GERMANY: An Introduction to Life Sciences
For over a century, Germany’s healthcare system has been defined by its statutory health insurance. Nowadays, approximately 74 out of 83 million inhabitants are covered by statutory health insurance, whereas only 10 million patients are privately insured. The statutory health insurance funds spend almost EUR300 billion a year on services for their insured. As a result, the statutory health insurance 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 services provided.
In addition to the density and quantity of 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, during Jens Spahn’s tenure as Minister of Health, witnessed a near-disruptive transformation of the German statutory health insurance 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.
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 (DiGA). Despite their introduction at the end of 2019, DiGAs continue to raise numerous issues, particularly regarding reimbursement schemes. The rollout 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 Digital Act (Digital-Gesetz– DigiG), both adopted in February 2024, the German legislature took two further important steps on its digitalisation path.
The financial health of the Statutory Health Insurance (SHI) system, which has deteriorated in recent years, particularly during the COVID-19 pandemic, is another area of focus. To address this, the legislature introduced the Financial Stabilisation of the Statutory Health Insurance System Act (GKV-FinStG) at the end of 2022. This strict law aims 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.
A key area of concern has been the maintenance of a sustainable supply of medicines, particularly generic medicines, which has seen a decline 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 widely influenced by European directives and regulations, especially concerning the marketability of pharmaceuticals and medical devices. All in all, legal advice has to cover many areas. This obviously includes legal know-how and expertise on life sciences regulations 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 amended regulations on market access and reimbursement of their products without losing sight of the fact that 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 (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 benefit of the respective medicinal product as assessed by the G-BA. Instead, the GKV-FinStG widely introduces a schematic price corridor system linked to comparator drugs. According to the first evaluation at the end of 2023, the legislature currently does not see a need to reconsider its “new approach”. Further, in the realm of Advanced Therapy Medicinal Products (ATMPs), the pharmaceutical industry is pushing for adaptations in the benefit assessment regulations and procedures. Another significant impact of the GKV-FinStG is its effect on Orphan Medicinal Products (OMPs). The sales threshold for OMPs required to undergo a regular benefit assessment will be lowered from EUR50 million to EUR30 million, marking a substantial shift in the industry.
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 duplication of work and discrepancies between HTA mechanisms. The HTA Regulation will apply from 12 January 2025, starting with cancer medicines and ATMPs, expanding to cover OMPs in 2028, and eventually covering all centrally authorised medicinal products in 2030. In June 2023, an implementation rolling plan for 2023-2024 was published. The Europe-wide shift presents huge challenges for the German life sciences industry, as well as the G-BA, which organised its first information day in December 2023 for all affected stakeholders.
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. The good news is that the legislature published a draft of the Medical Research Act (Medizinforschungsgesetz) on 26 January 2024, aiming to simplify and expedite the approval processes for clinical trials, among other goals. Another innovation for Germany in this field, which also aims to make Germany a more attractive location for clinical trials, is the publication of “Model contract clauses for clinical trials with drugs, conducted under the responsibility of a pharmaceutical company” in November 2023 – a joint initiative between Germany University Medicine (DHM), the KKS Network (an association of academic clinical study centres), the pharmaceutical industry associations vfa and BPI, and the Federal Association of Contract Research Organisations (BVMA).
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:
Manufacturers of medical devices continue to grapple with the challenges posed by the Medical Devices Regulation (MDR), which establishes 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. In Germany, the industry welcomed the news that, following months of discussions, the transitional provisions of the MDR were 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.