OBJECTIVES: In October 2022, the GKV-Financial Stabilization Act (GKV-FinStG) introduced so-called "guardrails" for AMNOG price negotiations, which determine the maximum amount of reimbursement by the statutory health insurance (SHI) depending on the additional benefit of a drug and the patent status of the appropriate comparator therapy. Whereas previously, an additional benefit justified higher prices compared to the comparator, from now on this will only apply to drugs with “major” or “considerable” additional benefit without restrictions. We investigate the potential impact of the new pricing algorithm on the pricing structure of new drugs in Germany.

METHODS: Following the new guardrail algorithm, we calculate counterfactual rebates after benefit assessment for all drugs newly assessed between 2019 and 2021. Potential savings from the guardrails during the first year after the benefit assessment are estimated based on retrospective claims data of large German SHI funds.

RESULTS: Between 2019 and 2021, 106 drugs underwent an early benefit assessment after initial market approval. For 70 drugs with quantifiable guardrail rebates (i.e., with data on comparator patent status and costs), the average rebate applied according to the new algorithm is 44.4%. This is about 50% above rebates observed under the former value-based pricing (VBP) rules. In particular, for drugs with unproven additional benefits and off-patent comparator, high guardrail rebates of up to 90% and more would result. 25% of the investigated drugs would not be affected by guardrail constraints. The potential savings of the guardrails for the subset of drugs assessed in 2019 and 2020 alone would have amounted to almost 180 million euros.

CONCLUSIONS: The guardrails significantly increase the complexity of VBP in Germany. There is a move from value-based to algorithmic pricing for new drugs with minor additional benefits. It remains unclear what effect the change in willingness to pay for step innovations will have on their market availability.