Regulatory, Pricing, and Reimbursement
An intro to the legal situation for regulatory, pricing, and reimbursement of drugs in Germany. Prepared in association with Heuking Kühn Lüer Wojtek, a leading global law firm, this is an extract from The Pharma Legal Handbook: Germany, available to purchase here for USD 99.
1. What are the regulatory authorities with jurisdiction over drugs, biologicals, and medical devices in your country?
- Federal Ministry for Health (Bundesministerium für Gesundheit (BMG), Berlin and Bonn). https://www.bundesgesundheitsministerium.de/
Drafting legislation, regulations and ordinances in all sectors of health care and social insurance, regarding admission of health care professionals, manufacturing and market licenses for medicinal products and medical devices.
- Federal Agency for Medicinal Products and Medical Devices (Bundesinstitut für Arzneimittel und Medizinprodukte (BfArM), Bonn. www.bfarm.de/EN/BfArM
National manufacturing and market licenses for medicinal products and medical devices, authorization of clinical studies for medicinal products and medical devices, risk supervision, supervision of drug traffic.
- Robert Koch-Institut (RKI) https://www.rki.de/EN/Home/homepage_node.html
The Robert Koch Institute (RKI) is the government’s central scientific institution in the field of biomedicine. It is one of the most important administrative bodies for the safeguarding of public health in Germany. Intelligence, prevention, abatement and control of diseases, in particular infectious diseases.
- Paul-Ehrlich-Institut (PEI) https://www.pei.de/EN/home/node.html
The Paul-Ehrlich-Institute is another Agency of the German Federal Ministry of Health. Its research and control activities promote the quality, efficacy and safety of biological medicinal products. It is in charge of national market licenses for biomedical medicinal products such as vaccines, authorization of clinical studies and risk supervision regarding medicinal products.
- Federal Insurance Agency (Bundesversicherungsamt, BVA)
Supervision of federal public health insurers, administration of structural risk equalization between health insurers, health fonds.
- Federal Center for Health Education (Bundeszentrale für gesundheitliche Aufklärung (BZgA)
Prevention campaigns, education measures, model projects for child and youth health, aids, addiction.
- Institute for Quality and Commercial Feasibility in Health Care (Institut für Qualität und Wirtschaftlichkeit im Gesundheitswesen (IQWiG)
Evaluation of diagnosis and therapy methods, cost and benefit evaluations for medicinal products. review of structured therapy programmes, high quality patient information.
- Institute for Quality Security and Transparency in Health Care (Institut für Qualitätssicherung und Transparenz im Gesundheitswesen, IQTIG))
Development and implementation of measures for quality enforcement and transparent reporting in health care.
Note on English language citations and summaries of German laws, statutes and regulations: As concerns English versions of the laws, statutes and regulations referred to in this publication, please refer to the translations made available on the following website of the Federal Ministry of Justice and Consumer Protection:
References in this publication to English versions and summaries of German laws, statutes and regulations are partly based on the translations made available on above website.
2. What is the regulatory framework for the authorization, pricing, and reimbursement of drugs, biologicals, and medical devices?
1. Medicinal Products, Biologicals:
The regulatory framework for German manufacturing and market authorizations of medicinal products and biologicals is set forth in the German Medicinal Products Act (also referred to as the Pharmaceuticals Act or Drug Act, Arzneimittelgesetz, “AMG”) of 12 December 2005 as amended, as well as a number of supplementary laws and regulations governing the implementation of the rules set forth in the Act. An English translation of the AMG is available on the following website of the Federal Ministry for Justice and Consumer Affairs: http://www.gesetze-im-internet.de/englisch_amg/index.html.
European manufacturing and market authorizations by EMA, London, are regulated by EU Regulations, notably Regulation (EC) No 726/2004.
Definition of Medicinal Products: Pursuant to § 2 (1) of the Medicinal Products Act, all “substances and preparations made from substances which are intended for use on or in the human or animal body and are intended for use, based on their properties, as remedies for the curing, alleviating or preventing of human or animal diseases or disease symptoms’ are medicinal products (Medicinal Products), unless they are foods, cosmetics, tobacco products or medical devices. The rules of the German AMG are essentially based on EU Directive 2001/83 (Code of Human Medicines Directive), EU Regulation 536/2014 and many others.
2. Medical Devices:
The regulatory framework for the manufacture and authorization of medical devices is set forth in the Medical Devices Act (Medizinproduktegesetz, “MPG”) of 2 August 1994, as amended, as well as supplementary laws and regulations governing the marketing of medical devices.
3. The regulatory framework of pricing of medicinal products and medical devices was reformed in 2011 and is essentially governed by the Law Reforming the Pharmaceutical Market generally referred to as “AMNOG” (Arzneimittelmarkt-Neuordnungsgesetz of 2011), as well as a number of other and supplementary laws and regulations. Up to 2011, the wholesale sale price of a new, patent protected prescription drug was determined by the manufacturer, except where such drug was assigned to a group of fixed price drugs. Since 2011, this applies only to the first year following market authorization. During that first year, any such medicinal product prescribed within the public health insurance system (Gesetzliche Krankenversicherung (GKV)) is evaluated as to its additional benefits as compared to other current standard therapies of the same indication (early benefit evaluation, „Frühe Nutzenbewertung“). If an additional benefit has been determined, the representatives of the GVK and of the manufacturer negotiate a reimbursement amount which is usually lower than the original manufacturer asking price. If there is no such additional benefit, the new drug is subject to a determined fixed price.
Wholesale adds a wholesale margin within a statutory maximum. That wholesale price is the nationwide uniform price charged to drug stores (pharmacies). The pharmacy sales price for prescription drugs (also uniform in Germany) is determined by adding a margin of 3 percent to the wholesale price, plus a fixed pharmacy service compensation of 8.35 Euros, and the value added tax. If the sale is charged to a public heath insurance, the price is reduced by a fixed deduction which is, since 2015, an amount of 1.77 Euros per unit.
The price of freely sellable medicinal products soled in pharmacies or elsewhere is determined by each pertinent seller (for example, herbal teas, plant extracts, vitamines, minerals etc.).
The price of the large number of generica is relatively moderate in Germany, whereas the prices for patent protected medicinal products is relatively high compared to other markets (where lower or no value added tax or different price regulation systems apply). The price difference prompts some German wholsale businesses to import from abroad (parallel imports).
4. The reimbursement of the cost of medicinal products and medical devices is regulated in laws and regulations regarding public health insurance and private health insurance. Details will be outlined in the answers to questions 10 to 13 below.
3. What are the steps to obtaining authorization to develop, test, and market a product?
1. The third section of the Medicinal Products Act (governing manufacturing licenses in §§ 13 to 20d), the fourth section (governing market license in §§ 21 to 37) as well as the sixth section (governing the protection of human subjects and ethincs in clinical testing in §§ 40 to 42b of the Medicinal Products Act) regulate the development, testing and marketing of medicinal products. The Medical Devices Act provides the corresponding background for medical devices. These statutes describe in detail the application and authorization process, withdrawals, revocations and the resting of the authorization. A “qualified person” must be available to the medicinal product manufacturing facility.
2. Any medicinal product placed on the German market following a marketing authorization from the German authorities or from the European Medicines Agency (EMA) must have successfully completed clinical trials substantiating the efficacy and safety. “Finished medicinal products” are manufactured in advance and placed on the market in packaging intended for distribution to the consumer (as defined in § 4 (1) of the German Medicinal Products Act),
Two kinds of medicinal products do not require marketing authorizations (§ 21 (2) of the German Medicinal Products Act), namely (i) medicinal products manufactured in a under a licensed pharmacy (no more than 100 packages per day) and (ii) medicinal products that are intended for use in clinical trials on humans.
Further, pursuant to § 21 (2) No. 6 of the Medicinal Products Act, an exception applies to medicinal products applied to a patient, free of charge, as a matter of compassionate use (to treat a life-threatening disease that cannot be treated satisfactorily with an authorised medicinal product), subject to the rules of the Ordinance for Compassionate Use (Verordnung über das Inverkehrbringen von Arzneimitteln ohne Genehmigung oder ohne Zulassung in Härtefällen (Arzneimittel-Härtefall-Verordnung – “AMHV”) of 14. July 2010 issued by the Federal Ministry of Health (Bundesgesundheitsministerium).
3. As concerns medical devices, §§ 4 to 14 of the Medical Devices Act regulate the required properties of medical devices, §§ 15 to 18 govern the role of supervisory authorities and certifications, §§ 19 to 24 concern clinical testing and market authorizations, and §§ 25 to 31 regulate the supervision and risk reporting.
4. What are the approximate fees for each authorization?
1. Depending on the nature of the product, fees and expenses are charged for the decision on the marketing authorization, on the authorization of tissue preparations, on the authorization of medicinal products for advanced therapies, batch releases, the processing of applications, activities in the context of the compilation and evaluation of risks of medicinal products, for the protest procedure against an administrative act issued on the basis of the Act or other services, including independent consulting and information services. The maximum fee for the market authorization as such of medicinal products is EUR 57,500.
2. Regarding the cost charged by the Paul-Ehrlich-Institute for market authorizations of biomedical medicinal products (such as vaccines), detailed information is available on the Institute’s website https://www.pei.de/EN/home/node.html.
5. For how long are marketing authorizations/registrations valid? How are marketing authorizations/registrations renewed?
1. Pursuant § 31 of the Medicinal Products Act, a marketing authorisation expires (i) if the authorised medicinal product is not placed on the market within three years from marketing authorisation, or if it was placed on the market but the market presence is interrupted for three successive years; (ii) when waived in writing; (iii) five years after it was granted, unless a timely application for prolongation is filed nine months prior to the expiry date; (iv) if the prolongation of the marketing authorisation is refused. Prolonged marketing authorizations are valid for an unspecified period, subject to detailed conditions.
2. Pusuant § 31 (2) of the Medicinal Products Act, the application for prolongation shall be supplemented by a report giving details of whether, and to what extent, the criteria by which the medicinal product is assessed have altered over the previous five years. Updates of the quality, safety and efficacy documents must be filed.
Further details apply as set forth in § 31 of the Medicinal Products Act.
6. How does the authorization process differ between brand-name products and generic products? Are there differences for local manufacturers versus foreign-owned manufacturers?
1. As concerns German manufacturing and market authorizations, there are no differences in the authorization process for local versus foreign manufacturer, provided all regulatory requirements are fulfilled.
2. Regarding the market authorization of generic medicinal products, § 42 b of the German Medicinal Products Act provides for certain limited benefits regarding support document filing requirements. The Act permits the applicant to reference, without a previous applicant’s agreement, certain documentation, including the expert report, already filed in support of a previous applicant’s medicinal product („Reference Medicinal Product“), provided the Reference Medicinal Product has been authorised for at least eight years. This also applies to filings for authorisations in another Member State of the European Union. However, a generic medicinal product authorised pursuant to this provision facilitating the documentation process may not be placed on the market until ten years have elapsed following the first authorisation of the Reference Medicinal Product (subject to further details). An authorisation pursuant to the above rules requires that the medicinal product in question has the same qualitative and quantitative composition of active substances and the same pharmaceutical form as the Reference Medicinal Product, and that the bioequivalence has been demonstrated in bioavailability studies (details apply). The applicant is not required to submit bioavailability studies if it can otherwise demonstrate that the generic medicinal product meets the relevant bioequivalence criteria in accordance with current scientific knowledge.
7. How are combination products (drug + drug, drug + biologic, drug + device, biologic + device, drug + biologic + device) regulated?
Combination products are usually innovative medicinal products and medical devices featuring the benefits of a medical device in combination with a pharmacological component (based on coating, impregnation or otherwise). The evaluation of a combination product for the regulatory market authorization process of § 25 of the Medicinal Products Act is obviously more complex than the process applicable to a medical device, only. The relevant German authority will require extra time to determine the necessary scope of evaluation and to conduct required examinations. Manufacturers of combination products should, therefore, seek early advice and instructions from the authority to determine the extent of documentation and supplementary approvals or certifications (such as a CE certification).
8. How is compliance with regulation monitored and evaluated? Is the regulatory regime comparable with the U.S. Food and Drug Administration or the European Medicines Agency expectations and requirements?
1. The eighth Chapter of the Medicinal Products Act contains rules pertaining to safety and quality control, notably § 54 on internal regulations, § 55 on Pharmacopoeia and § 55a containing the rules for official compilation of test procedures. Securing, monitoring and enforcing the quality of medicinal product manufacturing is primarily based on § 54 in combination with the Regulation Replacing the Operation Ordinance for Pharmaceuticals Manufacturers (Verordnung zur Ablösung der Betriebsverordnung für pharmazeutische Unternehmer) of 3 November 2006.
2. The German Medicinal Products Book (Arzneibuch) referenced in aforementioned Regulation consists of several volumes of rules and regulations which also include the European Medicinal Products Book. It represents a binding regulatory collection of recognized pharmaceutical rules regarding the quality, examination, storage, distribution and labeling of medicinal products. On the European level, these requirements and procedures for marketing authorisations, as well as the rules for monitoring any authorised products, are primarily laid down in Directive 2001/83/EC and in Regulation (EC) No 726/2004. In addition, the rules of Good Manifacturing Practices (and similar Good Practices rules in other sectors) apply.
3. In essence, the safety regime applicable in Germany corresponds to the rules of the European Medicines Agency EMA, it is highly complex and comparable to the regulations applied by the U.S. Food and Drug Administration.
9. What is the potential range of penalties for noncompliance?
1. § 17 of the Medicinal Products Act governs comprehensively the criminal sanctions, penalties and fines in the case of violations of regulatory law. Depending on the kind and circumstances of a violation the scope of sanctions ranges from imprisonment up to three years or monetary fines. Pursuant to § 40 of the German Criminal Code (Strafgesetzbuch „StGB) of 15 May 1871, as amended (most recent amendment of 30 October 2017), a monetary fine can be a maximum of EUR 30.000 per day for the number of days to be determined by the court (max. 360 days) – „daily rate“). In case of a criminal offense committed by a legal representative pursuant to the German Criminal Code, or pursuant to one oft he statutes relating to medicinal products or medical devices, the company fine can be up to 10 million EUR.
2. Pursuant to the Act on Regulatory Offences (Bußgeldgesetz) of 24 May 1968, as amended (most recent amendment of 17 December 2018), an administrative fine can be a maximum of EUR 1,000.00, except where a higher amount is stated in a relevant law. The administrative fine shall in any case exceed the financial benefit the perpetrator or the company obtained by the offense (§ 17 para 4 Administrative Offenses Act).
Where an administrative or penal offense, pursuant to one of the statutes named herein, is committed by an individual acting as a legal representative of a company, the administrative fine can imposed on the company (§ 30 Administrative Offenses Act, see http://www.gesetze-im-internet.de/englisch_owig/englisch_owig.html#p0156. Such corporate money fine pusuant § 30 of the Regulatory Offences Act can be imposed in case of an offence commited by a management individual by which the company violates its obligations, or from which the company benefits or was intended to benefit. This applies to any regulatory offence, regardless of what the offence concerned (it can be any offence within the sector of medicinal products, medical devices, food safety or CLP Regulations. In case of an intentional offence, the maximum amount of a fine is € 10 million, plus the absorption/skimming off of profits derived from the violation. In case of a negligent offence, the maximum amount of a fine is € 5 million, plus said absorption of profits.
Limited or permanent revocation of regulatory and/or professional licenses is also possibility.
See also responses to question 22 of Marketing, Manufacturing, Packaging & Labeling, Advertising.
10. Is there a national healthcare system? If so, how is it administered and funded?
Germany has a highly developed and comprehensive national healthcare system composed of a combination of public health insurance (sickness funds or gesetzliche Krankenkassen) and private health insurance (Private Krankenversicherung). The system is administered by the administrations and institutions named in the answer to question 1 above and the Federal Joint Committee (Gemeinsamer Bundesausschuss, „G-BA“) which is a central body of self-regulation for the steering of medical care and implementation of statutory rules. It is a public health organization issuing regulations implementing the legislative health laws and reforms. About 85% of the population are mandatory or voluntary members of the public health insurance, the rest has private health insurance.
The funding is in the hands of the public health care insurances or private insurers.
11. How does the government (or public) healthcare system function with private sector healthcare?
1. All active and retired workers, and employees earning up to about EUR 60,000 annually are automatically signed up to one of the public non-profit sickness funds. The contributions are paid equally by employers and employees. Membership cannot be refused.
In parallel, there are private health insurances which can be used by individuals with higher income, students and civil servants, and anyone else for complementary coverage.
2. Long-term care (Pflegeversicherung) is paid for half and half by the employer and the employee. It covers cases of necessary care requirements (individuals not being able to manage their daily routine such as eating, cleaning, personal hygiene, etc.). The contribution is about 2% of the income or pension plus the employer’s one half share.
3. The contributions to the public health insurance are determined by the Federal Ministry of Health, covering a fixed set of healh-related services regulated in the German Social Law Book (Sozialgesetzbuch – SGB). The health services must be economically viable, sufficient, necessary and meaningful. Contributions do not dependent on an individual’s health condition but are a percentage of the salary under about EUR 60.000 per year (currently 15.5%, 7.3% of which is covered by the employer). Family members are insured.
4. In the Private health insurance system, the premium is individually agreed on the basis of the insurer’s terms, defining the set of covered services and the degree of coverage. The amount depends on the scope of purchased services and the insured’s risk (health, age of entry etc). The contributions are used to accumulate savings for rising health costs at higher age (required by law).
The private health care organizations supplement the public system and operate independently, subject to the regulatory rules governing safety and consumer protection.
12. Are prices of drugs and devices regulated and, if so, how?
1. Within the framework of the Law Reforming the Pharmaceutical Market of 2011 (AMNOG, see introductory information in the answer to question 2 above) and the German Social Security Laws, the sale of medicinal products and certain medical devices marketed in Germany benefits from the general principle of cost reimbursement by the public (or private, as the case may be) health insurers, except products falling into a category excluded by law (such as OTC products), or excluded by a decision of the Federal Joint Committee (Gemeinsamer Bundesausschuss, G-BA). This general rule is subject to certain exceptions. A non-prescription product (over-the-counter product, “OTC”) can be purchased without a physician’s prescription. Pursuant to § 48 of the German Medicinal Products Act, the German Ministry of Heath can determine that a medicinal product can be sold without prescription if the properly applied or used product does not endanger the user’s health even if the use is not supervised by a physician. OTC products can be products which are available in pharmacies, only, or products available outside a pharmacy.
OTC products play a major role in the sector of self-medication. With a view to the fact that most OTC products do not qualify for reimbursement, they are not relevant for public health insurers. They are more important for private insurers („PKV“) which, in certain circumstances, reimburse the costs of OTC medicinal products recognized by evidence based medical practice or which are a well-proven medicinal alternative.
2. There is, in principle, free manufacturer pricing for a year after a medicinal product is first placed on the market. There is a formal assessment of the “added therapeutic effect” of a new pharmaceutical product which then forms the basis of the price determination. Products are often combined (clustered) in groups of therapeutically similar products which qualify for maximum reimbursement amounts. The prices of innovative medicinal products are normally negotiated. In principle, prescription drugs are reimbursed by the health insurances (with certain exceptions set out in the so-called “negative list” maintained by the G-BA.
3. The process of evaluation and price negotiation extends to new and patented medicinal products (except products which generate public health insurance expenditures of less than 1 million EUR). Based on their marketing authorization, orphan drugs are normally deemed to have excess therapeutic benefit without reference to comparing products in Germany (subject to certain limitations). For details see the extensive AMNOG-related literature.
13. How are drugs and devices used by patients paid for? What roles do public and private payers play?
1. Prices of drugs dispensed to hospital patients are negotiated between pharmaceutical manufacturers and hospitals or organizations purchasing for hospitals, subject to certain limits. They are paid for either by the public health insurance or, where private insurance applies, by the patient who would apply for reimbursement by its private insurer.
2. Regarding other patients not treated in a hospital, pharmaceutical manufacturers are required to apply a 7% discount off the ex-factory price for the benefit of sickness funds and other health insurers on patented medicinal products not allocated to a price group (Social Security Act SGB V, § 130a). For generics not clustered in a price groups, the discount is 6%, plus a further discount not exceeding 10%. Again, purchases and services are paid for either by the public health insurance or, where private insurance applies, by the patient who would then apply for reimbursement by its private insurer.
14. Who dispenses drugs and devices to patients and how are those dispensers compensated?
1. Medicinal Products and medical devices the sale of which is restricted to pharmacies (can be prescription or non-prescription products) may be purchased and sold by licensed pharmacies or drug wholesale entities, only (pharmacies in the case of retail (§ 17 of the Pharmacy Act, Gesetz über das Apothekenwesen (Apothekengesetz – ApoG) of 20. August 1960 in the version of 15. Oktober 1980, most recent amendment of 29. März 2017) or licensed medicinal products wholesale entities in the case of wholesale.
2. The seventh chapter of the Medicinal Products Act (§§ 43 to 53) regulates the sale of medicinal products, addressing in §§ 43 to 45 the pharmacy-only requirement and its exceptions and extensions, in § 47 the permitted distribution channels, in § 47a the obligation to keep records, in § 47b certain special distribution channels (diamorphine), in § 48 the prescription requirement, in § 51 the sale by itinerant traders, in § 52 the prohibition of self-service, in § 52a the wholesale trading of medicinal products, in §§ 52b and 52c the supply and brokering of medicinal products and in § 53 the expert consultation obligations.
3. Summarizing some of the more essential rules, it should be noted that all retail of medicinal products and medical devices restricted to pharmacies must take place within the authorized pharmacy’s premises. Self-service is not permitted in pharmacies for products the sale of which is restricted to pharmacies. Drive-in Pharmacies are permitted, subject to certain rules. Delivery may be arranged by means of reliable messengers, subject to the rules of § 11a of the Pharmacy Act. Distant sales of medicinal products is also permitted in accordance with and subject to the restrictions of the rules of § 11a of the Pharmacy Act. Other products not restricted to pharmacy sale can be sold by drugstores (Drogerien) or otherwise.
4. The sale of prescription medicinal products (§ 3 of the Prescription Drug Regulation) is subject to detailed recording and monitoring requirements of the pharmacist.
5. Medical devices not restricted to the sale in pharmacies are sold in medical supply stores.
6. Retail purchases must be paid for by the purchasing party which in turn can arrange for reimbursement by the relevant public or private health insurer (subject to the relevant conditions).
15. What are the professional and legal responsibilities of those who dispense drugs and devices? What role do they play in providing patient care, information, and safety?
The Pharmacy Act, the Prescription Drug Regulation and other rules and regulations provide for detailed professional consulting, advice, monitoring, supervision, recording and documentation responsibilities. Safety and security rules ensure the safeguarding of harmful substances. The identification of medicinal products is regulated in § 300 III No 1 of the Fifth Book of the Social Security Act, based on the uniform Identification Number for Medicinal Products (Pharmazentralnummer “PZN”). Pharmacies are subject to service obligations, prescribed opening hours, access regulations, night and emergency service obligations and the obligation to provide pharmaceutical counselling to customers.