An Introduction to the German Life Sciences Industry in 2025

Overview of Germany’s healthcare system

For more than 100 years, Germany’s healthcare system has been based on statutory health insurance (gesetzliche Krankenversicherung or GKV). Today, approximately 74 out of 84 million inhabitants are covered by statutory health insurance, whereas only ten million patients are privately insured. In 2024, statutory health insurance funds spent more than EUR300 billion per year on services for their insureds. Statutory health insurance funds therefore 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.

Impact of statutory health insurance

In addition to the density and quantity of regulations, life sciences is one of the most complex and rapidly changing regulatory branches. An almost disruptive change to the statutory health insurance system, in particular, was observed in the legislative period between mid-2017 and the end of 2021 when Jens Spahn was Minister of Health. Since 2020, the COVID-19 pandemic situation has emerged as the main catalyst for action by the legislator. While there was a refresh by the Minister of Health, Professor Karl Lauterbach, who was installed at the end of 2021, the pace of change has significantly slowed compared to the previous legislative period. It will be very interesting to see which new legislation will be introduced with a new government to be formed in spring 2025.

Digitalisation initiatives and regulatory changes

The focus is still on the acceleration of digitalisation, including installing e-health records or e-prescriptions. The further development of digital health applications (DiGA) continues to raise a lot of specific questions following their introduction at the end of 2019, particularly with regard to reimbursement schemes. However, the implementation of the main digitalisation instruments faced a lot of resistance in the last few years.

Finally, the e-prescription system has been fully applicable since the start of 2024. With the adoption of the Health Data Use Act (the “Gesundheitsdatennutzungsgesetz” or GDNG) and the Digital Act (the “Digital-Gesetz” or DigiG) in February 2024, the German legislator took two further important steps on its digitalisation path.

Focus on financial stability and medicinal supply

The focus is also still on the financial health of the statutory health insurance system, which has worsened in the last few years. At the end of 2022, the legislator therefore introduced a strict law, the GKV Financial Stabilisation Act (the “GKV-Finanzstabilisierungsgesetz” or GKV-FinStG) to stabilise statutory health insurance funding by avoiding a permanent rise in the premiums paid by its members.

This had a number of impacts, particularly on the lower reimbursement of medicinal products in Germany. As statutory sick funds are still facing growing deficits it seems likely that new laws will be introduced in the upcoming legislative period.

Influence of EU directives on regulation

Additionally, the focus is on the maintenance of a sustainable availability of medicines (specifically, generic), which again is something that has worsened in recent years. At the start of 2023, the legislator therefore published the Drug Delivery Shortage Control and Supply Improvement Act (the “Arzneimittel-Lieferengpassbekämpfungs-und Versorgungsverbesserungsgesetz” or ALBVVG).

Current developments and challenges for the industry

The regulatory framework for the life sciences industry is heavily influenced by EU directives and regulations, especially concerning the marketability of pharmaceuticals and medical devices. All in all, legal advice must cover many areas. This obviously includes legal know-how and expertise on life sciences regulations but also extends to, inter alia, M&A, antitrust and competition, public procurement and data protection.

Evolution of market access and reimbursement

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 prices in Germany are also a relevant reference point for prices in many European countries, as well. The benefit assessment by the Federal Joint Committee (the “Gemeinsamer Bundesausschuss” or G-BA), based on the Act on the Reform of the Market for Medicinal Products (the “Arzneimittelmarkt-Neuordnungsgesetz” or AMNOG) has the greatest influence on the reimbursement prices.

Impact of legislative changes on pharmaceutical pricing

Nevertheless, the GKV-FinStG of 2022 could essentially 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 legislator currently does not deem it necessary to reconsider its “new approach”, however.

One piece of good news is that with the Medical Research Act (the “Medizinforschungsgesetz” or MFG) of 29 October 2024, the legislator at least introduced an exception to this price corridor system in the event that the pharmaceutical company performs – briefly summarised – 5% of its clinical studies in Germany. The Medizinforschungsgesetz (MFG) further introduced the opportunity to agree on confidential reimbursment prices – to avoid negative reference impacts – for the first time after long years of discussion, but with a lot of limiting requirements.

Adaptations for Advanced Therapy Medicinal Products

Furthermore, Regulation 2021/2282 on Health Technology Assessment (the “HTA Regulation”) by calling for a more collaborative framework in the EU, gets closer to improving business predictability and avoiding duplication of work and discrepancies between HTA mechanisms. The HTA Regulation has been applicable since 12 January 2025, starting with cancer medicines and ATMPs. It will expand to cover OMPs in 2028 and to cover all centrally authorised medicinal products in 2030.

The European-wide orientation includes huge challenges for the German life sciences industry. On 8 March 2025, the German national implementing rules in the Ordinance for the Benefit Assessment of Medicinal Products (the “AM-NutzenV”) adopted by the Federal Ministry of Health (the “BMG”), entered into force.

Challenges in clinical trials and regulatory simplification

In terms of clinical trials, the implementation of the Clinical Trials Regulation (the “CTR”) and the Clinical Trials Information System (the “CTIS”), in particular, is still causing many practical issues for the industry. However, the legislator has taken a first step to improving the legislative conditions to perform clinical studies in Germany. With the MFG, simplifications of the regulatory framework for clinical studies were introduced, eg, the facilitation of the regulatory process for clinical studies affecting the Radiation Protection Law or the shortening of the processing time for the authorisation of mono-national clinical trials with medicinal products. Furthermore, the concept of common standard contractual clauses for clinical trial agreements found its way into law for the first time.

Anticipating the EU pharmaceutical law package

The “next big thing” for pharmaceutical entrepreneurs at a European level, beyond the further legislative progress of the regulation introducing the European Health Data Space (the “EHDS”), surely lies in the new EU pharmaceutical law package. On 26 April 2023, the EC presented the following legislative proposals for the revision of the EU medicinal products legislation:

• first, a proposal for a Directive of the European Parliament and of the Council on the Union code relating to medicinal products for human use; and
• second, 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 intend to repeal several pieces of EU legislation, including 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 also undoubtedly have a huge impact on the pharmaceutical industry in Germany and the proposals have already been heavily discussed. Not surprisingly, the different Commission and Parliament drafts (2024) affect the appropriate provision of regulatory data protection. Council discussions are currently ongoing.

Challenges for medical device manufacturers under the Medical Devices Regulation

Manufacturers of medical devices still face the challenge of adapting to the Medical Devices Regulation (the “MDR”), which sets 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.

The industry in Germany was also relieved by the news that, after months of discussions, the transitional provisions of the MDR were extended. However, even with more time, the preparation for stricter regulations remains challenging for the industry, with many questions still unanswered. Correspondingly, new proposals for further facilitations in practical terms have already been submitted.