GERMANY: An Introduction to Life Sciences
For over a century, Germany’s healthcare system has been defined by its statutory health insurance (SHI). Nowadays, approximately 74 out of 84 million inhabitants are covered by SHI, whereas only ten million patients are privately insured. The SHI funds spent more than EUR300 billion on services for their insured in 2024. Thus, the SHI funds have an important impact on all stakeholders in the life sciences industry. This leads to a highly regulated life sciences sector with a major emphasis on the cost-benefit ratio of the services provided.
In addition to the dense and numerous regulations, life sciences is one of the most complex and rapidly changing regulatory branches. Notably, the period between mid-2017 and the end of 2021, coinciding with Jens Spahn’s tenure as Minister of Health, witnessed a disruptive transformation of the German SHI system. This trend continued during the COVID-19 pandemic, prompting a new wave of regulatory actions spearheaded by the current Minister of Health, Karl Lauterbach, but significantly slowing down compared to the prior legislative period. It will be very interesting to see which new legislation will be introduced after the elections in February 2025, when a new government will be formed.
A key area of focus has been the acceleration of digitalisation in healthcare, such as the implementation of electronic health records and e-prescriptions as well as the further development of digital health applications (DiGAs). Despite their introduction at the end of 2019, DiGAs continue to raise numerous issues, particularly regarding reimbursement schemes. The roll-out of these digital initiatives met with significant resistance initially. However, by the start of 2024, the e-prescription system had become fully operational. With the Health Data Use Act (Gesundheitsdatennutzungsgesetz; GDNG) and the passage of the Digital Act (Digital-Gesetz; DigiG), the German legislature took two further important steps on its digitalisation path in 2024.
The financial health of the SHI system, which has deteriorated in recent years, particularly during the COVID-19 pandemic, is another area of focus. To address this concern, the legislature introduced the Financial Stabilization of the Statutory Health Insurance System Act (Gesetz zur finanziellen Stabilisierung der gesetzlichen Krankenversicherung; GKV-FinStG) at the end of 2022. This Act aimed to stabilise the financial situation of the SHI system by curbing the continual rise in premiums to be paid by members, significantly impacting, among other things, the reimbursement of medicinal products in Germany. As the statutory sick funds are still facing growing deficits, it is quite likely that new laws will be introduced in the upcoming legislative period.
Another key area of concern has been the maintenance of a sustainable supply of medicines, particularly generic medicines, which has declined in recent years. In response, in early 2023 the legislature introduced the Drug Delivery Shortage Control and Supply Improvement Act (Arzneimittel-Lieferengpassbekämpfungs- und Versorgungsverbesserungsgesetz; ALBVVG).
The regulatory framework for the life sciences industry is also heavily influenced by European directives and regulations, especially concerning the marketability of pharmaceuticals and medical devices. Legal advice must cover many areas, obviously requiring legal know-how and expertise in life sciences regulations and extending to, inter alia, mergers and acquisitions, antitrust and competition, public procurement and data protection.
Current Developments and Challenges for the Industry
Manufacturers of pharmaceuticals must deal with frequently amended regulations on market access and the reimbursement of their products, without losing sight of the fact that German prices are a very relevant reference point for prices in many other European countries. The benefit assessment carried out by the Federal Joint Committee (Gemeinsamer Bundesausschuss; G-BA), based on the Act on the Reform of the Market for Medicinal Products (Arzneimittelmarkt-Neuordnungsgesetz; AMNOG), has the greatest influence on reimbursement prices.
However, the GKV-FinStG of 2022 could significantly change the established system, which is mainly based on the benefits of medicinal products as assessed by the G-BA. Instead, the GKV-FinStG widely introduces a schematic price corridor system linked to comparator drugs. One piece of good news is that, with the passage of the Medical Research Act (Medizinforschungsgesetz; MFG) of 29 October 2024, the legislator at least introduced an exception to this price corridor system in cases where the pharmaceutical company performs – as is briefly summarised – 5% of its clinical studies in Germany. The MFG further introduced the opportunity to agree on confidential reimbursement prices – to avoid any negative impact of references – for the first time after long years of discussion, but with a lot of limiting requirements.
Furthermore, the upcoming Regulation 2021/2282 on Health Technology Assessment (the “HTA Regulation”) is set to bring significant changes, advocating for a more collaborative framework in the EU to improve business predictability and avoid the duplication of work and discrepancies between HTA mechanisms. The HTA Regulation has applied since 12 January 2025, starting with cancer medicines and advanced therapy medicinal products (ATMPs). It will expand to cover orphan medicinal products (OMPs) in 2028 before eventually covering all centrally authorised medicinal products in 2030. This Europe-wide shift presents huge challenges for the German life sciences industry, as well as the G-BA. At the end of December 2024, the Federal Ministry of Health (Bundesministerium für Gesundheit; BMG) published its draft for the German national implementing rules in the Ordinance for the Benefit Assessment of Medicinal Products (Arzneimittel-Nutzenbewertungsverordnung; AM-NutzenV).
With regard to clinical trials, the implementation of the Clinical Trials Regulation (CTR), especially its clinical trials information system (CTIS), is still causing many practical issues for the industry. However, the legislator took the first step towards improving the legislative conditions for the performance of clinical studies in Germany; along with the MFG mentioned in the foregoing, the regulatory framework for clinical studies was simplified, for example by facilitating the regulatory process for clinical studies affected by the radiation protection law and shortening the processing time for the authorisation of mono-national clinical trials of medicinal products. Further, the concept of “common standard contractual clauses” for clinical trial agreements found its way into law for the first time in Germany.
For pharmaceutical entrepreneurs in Europe, one of the most significant upcoming developments, aside from the ongoing legislative process concerning the European Health Data Space (EHDS), is the new EU pharmaceutical law package. On 26 April 2023, the European Commission presented a legislative proposal for the revision of the EU medicinal products legislation comprising:
- a proposal for a Directive of the European Parliament and of the Council on the EU Code relating to medicinal products for human use; and
- a proposal for a Regulation of the European Parliament and of the Council laying down EU procedures for the authorisation and supervision of medicinal products for human use and establishing rules governing the European Medicines Agency.
The proposals aim to repeal several European legal acts, such as Directive 2001/83/EC and Regulation (EC) 726/2004. This revision is part of the implementation of the Pharmaceutical Strategy for Europe and aims to promote innovation while reducing the regulatory burden and environmental impact of medicinal products. This will undoubtedly have a huge impact on the pharmaceutical industry in Germany, and the proposals have already been heavily discussed. Unsurprisingly, the different drafts of the Commission and Parliament (2024) affect the provision of appropriate data protection regulations. Council discussions are currently ongoing.
Manufacturers of medical devices continue to grapple with the challenges posed by the Medical Devices Regulation (MDR), which establishes a regulatory framework for the marketing of such products. This demands an understanding of the new legal requirements, and of the implications for the certification process and the design of quality management systems. In Germany, the industry welcomed the news that, following months of discussion, the transitional provisions of the MDR had been extended, providing some respite. However, even with this additional time, preparing for stricter regulations remains a challenge for the industry, and there are many unresolved questions. Correspondingly, new proposals for further facilitation of practical matters have already been submitted.