• Ariel D Stern, Felicitas Pietrulla, Annika Herr, Aaron S Kesselheim, and Ameet Sarpatwari.
• Ariel D. Stern ( astern@hbs.edu ) is an associate professor of business administration and a Hellman Faculty Fellow in the Department of Technology and Operations Management, Harvard Business School, in Boston, Massachusetts.
• Health Aff (Millwood). 2019 Jul 1; 38 (7): 1182-1187.

AbstractThe 2011 German Pharmaceutical Market Restructuring Act subjected brand-name drugs for nonrare diseases to price regulation based on an assessment of their clinical benefit. Indication-specific assessment outcomes range from major added benefit to less benefit than the appropriate comparator(s) and affect price negotiations beyond the first year on the market. Using data on drugs that entered the market in the period 2012-16, we evaluated benefit assessment findings, subsequent drug exits, and their correlates. We considered 171 drug-indication pairs, corresponding to 138 different drugs. Of these, 66 drug-indication pairs (55 different drugs) were found to have added benefit. Almost all drugs with a positive benefit assessment (98 percent) remained on the market, while drugs without a positive benefit assessment were over ten times more likely to exit (25 percent versus 2 percent). US policy makers considering how to address rapidly increasing drug costs may draw valuable lessons from the German experience.

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