OBJECTIVES: The German health care system is one of the world's most important pharmaceutical markets after the US and Japan. Its regulation has undergone a series of changes in the past ten years. We aim to analyze the role of cost-effectiveness analysis (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 put emphasis on the analysis of CEA's failure during the period from 2007 to 2010. We discuss CEA's current role under AMNOG regulation and possible alternatives. RESULTS: The first attempt to establish CEA in Germany was undertaken in 2007 with the mandate for IQWiG to develop a method for CEA in Germany. IQWiG published its efficiency frontier method in 2009. IQWiG was commissioned with CEA of various antidepressants and clopidogrel. 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. The legislator failed to specify clear guidelines for the development of a method for CEA. The efficiency frontier method lacked acceptance among experts. Its first application on antidepressants took three years. CEA remained a theoretical option without any real-world impact by the end of 2012. Cost per QALY approaches remain a viable alternative.