Following the federal election in September 2021, Germany will soon be led by a new three-party coalition, the so-called “traffic light coalition”, composed of the Social Democratic Party (SPD), the Liberal Democrats (FDP) and the Green Party (Die Grünen). This new federal government led by the new chancellor Olaf Scholz from the Social Democrats will replace the Merkel administration and will be in office for four years. On November 24, 2021, the new coalition has presented their coalition agreement with their plans for the next 4 years. The agreement needs to be approved by the respective party committees and it is expected that all three parties will approve it.

The new government’s roadmap foresees reforms in the healthcare and life sciences sector that will have a significant impact in particular on pharmaceutical and medical device companies but also healthcare providers and technology companies focusing on the healthcare and life sciences sector.

The coalition agreement has an own chapter for the healthcare and life sciences sector that among other things envisages changes to the regulation of pharmaceuticals and medical devices. In particular, there will be far-reaching cost-containment measures by amending the drug pricing and drug reimbursement rules. The new government also plans legislative changes in the areas of supply of medicines, vaccines and medical devices. Moreover, the enhanced digitalization of healthcare is a particular goal of the new coalition. With respect to digitalization, Germany generally and especially its healthcare sector starts from a rather low development stage (e.g., still widespread use of fax machines) so that significant investments will be needed.

It is also important that the new Ministry of Health will be a politician from the Social Democratic Party. This Ministry was led by a politician from the Christian Democratic Union for the last 8 years.

The new government also intends to enact changes to other areas of the broader life sciences industry, such as food advertising and the regulation of cannabis, alcohol and tobacco. The responsible ministries of Environment/Consumer and Agriculture/Food will be led by a politician from the Green Party.

Among other things, the roadmap of the coalition parties includes in particular the following plans with respect to the life sciences sector:

Pharmaceutical and Medical Device Companies

Pricing procedure. The coalition parties wish to amend the drug pricing and market access procedure (AMNOG). The AMNOG procedure starts with the market launch of a new medicine and can be divided into two procedural stages, namely the benefit assessment by the Joint Federal Committee (“G-BA”) and the negotiation of the reimbursement amount with the top association of the health insurances (“GKV-Spitzenverband”). Under the current regulations, the pharmaceutical companies are entitled to a period of free pricing for 12 months after the product launch. The coalition parties now plan to reduce this free pricing period for new drugs from one year to six months. According to their plans, the negotiated reimbursement price (Erstattungsbetrag) will apply from the seventh instead of the 13th month after launch. This will cut in half the period of free pricing for pharmaceutical companies. This measure is intended to increase cost-containment options for the statutory health insurance (SHI) fund.

Further cost containment measures to limit drug prices. The new government has also announced that it will generally strengthen the possibilities of the health insurances to limit the prices of medicines. The coalition agreement does not further elaborate on this important point so that it remains open which instruments the new government plans to provide the healthcare insurances with. In any event, the coalition agreement quite clearly and repeatedly speaks out the plan of the new coalition to limit drug prices and contain the expenditures of the healthcare insurances for drugs. The pharmaceutical industry needs to be prepared that the new government will employ several different measures to reach this goal.

Price freeze. Among the more concrete measures to limit drug expenditures, the new government plans to prolong the existing and quite controversial price freeze (Preismoratorium) for medicines. The price freeze was introduced back in 2010 and allows only very limited (inflation-reflecting) reimbursement of price increases for medicines. Following the most recent extension in 2017 for another five years, the price moratorium was expected to expire in 2022. This has now become very unlikely so that the industry needs to be prepared to a perpetuation of this significant cost containment measure which undoubtedly has a severe impact on pharmaceutical companies in Germany. The prolongation of the price free may trigger a new discussion around the legality of this legislative prohibition.

Federal Joint Committee. The new coalition parties plan to reform the rules governing the Federal Joint Committee (G-BA) to speed up its decisions. Among other things, the G-BA is responsible for conducting health technology assessments, i.e., assessing the (added) benefit of new drugs in the above mentioned AMNOG procedure for the market access of new drugs in Germany. The G-BA is also involved in health technology assessments of new medical devices and treatment methods and is also the key decision maker with respect to many other healthcare related matters (e.g., the exceptional reimbursement of off-label-use treatments). Therefore, the new government’s plan to “reform the G-BA” may have significant ramifications for life sciences industry companies.

Patient Rights and Patient Involvement in Market Access. Patient centricity appears to be another special concern for the new German government. The coalition agreement sets forth that the new government will strengthen the structures for independent patient counseling and enhance their independence. As part of the above mentioned reform of the G-BA and the market access rules, the new government will enhance the representation of patient groups in the G-BA. Further, the new coalition plans to make reforms to the exiting liability rules to improve the position of patients in medical liability matters. In that context, the new coalition also wishes to establish a new hardship fund.

Supply Security and Reshoring. The new coalition parties wish to prevent any shortages in the supply of medicines and vaccines. Among others, the parties want to take measures to relocate and re-shore the manufacturing of pharmaceuticals back to Germany or the EU. This includes reducing the bureaucratic burden, examining investment subsidies for production sites, and considering subsidies to ensure security of supply. In addition, a Health Security Act (Gesundheitssicherstellungsgesetz) is intended to ensure the efficient and decentralized stockpiling of medicines and medical devices, as well as regular emergency exercises for health risk personnel.

More Transparency and “Sunshine laws” against Conflicts of Interests. Germany has not yet enacted so-called “Sunshine laws” and does not require drug and device companies to disclose payments and transfers of value they make to healthcare professionals. The coalition agreement now announces that the new government will create more transparency about financial contributions made to healthcare professionals to avoid conflicts of interests. Hence, the new German government appears to consider new Sunshine legislation for the healthcare and life sciences sector in Germany.

Pharmacies. The new coalition envisages various changes and legislative amendments in the rules governing pharmacies and pharmaceutical services.

Digitalization. The coalition parties especially emphasize their goal to improve the digitalization of the German healthcare system. Among the many goals, they want to provide more telemedical services to patients on a regular basis. They also plan to accelerate the introduction of the electronic patient record (elektronische Patientenakte) as well as the connection of all relevant players to the telematics infrastructure. All insured persons in Germany should be provided with an ePA in compliance with the GDPR but its use will be voluntary (opt-out). In this context, Gematik, the agency currently tasked with the roll-out of the EPA, is to be expanded into a digital health agency.

Research Use of Health Data. The new German government also plans to enhance the possibilities to use health data for scientific research purposes by public and private entities. Insofar, a new act on the use of health data is envisaged (Gesundheitsdatennutzungsgesetz) as well as a new act governing registries (Registergesetz). These goals are also embedded into the broader healthcare digitalization strategy.

Beyond these specific changes affecting the pharmaceutical and medical devices space, the new government also plans further changes in the broader healthcare area which will have direct and indirect implications for life sciences companies. In particular, there will be changes in nursing care, hospital care and financing and health insurance.

Food industry and cannabis, alcohol and tobacco companies

Food. The coalition parties intend to create scientifically based reduction targets for sugar, fat and salt that are tailored to target groups. In addition, they want to prohibit advertising directed at children for foods with high fat, sugar and salt (HFSS) content in TV shows and other formats for under-14-year olds. Further, they want to develop further an EU-wide Nutriscore in a scientific and generally understandable way. The parties intend to strengthen plant-based products and advocate for the approval of innovations such as alternative protein sources and meat substitutes in the EU.

Cannabis, alcohol and tobacco. Germany plans to further liberalize Cannabis. In addition to the already legal provision of cannabis for medical purposes, there will also be controlled supply of cannabis to adults for recreational purposes in licensed stores in the future. This approach seeks to control the quality, prevent the distribution of contaminated substances and ensure the protection of minors. With regard to alcohol, tobacco and cannabis, the parties want to toughen the regulations for marketing and sponsoring.

Whistleblowing, Class Actions, Corporate Sanctions and other Plans

Whistleblowing Laws. The new German government has announced that it will implement the EU Whistleblowing Directive (EU) 2019/1937 into national law. In doing so, the new coalition plans to adopt national whistleblowing laws, which go beyond the scope of the EU Whistleblowing Directive and also include protection for whistleblowers that report breaches of national law and not only EU law violations. The implementation of the Whistleblowing Directive by companies will in any event require the establishment of local whistleblowing systems and procedures as it will not be sufficient to only refer to a corporate-group-wide whistleblowing system.

Class Actions and Collective Redress. The new German government plans to expand the currently available collective redress options for consumers. It will implement the new EU Directive on representative actions for the protection of the collective interests of consumers and the coalition agreement states that this will be implemented in a “user friendly” manner. Small companies should also benefit from the new “class action” options.

Corporate Sanctions and Compliance Programs. The new government plans to “protect honest companies from unlawful competitors” which will probably lead to amendments of the respective commercial laws. The coalition also wishes to revise the rules on corporate sanctions, including the level of sanctions, in order to improve the legal certainty of companies with regard to their compliance obligations. The last government had attempted to reform the existing German laws and enact new rules on corporate criminal liability. In that course, the companies should also be incentivized to implement robust compliance programs. In the last government, the SPD had pushed this legal reform idea. As the SPD is now the strongest party in the new government, it can be expected that the new government will soon present similar reform plans.

Internal Investigations. In conjunction with the reforms of the corporate sanctions rules, the new German government also plans to create a new legal framework for internal investigations by companies.

English as Court Language. The new government plans to establish English-speaking special chambers at German commercial courts.

The envisaged reforms of the coalition parties will have significant direct and indirect implications for life sciences companies. Therefore, all companies in this sector should closely monitor the upcoming legal developments in Germany.

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Photo of Dr. Dr. Adem Koyuncu Dr. Dr. Adem Koyuncu

Adem Koyuncu is double qualified as a lawyer and medical doctor and a partner in our Brussels and Frankfurt office. He is a chair of the firm’s “Food, Drug & Device” practice group and also a member of our Compliance practice. Adem is…

Adem Koyuncu is double qualified as a lawyer and medical doctor and a partner in our Brussels and Frankfurt office. He is a chair of the firm’s “Food, Drug & Device” practice group and also a member of our Compliance practice. Adem is recognized as a “leading lawyer for pharma and medical devices law” (JUVE 2021).

Adem helps clients on a wide range of EU and German law issues, including regulatory, compliance, privacy and liability matters. He also provides strategic advice. He knows the life sciences sector also from his earlier work in the pharmaceutical industry and as a medical doctor. He represents clients before courts and authorities and assists them in contract negotiations, investigations and transactions. For years, Adem is listed in various lawyer rankings.

See some Accolades from Clients and Surveys:

  • “He is one of the most detail-oriented and client-focused partners I have ever encountered.” (Client, Chambers 2021)
  • „Great professional and human competence, good team player.“ (Client/Adverse Party, JUVE 2022)
  • “I find him to be one of the most pragmatic regulatory lawyers. He was a doctor before a lawyer, has been in-house, worked on lots of stuff that I have to handle in-house, which helps when getting advice. He is really good at saying it’s a complex situation and your best option is to do this.” (Chambers 2022)
  • “He always comes through with extremely helpful advice. He brings a unique understanding and experience to his practice as both a lawyer and medical doctor.” (Chambers 2021)
  • “Adem Koyuncu is not only a lawyer but also a doctor and has worked in industry. He knows the perspectives that also move in-house lawyers.” (Legal 500 2022)
  • “He is very sharp and quick, while at the same time having a good sense of humor and nerves of steel. Very pleasant to work with.” (Legal 500 2022)
  • He is described as “versatile competent, reliable and high quality” (JUVE 2021) and “incredibly fast.” (JUVE 2018)
  • Provides advice at “an outstanding level.” (Legal 500 2015)
  • “Very strong negotiation skills.” (JUVE 2011)
  • Clients appreciate his “very broad knowledge and long-standing expertise” (JUVE 2021/22) and that “he is approachable, knowledgeable and really easy to talk to over the various issues. He is calm and has seen most problems before.” (Chambers 2020)
  • Peer lawyers described him as “highly competent” and a “very good and pleasant lawyer” (JUVE 2014) and as “the off-label-guru, substantively very good, creative.“ (JUVE 2022)

Adem is the author of numerous publications (e.g., in leading books on pharma law, product liability and clinical trials) and frequent speaker at different events. As such, he will soon speak at following events:

  • “Medical Device Liability and Risk Transfer 2.0 | A liability issue for the Management?!,” BVMed, Webinar (3/24/2023)
  • “Data Protection Requirements and Open Issues in the Pharma Sector – Status quo,” Speech at conference, 26. Marburger Gespräche zum Pharmarecht, Marburg (3/16/2023)
  • “Vendor Oversight & Vendor (Quality) Management in the Pharma Industry,” FORUM-Institut, Online Seminar (4/19/2023)
Photo of Katharina Ewert Katharina Ewert

Katharina Ewert helps major national and multinational companies in the food, medical device, pharmaceutical and cosmetics sectors to navigate regulatory, litigation and procurement risks. With a strong background in general EU law and procedure, Katharina provides strategic advice to clients in a changing…

Katharina Ewert helps major national and multinational companies in the food, medical device, pharmaceutical and cosmetics sectors to navigate regulatory, litigation and procurement risks. With a strong background in general EU law and procedure, Katharina provides strategic advice to clients in a changing regulatory environment. Katharina is a member of Covington’s Diversity and Inclusion Committee.

Katharina is a member of Covington’s Diversity and Inclusion Committee.

  • In her work with a broad range of life sciences companies, Katharina regularly:
  • advises clients on all aspects of food development and marketing, including the regulation of ingredients, labelling and advertising;
  • helps companies in evaluating health and nutrition claims for foods and food supplements, as well as marketing claims for cosmetics;
  • provides strategic advice to major companies in the medicines and device space on national and EU public procurement considerations;
  • assists clients in navigating the implications of Brexit; and
  • represents clients in administrative proceedings in the national and EU courts.

Katharina’s pro bono work includes advising charities on corporate, commercial and public procurement matters.

Katharina gained valuable experience during a secondment the in-house legal team of a global pharmaceutical company.