The German government is discussing a new Pharma Strategy with a number of reforms to improve the conditions for the pharmaceutical industry in Germany. Recently, the “Strategy Paper 4.0 – Improving the General Conditions for the Pharmaceutical Sector in Germany” (original title: Strategiepapier 4.0: Verbesserung der Rahmenbedingungen für den Pharmabereich in Deutschland – Handlungskonzepte für den Forschungs- und Produktionsstandort) became public that reportedly has the backing of the German Chancellor and the Federal Health Minister.
This strategy paper presents a range of measures to strengthen, among other things, pharmaceutical research and production in Germany and to improve the market access and pricing environment. These measures would have a significant impact for a multitude of players in the life sciences field. As such, the German government anticipates faster approvals for clinical trials, faster access to innovative medicines, more digitalization, greater supply security, a more investment-friendly environment and reduction of bureaucracy. Currently, and this is widely acknowledged by the government and most stakeholders, there is significant room for improvement in all of these areas.
We have already published blogs on other significant legal reforms in Germany in the areas of drug pricing and reimbursement and digitalization and health data use and most recently the envisaged hospital law reform. The reform ideas in the new strategy paper are more pharma-specific but would also build on some of these recent legislative reforms.
Germany is the fourth largest market for pharmaceuticals in the world. The strategy paper stresses that Germany’s attractiveness as a research and development hub has decreased over the recent past compared to other countries. It also addresses the vulnerability of supply chains and the intense price pressures in the generics industry. Based on these considerations, the new Pharma Strategy provides a number of measures that address various issues to promote Germany’s attractiveness as a center for the pharmaceutical industry. The paper refers to the following areas and lists several quite specific reform ideas:
1. Facilitate and accelerate clinical trials
- Establishment of one “Federal Ethics Committee” for the review of pharmaceutical clinical trial submissions (instead of the current system where ethics committees are established in the German States),
- Reduction of turnaround times for mono-national clinical trials,
- Integration of the currently separate approval process under the radiation protection laws into the clinical trial authorization process. The current laws in Germany in this area present big issues and cause delays for clinical trials using radiation like, for example, CT or PET scans or X-rays),
- Development and provision of model contract clauses for clinical trial agreements to speed up the contracting process,
- Regulatory facilitation of the conduct of so-called “decentralized clinical trials”.
2. Strengthen regulatory authorities and create synergies among supervisory authorities
- Restructuring of the competences of the federal agency BfArM and the Paul Ehrlich Institute (PEI) (pursuant to the strategy paper, BfArM would become the responsible authority to approve all clinical trials except for those with vaccines and blood products),
- Harmonization of
- the granting of manufacturing authorizations, and
- the procedures and interpretations of the regulatory authorities for certain groups of medicinal products.
3. Promote digitalization in the healthcare sector
- Ensuring the availability of health data through Health Data Use Act (original title: Gesundheitsdatennutzungsgesetz or “GDNG”), e.g.
- Reorganization of data infrastructure via the genome sequencing model project and enabling data use for private research and pharmaceutical industry,
- Further development of the concept for a leading data protection supervisory authority for cross-border research projects.
4. Incentivizing manufacturing in the EU and diversify supply chains
- Investment cost subsidies for production facilities,
- Grants to ensure security of supply in the context of pricing regulations,
- Amendment and modernization of public procurement law at EU and national level,
- Active participation in the development of an EU Critical Medicines Act.
5. Create regulatory framework to ensure EU market competitiveness
- EU pharmaceutical package: Strengthening of regulatory innovation competitiveness,
- EU patent package: Preservation of patent rights.
6. Promote innovation and research projects
- Strengthening of antibiotics research,
- Increase of the research allowance and investment bonus in the Growth Opportunities Act (Wachstumschancengesetz),
- Development of measures to overcome the translational gap.
7. Maintain the financial stability of the statutory health insurance system
- Evaluation of the Statutory Health Insurance System (GKV-Finanzstabilisierungsgesetz – “GKV-FinStG”), e.g. the AMNOG reform by the end of 2023,
- Facilitation and implementation of confidential rebates between pharmaceutical companies and health insurance funds,
- Waiver of further increase in mandatory manufacturer discounts that pharmaceutical companies need to pay to the healthcare insurance system as a markdown from the drug sales prices.
8. Reduce bureaucracy
- Increased digitization of approval application processes,
- Adoption of the Bureaucracy Relief Act IV (original title: Bürokratieentlastungsgesetz) which shall take into account the demands of the pharmaceutical industry.
Overall, the Strategy Paper 4.0 shows what the German government believes needs to be done to improve Germany’s attractiveness as a country for pharmaceutical research and development. The Covid-19-pandemic has shown how important highly innovative drug research is. The government also acknowledges the major benefits when pharmaceutical companies conduct research and produce in Europe.
Given the broad scope of the “Pharma Strategy”, it would have a significant impact on the pharmaceutical industry in Germany. However, so far this is only a strategy paper and the government will need to follow through and present new legislation or implementation acts. In this respect, the pharmaceutical and broader life sciences industry has responded to the strategy paper with rather mixed comments. Particularly in the area of drug pricing and reimbursement, there have recently been rather detrimental legal changes that the strategy paper would not really resolve (e.g., AMNOG process issues; combination discounts; price freeze (Preismoratorium) and inflation compensation).
In conclusion, the Pharma Strategy Paper 4.0 shows the direction that the German government wishes to take. However, the implementation of this strategy remains to be seen and the strategy paper falls short of concrete information on the practical next steps. Given the far-reaching nature of the new Pharma Strategy, pharmaceutical companies and other stakeholders should closely follow this development and analyse the possible implications of the reform ideas for their businesses and products.
The Life Sciences Team of Covington & Burling LLP in Frankfurt (Germany) will monitor the next steps and report about further developments.