Medicinal cannabis in Germany - Business Report

166 Confidential __________________________________________________________________________________ However, since 1 st July 2018 and on 1 July of the following year, pharmaceutical companies will receive inflation compensation. In other words, since August 2009, price increases for these drugs have been effectively excluded. However, the health insurance funds are far from being satisfied with this and are continuing to exert pressure on drug prices through fixed-price regulations, rebate contracts and the substitution of inexpensive reimports (e.g. Canemes®). How the AMNOG procedure for the orphan drug product Epidyolex® will turn out and whether it will lead to a tolerable reimbursement price remains an open question. 10.6 Changes by the GSAV At present, according to the drug price regulation, a surcharge of 100 percent is charged for the processing of Cannabis flowers and a surcharge of 90 percent for the further processing. The GSAV will reform the current pricing system. The pharmacy surcharge, as it has existed up to now, will be abolished. This should lead to savings of around 25 million. The DAV and the GKV-SV are obliged to renegotiate the pharmacy surcharge, so far no new agreement has been reached. If no agreement can be reached, the arbitration board shall decide on the amount of the surcharges in the auxiliary tax according to § 129 SGBV. In addition, § 129 provides in the new paragraph 5d, that pharmacists and health insurance funds must agree on pharmacy surcharges for the supply of Cannabis and the Cannabinoids as a substance or preparation within six months of the promulgation of the GSAV. These are then incorporated into the drug price regulation. Not affected are privately insured patients and patients who are also insured with subsidy private health insurance (Beihilfe) who do not benefit from the changes made by the GSAV. 11. Forecast of Cannabis market development 2018-2023 11.1 Framework conditions for market development and trend projections The development of the German Cannabis market will probably proceed in three phases. The initial phase A from 2017 to 2019 is rather characterized by "wild" disordered growth. Here, pull effects due to the large number of Cannabis-experienced clients already present were also predominant. In the subsequent phase B, the pull effect decreases significantly, and a push effect becomes increasingly effective as a market driver, because in the years 2020 to 2023 many new and potent competitors enter the German Cannabis market once again. The market is expected to enter a phase of consolida- tion from 2024 onwards.