On 13 December 2023, the German government published a long-awaited strategy outline of intended upcoming legislative measures to counter both the dwindling significance of Germany as a strong hub for pharmaceutical innovation, and threats to supply chain security.

The proposed action items fall into 8 chapters, the most significant of which for pharmaceutical companies are briefly summarised below:

1. Strengthening clinical research; a model clinical trial agreement and centralised ethics committee

The government intends to publish a model clinical trial agreement to expedite contract negotiations between sponsors and study sites. Although not compulsory (contrary to the “convention unique” in France), German model clauses might nonetheless change the substance of future agreements. Once such a model agreement is published and recommended by the government, pharmaceutical companies will need to re-assess if contractual transfers of patentable inventions and other IP so far based on favourable contract language, will still be sustainable to the same extent.

The government proposes the introduction of a central ethics committee as a subdivision of the federal drug agency, BfArM, with competence for high-profile research, including first-in-human studies. This proposal has already provoked pushback from the Federal Medical Chamber that is concerned about a potential conflict of interest, since BfArM is also competent for clinical trial authorisations.

An announced reduction of certain application processing timelines (e.g., 26 days for submissions without formal shortcomings) is generally welcomed. The same is true for an intended integration of so far distinct radiation protection research permits into the regular trial approval procedure, as well as allowing investigational product labels to be in English only.

2. Incentivising domestic (EU) investment in manufacturing and fostering supply chain on-shoring

Subsidies may be made available especially for investments in manufacturing sites for antibiotics and oncology medicines. Whilst the strategy paper is silent on the specific funding instruments to be used, legal compatibility with EU state aid rules might become a concern.

Antibiotics along with paediatric medicines have already been the focus of the recently adopted German Drug Shortage Combating and Supply Improvement Act (ALBVVG). This Act introduces preferential treatment of EU-based bidders for tendered rebate and supply agreements with the national public health insurers. The new strategy proposes that such instruments may be extended to other drug categories, mainly oncology drugs.

ALBVVG has already imposed increased stockpiling obligations on pharmaceutical companies. Supply chain managers are advised to continuously monitor if and to what extent their products are affected, and whether future legislation, driven by the strategy paper, may extend stockpiling and supply shortage reporting to broader categories of medicines.

3. Further advancing healthcare digitalisation; implementing a German health data space

Unrelated to the new pharmaceutical strategy paper, but coinciding with its publication, the German Parliament, on 14 December 2023, adopted the E-Health Act. It aims at accelerating the nationwide rollout of e-prescriptions. In its pharmaceutical strategy paper, the government reasserts its determination to prioritise e-health and digitalisation. It reaffirms the significance of further draft legislation, which will create a near equivalent in Germany to the European Health Data Space (EHDS). This initiative is intended to facilitate the access of pharmaceutical companies to real-life health data, managed by a federal regulator (research data center, FDZ).  As a result, research-focused pharmaceutical companies may soon find in Germany an EHDS test lab environment and may explore if the categories of real-life data concerning their indications will be in the data pipeline available for licensing.

The strategy also announces an overhaul of a model project on gene sequencing data obtained for orphan and oncological diseases. Project start is announced for 2024. Access to such gene sequencing data within the EHDS framework is also foreseen. However, usage of such data for pharmaceutical-sponsored research may be still far down the road.

4. Fine-tuning the HTA (AMNOG) reimbursement price setting scheme; re-instating rebate confidentiality

The government promises to once more re-assess AMNOG, to counter potential negative effects on pharmaceutical companies’ investments in Germany. Substantively, the confidentiality of discounted reimbursement prices may be re-introduced, which might impact the German list price of an innovative drug referred to in other EU under their national HTA schemes. Notably, the government indicates a commitment to not increasing compulsory rebates above the current levels. 

5. Consolidating responsibilities of federal drug agencies, aiming at a one-stop-shop at BfArM

Whereas competences (for API groups and indications) of BfArM and its sibling agency PEI are so far separated, the strategy proposes that BfArM be elevated to the role of a central go-to process manager when it comes to coordinating filings for marketing authorisations, trial permits, radiation protection waivers etc. In addition, the strategy proposes to harmonise the issuance of manufacturing and import authorisations, aspiring to streamline decision-making by 20 or so state-level GMP authorities.

6. Creating a regulatory framework for EU competitiveness; protecting proprietary clinical data and IP

The government expresses its opposition against the shortening of regulatory data protection period which is a controversial element of the proposed EU pharmaceutical legislation package.  The government will also continue to oppose TRIPS waivers and mandatory technology transfers.  Its position will no doubt assist pharmaceutical companies and associations campaigning against any dilution of IP protection.

7. Strengthening R&D under threat from market failure

Under this chapter, public project funding and institutional funding (i.e., subsidies) are again offered as a future prospect with a focus on antibiotics, orphans, vaccines, and drugs for pandemic prevention. Here, the government pitches its most recent legislative project, the Growth Opportunities Act.

Pharmaceutical companies may benefit as well, with expenses eligible for funding expanded to costs for materials and supplies and a threshold tripled to € 12 million in addition to leveraging already initiated funding and venture capital plans like RegioInGrowth or the EXIST financial aid guideline. These incentives are most likely to be of interest to biotech startups, and potentially generic manufacturers, provided they are in conformity with the EU state aid framework.

8. As always, reduction of bureaucracy

Advancements in digitisation of administrative procedures are announced, and reference is made to the 4th Easing of Bureaucracy Act. The government seems to promise receptiveness to constructive dialogues with the pharmaceutical industry, particularly biotechs. This attitude is certainly to be welcomed, especially after the German health minister was reported to have shunned debates with pharmaceutical industry representatives in the past.

Overall, the pharmaceutical strategy paper shows that the German government has come to realise the significance of the innovative pharmaceutical sector for Germany and the EU. The strategy paper suggests a change of heart compared to prior policies that focused primarily on controlling spend. The new legislation announced in the strategy will have to be closely monitored to ensure that the government delivers on its promises.