GERMANY: An Introduction to Life Sciences
Key Areas of Focus
For more than 100 years, Germany’s healthcare system has been characterised by statutory health insurance (SHI). 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 approximatelyEUR220 billion a year on services for their insured. Hence, these funds have an important impact on all stakeholders in the German life sciences business. This leads to a highly regulated life science industry 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. In particular during the tenure of Jens Spahn as Minister of Health, between mid-2017 and end of 2021, an almost disruptive change in the statutory health insurance sector was observed. Since 2020, the COVID-19 pandemic situation has been the main focus of action by the legislature, a change reinforced at the end of 2021 by the newly installed Minister of Health, Professor Karl Lauterbach.
One focus is still the acceleration of digitisation, such as installing electronic health records or electronic prescriptions as well as further development of digital health applications (DiGA). However, the implementation of the main instruments has faced a lot of – particularly technical – problems in the last years and they are still not (fully) introduced. Hopefully, at least the e-prescription will fulfil its designated role in the course of 2023.
Another focus is the financial situation of the SHI system, which has deteriorated in recent years (most recently during the COVID-19 pandemic). At the end of 2022, the legislature therefore introduced a strict law to stabilise the financial situation of SHI funds, thus avoiding a permanent rise in the premiums to be paid by fund members with many impacts in particular for the (lower) reimbursement of medicinal products in Germany (Financial Stabilisation of the Statutory Health Insurance System Act – GKV-FinStG).
A third focus is the maintenance of a sustainable supply of – in particular, generic – medicines, which has worsened in recent years. In response the legislature published a “Drug Delivery Shortage Control and Supply Improvement Act” at the beginning of 2023.
The regulatory framework for the life science industry is further widely influenced by EU directives and regulations especially concerning the marketability of pharmaceuticals and medical devices. Overall, legal advice has to cover many areas. This obviously includes legal know-how and expertise in life sciences regulation and extends to, inter alia, mergers and acquisitions, antitrust and competition, public procurement and data protection issues.
Current Developments and Challenges for the Industry
Manufacturers of pharmaceuticals have to deal with frequently changing 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. The benefit assessment by the Federal Joint Committee (G-BA) based on the Act on the Reform of the Market for Medicinal Products (AMNOG) has the greatest influence on reimbursement prices. The GKV-FinStG of 2022 could, however, essentially change the established system, mainly based on the benefit of the respective medicinal product as assessed by the G-BA. Instead, the GKV-FinStG widely introduced a schematic price corridor system linked to comparator drugs.
Further, in the view of advanced therapy medicinal products (ATMP), the pharmaceutical industry is striving for adoption of the benefit assessment regulation and procedures. In this field, another deep impact of the GKV-FinStG should be noted: the sales threshold for orphan drugs that have to perform a regular benefit assessment, will be reduced from EUR50 to EUR30 million.
“Germany-innovative” digital health applications (DiGA) on panel doctor’s prescriptions, leading to reimbursement by the statutory health care funds, are still provoking a number of specific questions after their introduction at the end of 2019. This of course means a need for appropriate legal advice consisting of expertise on medical devices regulation, as well as data protection and reimbursement.
On a European level, stakeholders need to keep in mind that in December 2021, the European Parliament formally adopted the respective Regulation on Health Technology Assessment (HTA), which will apply from January 2025. This regulation aims to create a more collaborative framework in the EU, to improve business predictability and avoid duplication of work and discrepancies between HTA mechanisms The legislation will first apply to cancer medicines and advanced therapy medicinal products (ATMPs) starting from January 2025, expanding to cover orphan medicinal products (OMPs) in 2028 and finally to covering all centrally authorised medicinal products in 2030.
With regard to the long awaited Clinical Trials Regulation (CTR) that came into effect (foreseeing a three-year transition period) with the Clinical Trials Information System (CTIS) going live on 31 January 2022, the German national competent authority (BfArM) has implemented the respective pathways. CTIS has, however, brought up many practical issues for the industry so far, and is therefore the subject of frequent discussions.
The “next big thing” for pharmaceutical entrepreneurs on a European level, beyond the further legislative procedure for the regulation introducing the European Health Data Space (EHDS), clearly lies in the new EU pharmaceutical law package 2023. At the beginning of February 2023, the Commission leaked a draft proposal to revise the European Union’s pharmaceutical legislation and the OMP and Paediatric Regulations. The proposals are expected to be published at the end of March 2023.
Manufacturers of medical devices still are faced with the challenge of adapting to the Medical Devices Regulation, which sets the regulatory framework 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. Also in Germany, the industry was relieved to learn the good news that, after months of discussions, the European Commission had adopted a proposal to amend the transitional provisions of Regulation (EU) 2017/745 on medical devices (MDR). The Commission proposed to extend the validity of certificates issued under the previous directives until 2027 for high-risk devices and until 2028 for low-risk devices. It also aims to abolish the “sell-off” deadline after which devices would have to be withdrawn.