GERMANY: An Introduction to Life Sciences

GERMANY: An Introduction to Life Sciences 

For more than 100 years, Germany's healthcare system has been characterised by statutory health insurance. Nowadays, approximately 73 out of 83 million inhabitants are covered by statutory health insurance whereas only 10 million patients are privately insured. Germany's yearly expenditures on health amount to EUR390 billion. This corresponds to around 11% of GDP. The statutory health insurance funds spend approximately EUR220 billion a year on services for their insured. Hence, the statutory health insurance funds have an important impact on all stakeholders in the German life sciences business. This leads to a highly regulated healthcare system with a major emphasis on the cost-benefit ratio of services provided.

In addition to the density and quantity of regulations, life sciences is one of the most complex and rapidly changing regulatory branches. Since the beginning of the current legislation with Jens Spahn taking the office of Minister of Health in mid 2017, an almost disruptive change in the statutory health insurance is to be observed. Prior to the COVID-19 situation more than 30 major legislative amendments were triggered by the ministry. One focus has been the acceleration of digitisation. The legislature provided the impulses necessary to catch up with the development in other countries such as installing electronic health records or electronic prescriptions. The implemented regulations on the Digital Health Applications on panel doctors' prescriptions are a unique service that goes beyond catching up with other countries while being closely monitored by foreign markets.

The COVID-19 pandemic situation still challenges all stakeholders and leads to constant actions by the legislature. The legislation focuses on economic support for those hit severely by the pandemic implications.

The regulatory framework is provided by European directives and regulations, especially concerning the marketability of pharmaceuticals and medical devices, whereas all aspects of reimbursement of pharmaceuticals and medical devices are regulated by national laws.

All in all, legal advice for the life science industry has to cover many areas. This obviously includes legal know-how and expertise on health care regulation and extends to, inter alia, mergers and acquisitions, antitrust and competition, public procurement and data protection.

Current Developments and Challenges for the Industry

Manufacturers of pharmaceuticals have to deal with frequently changed regulations on market access and reimbursement of their products without losing sight of the fact that the German prices are a very relevant reference for prices in many European countries as well. The benefit assessment by the Federal Joint Committee (G-BA) based on the Act on the Reform of the Market for Medicinal Products having its 19th anniversary (AMNOG) has the greatest influence on the reimbursement prices. In view of advanced therapy medicinal products (ATMP) the pharmaceutical industry strives for adaptations of the benefit assessment regulation and procedures. The legislature and the G-BA still have to figure out how these procedures can be adapted reflecting the particularities of AMTP and orphan drugs.

On a European level, stakeholders need to keep in focus that the European Commission put forward a legislative proposal for a new HTA Regulation, calling for a more collaborative framework in the EU, to improve business predictability and avoid duplication of work and discrepancies between HTA mechanisms. Even before the regulation is in force a proactive consultancy is necessary.

Driven by the COVID-19 pandemic and with reference to the marketing authorisations of vaccines, the European Medicines Agency (EMA) developed efforts to improve timely access for patients to new medicines with the adaptive pathway approach including the idea of rolling reviews as part of the application process. As a result legal advice has to be foresighted and adaptive as well.

Manufacturers of medical devices are faced with the challenge of adapting to the Medical Devices Regulation setting the regulatory frame for the marketability of their products. This demands an understanding of the new legal requirements and the implications for the certification process and the design of quality management systems. With the implementation of Digital Health Applications on panel doctors' prescriptions leading to reimbursement by the statutory health care funds, a world novelty has been introduced by the legislature. This of course means a need for appropriate legal advice consisting of expertise on medical devices regulation, as well as data protection and reimbursement.

Mail-order pharmacies are constantly challenged by the representatives of stationary pharmacists and their attempts to jeopardise mail-order business in general with legal actions and attempts to influence the legislature to prohibit mail-order sales. After the ruling of the European Court of Justice in 2015 implemented by the national courts, mail-order pharmacies based outside of Germany in other EU member states were no longer bound to fixed sales prices for prescription-only medicinal products whereas stationary German pharmacies were still subject to fixed sales prices. In 2020 the German legislature once again regulated the fixed sales prices in a different law, which in turn again applies to mail-order pharmacies based in other EU member states. Court actions by the European Commission and mail-order pharmacies against this legislation are expected and will have a major impact on the business models of mail-order pharmacies.

Due to the COVID-19 pandemic, the legislature tightened regulations on investments by non-EU residents. Regulators can investigate whether the acquisition of a domestic company by a non-EU resident or the direct or indirect acquisition of a stake in a domestic company by a non-EU resident poses a threat to the public order in cases where the company develops, manufactures, or markets essential medicines, including their precursors and active ingredients, as well as medicinal products intended for diagnosis or treatment to ensure the provision of healthcare to the population. Such transactions are not prohibited but need to be assessed from yet another regulatory perspective.