Germany as a location for pharmaceutical businesses - quo vadis, 2024?

In a strategy paper published by the German Federal Government on 13 December 2023, key goals were set to strengthen Germany as a research and pharmaceutical base and to improve its competitiveness in this space, including:

• Unbureaucratic approvals for clinical trials with medicinal products.

• Easier access to health data for research purposes.

• Incentives for the establishment of more manufacturing sites.

This article considers the eight key points of the new German pharma strategy at a glance.

Improvement and acceleration of clinical trials of medicinal products for human use

Regulation (EU) 536/2014 on clinical trials on medicinal products for human use (Clinical Trials Regulation - CTR), which came into full force on 31 January 2022, harmonised the approval procedure for clinical trials in the EU through its direct application in all EU Member States. The following national measures stated by the German Federal Government are intended to strengthen the reduction in bureaucracy already implemented by the CTR and contribute to a further improvement and acceleration of clinical trials on medicinal products for human use in Germany.

The Federal Government suggests the establishment of a central, interdisciplinary Federal Ethics Committee, which, as a subdivision of the Federal Institute for Drugs and Medical Devices (Bundesinstitut für Arzneimittel und Medizinprodukte - BfArM), would be responsible for certain particularly urgent and demanding approval procedures. This includes clinical trials discussed in the Emergency Task Force of the European Medicines Agency (EMA), highly complex master protocol studies and first-in-human studies in which new medicinal products are to be tested on humans for the first time. In addition, the Federal Ministry of Health (Bundesgesundheitsminiterium - BMG) intends to align with the 16 federal states in Germany with the aim of achieving further harmonisation in the decisions of the ethics committees established under German state law. The proposal to establish a Federal Ethics Committee has already been discussed during the legislative process for the 4th Act Amending the German Medicinal Products Act (4. AMG-Änderungsgesetz). This led to the implementation of provision supplementing the CTR in Germany, and has now subsequently provoked renewed resistance to this strategy paper from the German Medical Association (Bundesärztekammer) and the Working Group of Medical Ethics Committees (Arbeitskreis Medizinischer Ethik-Kommission), which fear the lack of independence of the ethical evaluation due to the establishment of the new Federal Ethics Committee at the BfArM as the higher federal authority competent for the approval of clinical trials in Germany.

Moreover, contract negotiations between sponsors and trial centres, and thus the actual initiation of clinical trials, are to be accelerated by the publication of practical model contract clauses in the form of a handout by the BMG. This initiative was already launched in 2023 in the field of oncology by the Bavarian Center for Cancer Research (BZKF), and all six university hospitals in Bavaria together with representatives of the pharmaceutical industry, and resulted in a uniform model contract for clinical trials. Unlike in France, for example, there will be no legal obligation for sponsors to use the model contract clauses now to be published by the BMG. However their publication will certainly have a signal effect and require sponsors of clinical trials to take a closer look at the model contract clauses if they are referenced by German trial centres during contract negotiations or even adopted verbatim in the clinical trial agreements provided by sponsors. It therefore remains to be seen how the provisions on the transfer of inventions, in particular employee inventions, as well as on the liability of the parties involved and any limitations of liability in favor of the trial centres will be drafted, which are of particular importance for sponsors and trigger the greatest negotiation effort in the context of contract negotiations.

For purely mononational clinical trials, the processing times for approval applications are to be shortened by up to 19 days. The assessment of the intended clinical trial by the competent higher federal authority should take place within 26 days after the completeness of the submitted application documents has been checked (validation phase, for which up to 10 days are currently envisaged in accordance with Art. 5, para. 3, CTR), and the decision on the application should then be communicated to the sponsor via CTIS within a further five days. The shortening of the approval periods for purely mononational clinical trials is to be welcomed. It will save almost three weeks, not only for small and medium-sized companies (SME) that are seeking to initially test their drug compound in Germany. Even before the CTR came into full force on 31 January 2022, the then applicable regulatory framework in Germany, in particular Section 42 AMG (old version) in conjunction with Section 8, para. 3, GCP-V already provided for a shortening of the approval procedure to a maximum of 30 days in a similar form for clinical trials that were to be conducted at one single trial site.

Finally, it is intended that the notification or approval of procedures for the use of radioactive substances or ionising radiation on trial subjects currently required by and stipulated in Sections 31-32 of the German Radiation Protection Act (Strahlenschutzgesetz - StrlSchG) will be integrated into the approval procedure for clinical trials of medicinal products. In order to simplify it, any deadlines for the radiation protection procedure will be shortened by adapting them to the timeframes set forth in the CTR and duplicate reviews by the parties involved (competent Higher Federal Authority, Bundesamt für Strahlenschutz - BfS, Ethics Committee) will be further reduced or avoided.

Strengthening the regulatory authorities and creating synergies with supervisory authorities

The German Federal Government has announced a reorganisation of the currently complex and separate responsibilities of the two higher federal authorities: BfArM and PEI. In future, the BfArM will take over the co-ordination and process management for approval procedures and applications for clinical trials for all medicinal products (with the exception of vaccines and blood products), act as a central point of contact for the pharmaceutical industry, and co-ordinate (among other things) the procedures for obtaining ethical approval, radiation protection testing and other processes.

To further harmonise the granting of manufacturing authorisations, the higher federal authorities will also be tasked with creating interpretation aids for technical guidelines, including the requirements for QPs (qualified persons). In addition, competent state authorities in Germany will be granted the power to request an assessment by the competent higher federal authority in a GMP interpretation issue. This mechanism may well lead to a standardisation of the decision-making practice of the GMP supervisory authorities responsible in Germany, provided, however, they will make use of it.

Finally, the German Federal Government has announced that it will intensify its efforts with the European Commission to ensure that GMP certificates are also recognised for manufacturing sites outside the territories of the EU and EEA within the framework of Mutual Recognition Agreements (MRA).

Further digitalisation in healthcare provision

Recognising the central importance of health data for new (bio)technological developments and the application of new therapies for success in pharmaceutical research, the German Federal Government has announced that it will further strengthen digitalisation in the healthcare sector. With reference to the German Health Data Use Act (Gesundheitsdatennutzungsgesetz), which is currently still in the parliamentary process and essentially aims to make health data accessible for research (eg by establishing a decentralised health data infrastructure with a central data access and co-ordination office for the use of health data), existing barriers to the use of health data are to be further reduced. Data from the research data centre (located at and managed by the BfArM) is also to be made accessible to pharmaceutical companies.

The pharmaceutical industry is to be given access to and use of data from the genome sequencing pilot project, as part of which genomic and clinical data in the field of rare and oncological diseases is to be collected in a quality-assured manner and made available for healthcare and research. In addition, a European connection is being prepared via the European genome data infrastructure (which is currently still under construction) and via the European Health Data Space.

Incentives to locate more manufacturing sites in the EU and diversify supply chains

By reducing bureaucracy and examining investment subsidies for manufacturing sites and subsidies to ensure security of supply, the aim is to bring the manufacture of medicinal products, including the production of active ingredients and excipients, back to Germany or the EU. Even though the strategy paper does not yet mention any specific incentives for the establishment and promotion of more manufacturing sites in Germany, the BMG and the Federal Ministry of Economics and Climate Protection (Bundesministerium für Wirtschaft und Klimaschutz - BMWK) have set themselves the goal of developing targeted funding instruments such as subsidies, particularly for investments in manufacturing facilities for antibiotics and oncologicals, as part of a joint project structure.

Further subsidies have also been announced to ensure supply security within the framework of price regulation under German social law. The measures already taken in summer 2023 in the German Drug Supply Shortage Reduction and Supply Improvement Act (Arzneimittel-Lieferengpassbekämpfungs- und Versorgungsverbesserungsgesetz - ALBVVG) to strengthen the security of supply of medicines in Germany in the short and long term (including in the area of reference prices, discount agreements and drug production) are now to be extended to other medicines, particularly oncological medicines, as part of the discount agreements to strengthen the EU and Germany. In this regard, pharmaceutical companies and wholesalers, which are already subject to increased binding stockpiling obligations under the ALBVVG, will have to consider whether and to which medicinal products the existing regulations of the ALBVVG will be extended.

Regulatory framework to ensure EU competitiveness

Following on from the pharma package presented by the European Commission on 26 April 2023 to revise regulations and directives on EU pharmaceuticals, the German Federal Government is in favour of regulatory simplification of the approval procedures (eg shortening of processing times, reduction in the number of scientific committees, elimination of an extension application for approval) and strong competitiveness of the regulatory framework. However, in the strategy paper, the German Federal Government also positions itself against the shortening of data protection proposed in the EU pharma package . This, according to the current legal framework under Section 24b (1) AMG (Art. 10 Directive 2011/83/EC), is eight years from authorisation for all medicinal products and is to be reduced to six years (with various extension options linked to additional conditions) as part of the reform proposed by the EU (see Art. 81 Directive 2023/0132 (COD)). The German Federal Government is also still opposed to the even temporary suspension of intellectual property rights in the form of a TRIPS waiver (Trade Related Aspects of Intellectual Property Rights) and mandatory technology transfer.

Promotion of innovation and research projects

Moreover, the German Federal Government is also paying particular attention to start-ups and SMEs in Germany, which lack a sufficient supply of outside capital to finance their research projects, particularly in the growth and maturity phases. It is not only offering incentives to mobilise and channel capital, but also the prospect of targeted (tax) support for research, development, innovation, transfer and founding of companies. This should focus on pharmaceuticals for which there is a lack of market potential due to low expected returns (including antibiotics, drugs for rare diseases, vaccines and pandemic prevention drugs).

The German Growth Opportunities Act (Wachstumschancengesetz), passed by the German Bundestag in November 2023, provides for a comprehensive expansion of tax incentives for research (research allowance). Among other things, the strategy paper emphasises the financial benefits for pharmaceutical companies conducting research in Germany. Eligible expenses will be extended to certain material costs and the maximum assessment base will be tripled to EUR 12 million. SMEs will have the opportunity to apply for a 10% point higher funding rate (subject to compatibility with the EU state aid framework).

Financial stabilisation of the German statutory health insurance: pharmaceutical supply

The reform of reimbursement negotiations for new medicinal products (AMNOG reform), which was implemented in autumn 2022 through the German Statutory Health Insurance (SHI) Financial Stabilization Act (GKV-Finanzstabilisierungsgesetz), is to be subject to further evaluation in 2024. This will involve stakeholders, with the aim of reviewing whether the effects of the reform on the supply security and Germany as a production location are already recognisable. The review will also consider whether further measures to promote reliable, comprehensible and easy-to-implement framework conditions for the pricing and reimbursement of medicinal products are necessary for more investment by pharmaceutical and biotechnology companies in research, development and production in Germany.

The German Federal Government has also announced new regulations to enable confidential reimbursement contributions. These are to be taken into account in negotiations on, for example, the auxiliary tax and in other reimbursement negotiations. The aim is to ensure that confidential reimbursement contributions for new medicinal products do not lead to additional expenditure or new bureaucracy for the German healthcare system.

In addition, the German Federal Government seeks to stabilise the manufacturing discount for reimbursable medicines without a reference price at the current level of 7%.

Outlook: Further debureaucratization

The German Federal Government sets itself the goal of further reducing bureaucratic requirements and administrative processes. It emphasizes that the special requirements of the pharmaceutical industry will also be considered in the announced German Bureaucracy Reduction Act IV (Bürokratieentlastungsgesetz IV). Last but not least, the German Federal Government is also committed to increased and more comprehensive digitalisation of application processes in approval procedures.