon as possible and want to be sure what price they can charge in Germany.


Bibiane Schulte-Bosse: The arbitration procedure comes at the end of the negotiation process. If the parties have not reached the agreement within six months, then the arbitration board has to decide. The decision of this arbitration board can be appealed to the Berlin-Brandenburg Regional Social Court of Justice and then again appeal to the Federal Social Court of Justice in Karlsruhe.


Bibiane Schulte-Bosse: The arbitration board was formed by one impartial chairman, who is currently Professor Huster, and two other impartial members. Then both the company and the GKV appoint two additional impartial members to this arbitration board. The arbitration board thus consists of seven persons, among whom a majority must always be found for a given decision, of course.


Bibiane Schulte-Bosse: The company itself also is represented as the party in the proceedings and is thus representing its interests. The arbitration board procedure is ultimately similar to court proceedings, I would say, only with a lot more participants who are in the room. At the oral hearing in an arbitration board proceeding, there are easily 20 or more people present, which you do not have at an oral hearing at the court. They are usually only the judges, which may be one to three judges and, of course, the parties, but not more than 20 people or so.


Bibiane Schulte-Bosse: In addition to the arbitration board itself, which are already seven people, there are parties who usually often consist of about three to six people, I would say. Then there is a representative present from the Federal Ministry of Health, a representative of an affected patient organization. The deputies of the impartial members are there. Court reporters, translators, and experts, if necessary. So that adds up to quite a few people in the room.


Bibiane Schulte-Bosse: The arbitration board is usually called upon by one of the negotiation parties, who then submits the request for arbitration. Each party then has to submit a more specific request in which it sets out its positions and requests and explains them in detail. So that's a lot of legal work and pharmaceutical and medical writing you have to do in such a request you hand into the arbitration board. Such a pleading sometimes consists of more than 60 pages, and that's quite exhausting, of course, not only to write but also to review, as you can imagine.


Bibiane Schulte-Bosse: The oral hearing needs to be very well prepared. In the beginning, each party has the opportunity to present its position again, often with the help of a PowerPoint presentation. Of course, one should prepare the negotiation in terms of arguments, work out fallback positions, and compromise solutions that may come into play. All in all, this is very time-consuming for both sides. You have to think it through carefully because you don't know the outcome. The outcome is sometimes unpredictable. We have a nice German saying it says: in court and on the high seas, you're alone in God's hands. It's always a little bit of luck included.


Dr. Stefan Walzer: I agree. Let's say, it's a picture you just have drawn to a situation that might have happened outside of the AMNOG process. Then everybody could also maybe understand about how the arbitration process would look like. You have also mentioned the arbitration board has different processes. In a couple of weeks, we will have Professor Wasem in the Podcast. We’ll discuss various decisions that, especially for some of the orphan drugs, it's sometimes really getting tricky, especially if you don't have EU prices available at the time of the negotiation and maybe in some areas as well, no comparable drugs. They are so-called solitaire status for those products. Ultimately, the price anchor is, where you also mentioned earlier, the added benefit. What is your feeling about how this could be appropriately resolved, especially in the arbitration board?


Bibiane Schulte-Bosse: It's always difficult if you don't have a comparator, which is often for orphan drugs because they are a drug of their own, and they are the first and only drug for special sickness and special disease. So if you don't have comparator drugs, you don't have the annual treatment costs of the comparator. Then you have to rely only on the amount of the additional benefit on the one hand, and the EU prices on the other hand. Of course, EU prices are always disputed by the other party because nobody trusts each other with the EU prices, which is quite difficult.


Bibiane Schulte-Bosse: The question is then, how do you monetarize the additional benefit for these drugs, then? The outcome, as I've said, it's unpredictable with these drugs. What my experience is that, in most cases, GKV and the company avoid a decision at the end by the arbitration board for these special kinds of drugs. Because the decision the arbitration board then makes would be there is no right decision, so it would be very difficult if you appeal that decision to the court to rule that this was the right decision and the price was the one and the only right price. In the end, nevertheless, they have called upon the arbitration board; the parties come to an agreement before the arbitration board has to decide


Dr. Stefan Walzer: Perfect. At the end of the day, if an economist has already said that the monetary quantification of the added benefit is difficult, then it's probably also even more difficult when you think maybe about objectives at its board.


Bibiane Schulte-Bosse: Mm hmm.


Dr. Stefan Walzer: Thank you very much, Bibiane. That was a great discussion. Great talk. Great insights. Looking forward also to further collaboration in the future.


Bibiane Schulte-Bosse: Thank you very much, Stefan. It was a pleasure.


Dr. Stefan Walzer: Great insights from a contracting and legal perspective from Bibiane. She's again confirming that for the negotiations, one should be prepared to know, obviously when you want to go, so the target price, and the various steps that need to be taken to get there. On top of that, it's very important, and that's maybe not always the easiest case, especially if you're a non-native speaker in German, to understand all of the important aspects with respect to contracting.


Dr. Stefan Walzer: No worries. There are various lawyers available in Germany who could also help explain its specifics in English to get prepared into those kinds of negotiations. One would need to see how the whole kind of things might change in the future, especially after the elections. But at the end of the day, quite clearly, the negotiations will hold. On top of that, we have also briefly discussed with Bibiane the DiGA pathway, the digital healthcare applications. They have now as well started their negotiation round: the first one that's just starting there. So we need to see how those results would be achieved.


Dr. Stefan Walzer: In terms of the arbitration board, there was a change. We have also quickly discussed that between the two different heads. Beforehand, it was a health economist. It was Professor Wasem. He will also be part of one of the episodes within the MAP Market Access Podcast. He was clearly focusing still on the frame of the pricing negotiations. I also think what we have seen so far, not a lot of arbitration decisions after the changes, which is inconsistent not only because of the change but also beforehand; the number of cases went significantly down. I think the whole decision-making with the rationales is still following the same kind of pathway.


Dr. Stefan Walzer: There is no clear rule. There is no algorithm behind it. At the end of the day, as Bibiane said it, it's in the hands of God, in a way. When you go to the arbitration board, ultimately, it depends on the case. I think you would only file for arbitration if you find and think that you have an advantage, but obviously, you don't know what the other side is doing.


Dr. Stefan Walzer: Let's stay tuned for other episodes of the MAP Market Access Podcast. Also, with respect to drugs, but also in terms of medical devices and digital health applications.


Dr. Stefan Walzer: That was an episode of MAP. The Market Access Podcast provided by Mass Market Access and Pricing Strategy, which is your healthcare consultancy in the German-speaking markets. MAP is available every second week with a new episode. So watch out. In case you might have questions, contact me directly and or visit a website on