Medicinal product regulation and product liability in Germany: overview

A Q&A guide to life sciences law in Germany.

The Q&A gives a high level overview of key issues including pricing and state funding, manufacturing, marketing, clinical trials, advertising, labelling, patents, trade marks, and product liability.

For information on pharmaceutical patents, trade marks, competition law, patent licensing, generic entry, abuse of dominance and parallel imports, visit Pharmaceutical IP and Competition Law in Germany: overview.

To compare answers across multiple jurisdictions, visit the Medicinal product regulation and product liability Country Q&A tool.

This Q&A is part of the global guide to life sciences law. For a full list of jurisdictional Q&As visit www.practicallaw.com/lifesciences-mjg.

Contents

Regulatory overview

1. What are the main legislation and regulatory authorities for pharmaceuticals in your jurisdiction?

Legislation

The main objective of healthcare legislation is to protect public health and individual patients.

Medicinal products are mainly regulated by the Drug Act (Arzneimittelgesetz) and the Facility Ordinance for Active Ingredients of Pharmaceuticals (Arzneimittel-und Wirkstoffherstellungsverordnung). These address, for example, manufacturing, marketing, distributing and pharmacovigilance. Rules for advertising medicinal products are set out in the Healthcare Advertising Act (Heilmittelwerbegesetz).

Regulatory authorities

Medicinal products for human use are subject to a marketing authorisation from the Federal Institute for Drugs and Medical Devices (Bundesinstitut für Arzneimittel und Medizinprodukte) (BfArM) (www.bfarm.de) and the Federal Agency for Sera and Vaccines (Paul-Ehrlich-Institut) (PEI) (www.pei.de), if not covered by the European centralised procedure.

The BfArM regulates medicinal products (other than blood and vaccination products) for use on humans. Its functions include:

  • Authorising finished medicinal products (that is, products that have been manufactured and marketed in packaging ready for distribution to consumers), including post-marketing authorisation.

  • Registering homeopathic products.

  • Recording and assessing risk.

  • Controlling legal marketing of narcotic drugs and precursors (that is, chemical substances used to manufacture drugs).

  • Advising the federal government.

The sub-departments (Abteilungen) are:

  • Departments one to five: approval procedures.

  • Department six: scientific service.

  • Department seven: pharmacovigilance.

The PEI authorises the marketing and control of:

  • Immune biological drugs for human and veterinary use, in particular sera.

  • Vaccines.

  • In vitro diagnostics for the detection of specific pathogens.

  • Allergens.

  • Test sera and test antigens.

  • Blood preparations.

  • Bone marrow preparations.

  • Gene transfer medicinal products.

  • Somatic cellular therapeutics.

  • Xenogenetic cellular therapeutics.

  • Genetically manufactured blood fractions.

The PEI has a test laboratory for In Vitro Diagnostics (PEI-IVD). This is a notified body within the meaning of Directive 98/79/EC on in vitro diagnostic medical devices (IVD Directive) and deals with products listed in Annex II of the IVD Directive. The objective of the PEI-IVD is to maintain the high level of safety of blood and blood products set out in the IVD Directive.

 
2. Briefly outline how biologicals and combination products are regulated in your jurisdiction.

A biologic medical product (biological) is a medicinal product such as a vaccine, blood or blood component, allergenic, somatic cell, gene therapy, tissue, recombinant therapeutic protein or living cells that are used as therapeutics to treat diseases. Such products are created by biological processes, rather than being chemically synthesised. Biologicals fall in general under the regulation of the Drug Act. Therefore, such products require a marketing authorisation. The competent national agency in Germany for granting marketing authorisations for biologicals for human use is the Paul-Ehrlich-Institut (PEI).

Products that contain or are coated with a substance or preparations of substances which are considered to be medicinal products or components of a medicinal product (including plasma derivatives), if used separately and which are liable to act on the body with an action that is ancillary to that of a device, are also considered to be medical devices.

 
3. Briefly outline how medical devices and diagnostics are regulated in your jurisdiction. Is there any specific regulation of health IT issues and mobile medical applications?

Medical devices are products that have a medical purpose and are intended by the manufacturer for use in humans. In contrast to medicinal products that act pharmacologically, immunologically, or metabolically, the main intended purpose of medical devices is primarily achieved by physical means.

The placing of medical devices on the market in Germany is regulated in the:

  • Medical Devices Act (Medizinproduktegesetz, MPG).

  • Medical Device Safety Plan Ordinance (Medizinproduktesicherheitsplanverordnung, MPSV).

  • Ordinance on Clinical Investigations with Medical Devices (Verordnung über klinische Prüfung von Medizinprodukten, MPKPV).

In addition, the Medical Devices Ordinance (Medizinprodukteverordnung, MPV) needs to be considered.

Medical devices can only be placed on the market or put into service if they bear the CE marking, except for:

  • Custom-made devices and medical devices manufactured in-house.

  • Medical devices under section 11(1) of the Medical Devices Act, as well as medical devices intended for clinical investigation, or in vitro diagnostic medical devices intended for performance evaluation.

Medical devices can only bear the CE marking if the essential requirements applicable to them taking into consideration their intended purpose are fulfilled, and the compliance assessment procedure prescribed for the medical device has been conducted.

The essential requirements for:

  • Active implantable medical devices are in Annex 1 to Directive 90/385/EEC on active implantable medical devices (Active Implantable Medical Devices Directive) last amended by Directive 93/68/EEC.

  • In vitro diagnostic medical devices are in Annex 1 to Directive 98/79/EC on in vitro diagnostic medical devices (IVD Directive).

  • Other medical devices are in Annex 1 to Directive 93/42/EEC on medical devices, last amended by Directive 2000/70/EC (Medical Devices Directive).

Medical devices are defined as (section 3(1), Medical Devices Act):

  • All instruments, apparatus appliances, software, substances or preparations made from substances or other articles, used alone or in combination, including the software intended by the manufacturer to be used specifically for diagnostic and necessary for the medical device's proper application.

  • Intended by the manufacturer to be used for human beings, due to their functions, for the purpose of diagnosis, prevention, monitoring, treatment or alleviation of disease.

  • Which do not achieve their principal intended action in or on the human body by pharmacological, immunological or metabolic means, but which might be assisted in their function by such means.

Given this definition, software such as mobile medical applications will be regarded as a medical device if it either:

  • Is an integrated part of the medical device and therefore an integral element of the medical device (integrated software).

  • Pursues a medical purpose of its own and is therefore a medical device in its own right (stand-alone software).

In practice, it is rather difficult to determine whether software falls under the Medical Devices Directive, respectively the German Medical Devices Act, or not. If the manufacturer's purpose of the software is:

  • A medical one in the sense of diagnosing, preventing, monitoring, treating or alleviating diseases, the software may be considered a medical device.

  • An administrative one, without any medical modules that enable the derivation of therapy and diagnosis recommendations from the patient data, the software is in general not a medical device.

However, the determination of mobile medical apps as medical devices depends very much on the circumstances of the individual case.

 

Pricing, state funding and reimbursement

4. What is the structure of the national healthcare system, and how is it funded?

Structure

The national healthcare system is a social security system that aims to cater for, and be accessible to, all citizens. Insurance coverage for disease, long-term nursing care, disability or occupational invalidity is largely funded from contributions paid by members of the relevant insurance policy. Government subsidies fund a small part of public health insurers' expenses. These branches of insurance operate autonomously, but are bound by statutory regulations in their decision making.

Funding

The funding of public health insurance changed in January 2009. A fixed contribution rate was introduced at federal level. Every public health insurance fund receives a lump sum for each insured person and an additional sum depending on the age and risk level of the insured person. If the lump sum does not cover the insurer's costs, the public health insurance fund can impose additional contributions on each insured person with a maximum of 1% of his income liable to insurance deductions. Since 2010 the public health insurance funds can charge an additional fee, of any amount, which is independent from the actual income of the insured person.

Public health insurance funds provide benefits (generally benefits in kind) and services. Therefore, the insured person does not have to pay for the services directly. Federal law largely covers the range of benefits offered by public health insurers. About 85% of the German population are covered by public health insurance. Insured persons can choose optional rates covering, for example, special forms of medical care and non-reimbursable pharmaceuticals. After implementation of the German healthcare reform in July 2009, 17 Acts and ordinances were amended.

Private insurance companies practise a cost-reimbursement principle where the insured person pays the medical bills and is reimbursed by the insurance company afterwards.

 
5. How are the prices of medicinal products regulated?

Although the pricing of drugs by manufacturers and dealers is still largely unregulated, the Ordinance on Pharmaceutical Product Pricing (Arzneimittelpreisverordnung) sets permissible margins for wholesalers and pharmacists. The ordinance applies only to prescription medicinal products. The Fifth Social Security Code (Sozialgesetzbuch V) sets compulsory discounts for public health insurance funds and pharmacies (sections 130 and 130a, Fifth Social Security Code).

Retail prices for prescription drugs must be uniform across all pharmacies.

The Act on the Improvement of Economic Efficiency for the Provision of Medicinal Products (Gesetz zur Verbesserung der Wirtschaftlichkeit der Arzneimittelversorgung) introduced further compulsory discounts for public health insurers. The provision of rebates in kind is now prohibited and the provision of rebates in money is largely restricted, unless the public health insurers benefit from the rebates.

 
6. When is the cost of a medicinal product funded by the state or reimbursed? How is the pharmacist compensated for his dispensing services?

Prescription medicinal products are generally reimbursed by public health insurance funds. The patients obtain a prescription from their physician and collect the medicinal product from the pharmacy. The reimbursement of medicinal products is then paid directly to the pharmacist by the public health insurance funds. The Ordinance on Pharmaceutical Product Pricing provides the relevant financial framework for prescription drugs that must be sold in pharmacies. The regulation allows the pharmacy or wholesalers to add on a fixed percentage charge to the freely calculated manufacturer's price, when selling the drug to final consumers or pharmacies respectively. About 65% of prescriptions are affected by this regulation.

The cost of medicinal products that are not "necessary and economic" or which are prescribed in cases of specific minor impairments of health is not reimbursed at all. Specific medicinal products, which are considered inefficient or which cannot provide the necessary proof of sufficient therapeutic benefits, are set out in a government "negative list".

The Reform of the Market for Medicinal Products Act (Arzneimittelmarkt-Neuordnungsgesetz) came into force on 1 January 2011. From this date, the reimbursement of all medicinal products being marketed for the first time is subject to a mandatory benefit assessment. The benefit assessment will reduce the cost of the healthcare system. Under the new reimbursement scheme, only medicinal products with an additional benefit (compared to those already on the market) enjoy a favourable reimbursement price.

The Joint Federal Committee decides what (if any) added benefit a new medicinal product offers and under which circumstances it can be reimbursed by the public health insurance funds. The prices of medicinal products with an added benefit are negotiated on the basis of this benefit (see www.bmg.bund.de/ministerium/english-version/amnog.html). A maximum reimbursement rate is fixed for medicinal products without an added benefit. If this is not possible owing to a lack of other products with comparable pharmacological and therapeutic properties, the manufacturer will agree a reimbursement price with the public health insurance that cannot exceed the costs of comparable therapy. Over-the-counter (OTC) products are not generally refundable.

 

Clinical trials

7. Outline the regulation of clinical trials.

Legislation and regulatory authorities

The conduct of clinical trials is regulated in the Drug Act (section 40 pp). In addition, the Good Clinical Practices Ordinance (GCP-Verordnung) (GCP Ordinance) sets out details regarding the conduct of a clinical trial.

Section 42a of the Drug Act contained special provisions about withdrawal, revocation and suspension of the authorisation by the Higher Federal Authority only. The 15th Amending Law of the Drug Act added section 42a(4a), setting out equal powers for the ethics committee to regulate clinical trials.

Authorisations

Before starting a clinical trial, a trial protocol and other details set out in the GCP Ordinance must be submitted for parallel approval by the independent ethics committee and the BfArM or the PEI (depending on the test product). The trial can only begin if both bodies approve (section 40, paragraph 1, Drug Act). The competent authority of the relevant federal state must be notified of the clinical trials.

Consent

Before including a trial subject in a clinical trial, the trial subject must give his informed consent in writing. Before the consent can be obtained, the physician must explain the nature, intent, risks and importance of the clinical trial to the trial subject. The trial subject must also give his consent to the purpose and extent of collection and use of personal data in the clinical trial.

Trial pre-conditions

Other conditions include:

  • The sponsor of the clinical trial must have its seat in the EU or European Economic Area (EEA), or have a legal representative in the EU or EEA.

  • The clinical trial must have a superior audit manager who must be an authorised physician with a minimum of two years' experience in clinical trials.

  • Patients participating in a trial must have specific insurance cover appropriate to the risks involved, which pays at least EUR500,000 for death or permanent inability to work.

Procedural requirements

All clinical trials must be conducted according to GCP standard (section 40, Drug Act implementing Directive 2001/20/EC on the conduct of clinical trials). In addition, products to be tested must have a Good Manufacturing Practice (GMP) certificate.

Reporting and documenting of the clinical trial by the sponsor and physicians are regulated (section 12, GCP Ordinance).

 

Manufacturing

8. What is the authorisation process for manufacturing medicinal products?

Application

Authorisation is required for each production facility located in Germany. The competent authority is determined by the states and is usually the general regional government authority (Regierungspräsidium) or the local or regional public health authority (Gesundheitsamt). Certain activities (in particular developing, manufacturing, storing and testing medicinal products) must also be reported to the competent authority of the relevant state.

Conditions

The manufacturer must meet certain requirements set out in the Facility Ordinance for Active Ingredients of Pharmaceuticals, relating to, for example, quality management, personnel, hygiene requirements, manufacturing processes and storage. The Facility Ordinance for Active Ingredients of Pharmaceuticals complies with Directive 2003/94/EC on good manufacturing practice for medicinal products.

Restrictions on foreign applicants

The legal requirements are equally binding on foreign and domestic manufacturers.

Key stages and timing

The authorisation application must be filed before the manufacturing process is started. In most cases, the public authority inspects the premises before delivering a manufacturing authorisation. The application must be accompanied by several documents. The public authority only issues the authorisation if it is sure that the necessary safety and quality benchmarks are complied with.

The competent authority must decide on an application for a manufacturing authorisation within three months (section 17, paragraph 1, Drug Act). However, this time limit is interrupted if the authority asks the applicant to remedy defects in the application (section 17, paragraph 3, Drug Act).

The competent authorities can provide guidance before an application is filed and must provide, on request, information and assistance before and after the formal application procedure (section 71c, Code on Administrative Procedure (Verwaltungsverfahrensgesetz)).

Fee

The competent authorities must fix fees on a case-by-case basis. Their decisions are made according to a legal framework that can vary between federal states. Against this, the authorities must balance the importance of the authorisation to the applicant against the actual administrative effort necessary on their side.

Period of authorisation and renewals

The competent authorities usually give unlimited authorisation and accreditation.

Monitoring compliance and imposing penalties

The competent authorities can monitor a manufacturer's compliance with its manufacturing authorisation. They can enforce compliance using the Drug Act (section 64, Drug Act).

The public officers responsible for monitoring can, for example:

  • Enter and inspect office premises and operating rooms.

  • Review documents on the manufacture of the products.

  • Demand all necessary information on the company's operations.

  • Demand samples, if the authority considers this necessary for monitoring.

Premises inspections generally take place every two years. Anyone subject to supervision measures must accept them and fully support those in charge. According to the principle of proportionality, the authority must only use these measures as necessary. The competent authorities are usually open to discuss their intended measures and willing to compromise if a specific case allows it.

The competent authority must issue the necessary directives to rectify any identified infringements and prevent future infringements. To ensure this, they can suspend or withdraw the marketing authorisation (section 18, Drug Act). They can also stop the manufacturing or seize and withdraw medicinal products from the market (section 69, Drug Act). However, they cannot impose fines or criminal penalties.

 

Marketing

Authorisation and abridged procedure

9. What is the authorisation process for marketing medicinal products?

Application

Authorisations are granted by the BfArM or PEI, depending on the product.

Authorisation conditions

Finished medicinal products (that is, products manufactured and marketed in packaging ready for distribution to consumers) can only be placed on the market after authorisation (for pharmaceutical products) or registration (for homeopathic products). To be granted authorisation, pharmaceutical companies must provide proof of the pharmaceutical quality, efficacy and safety of the product.

Homeopathic products are registered if no medicinal indication claims are made for them and adequate quality is demonstrated.

Key stages and timing

The BfArM has published a comprehensive brochure on the form and contents of an authorisation application, including an authorisation application form (Federal Gazette No. 44a, 5 March 1997). The BfArM also accepts documentation submitted in electronic form, including CD-ROM (Ordinance on Submission of Application (Verordnung über die Einreichung von Unterlagen in Verfahren für die Zulassung und Verlängerung der Zulassung von Arzneimitteln)).

It usually takes two-and-a-half years to obtain a decision. The authorities dealing with the application can provide guidance before an application is filed. All government authorities must provide this information and assistance as is requested (both before and after the formal application is filed) (section 71c, Code on Administrative Procedure).

Fee

The applicant must pay the costs of investigating the application and granting the authorisation after the BfArM issues its decision. The BfArM fixes fees on a case-by-case basis according to the corresponding cost ordinance (AMG-Kostenverordnung).

Period of authorisation and renewals

The first authorisation is usually granted for five years and can be extended by applying to the same authority that granted it. Renewal is refused if the necessary requirements of quality, efficacy and safety are no longer fulfilled. After the first renewal of the authorisation, no further renewal is needed unless the authority makes another decision, for example, due to security reasons.

If the application for renewal has been filed at least six months before the end of the five-year period, the product can be marketed until the authority issues a decision. The renewal fee is between EUR1,410 and EUR4,757.

Post-marketing commitments and pharmacovigilance obligations

 
10. What commitments and pharmacovigilance obligations apply after a company has obtained marketing authorisation? Are there further conditions concerning how the drug is distributed and accessible to patients?

The holder of a marketing authorisation must:

  • Keep detailed records of all cases of suspected side-effects (including those arising in the European community or third countries).

  • Record every case of serious suspected side-effects and report these to the competent higher federal authority and to the European Medicines Agency within 15 days of becoming aware of them (section 63b, Drug Act).

Medicinal products can be made available to consumers through pharmacies but not by unauthorised mail order (section 43, Drug Act). However, this does not enable unauthorised mail-order.

Medicinal products which are only intended to serve purposes other than the curing or alleviation of disease, suffering, bodily injuries or symptoms of illness can be sold and distributed outside pharmacies (section 44, Drug Act).

 
11. Which medicinal products can benefit from the abridged procedure for marketing authorisation and what conditions and procedure apply? What information can the applicant rely on?

There are different simplified procedures for obtaining marketing authorisation:

  • The fast track approval permits an early authorisation for medicinal products developed for the prevention of a severe disease where other medical therapies do not exist (for example, medicinal products applied to HIV-patients). In this case, the fight against the disease prevails over potential adverse effects. This authorisation is often conditional on further clinical trials.

  • In special cases, the authorisation process can be made easier (for both prescription and non-prescription drugs) by a standardised procedure for products listed in the Regulation on Standardised Authorisations (Verordnung über Standardzulassungen von Arzneimitteln). The annex of this regulation lists more than 300 medicinal products including, for example, paracetamol or tincture of formaldehyde. In this case, the volume of information, which usually must be provided in the application form for documentation purposes, is reduced.

  • A simplified procedure also exists for medicinal products that have already been approved by another EU member state. These products can be authorised for marketing in Germany by mutual recognition procedure (MRP) (see Question 12).

Certain biotechnological or innovative medicinal products can be assessed and approved by a centralised procedure, which is valid throughout the EU.

 
12. Are foreign marketing authorisations recognised in your jurisdiction?

A simplified procedure exists for medicinal products that have already been approved by another EU member state. These products can only be authorised for marketing in Germany using the MRP.

The assessment reports from the member state that issued the first marketing authorisation for a particular product (the reference member state) are made available to every other member state in which authorisation is sought (concerned member state (CMS)). A marketing authorisation is issued on a national basis in each CMS. A translation of the product information, package leaflet and labelling into the CMS language must be provided in the application. The CMS must recognise the first marketing authorisation unless there are serious objections based on a potential risk to public health. If an application is rejected, arbitration by the Committee for Medicinal Products for Human Use can be requested (see www.emea.europa.eu). The CMS must issue authorisation within 90 days of an application under the MRP.

An overview of all products that have been approved through the MRP is provided in the European Product Index (http://mri.medagencies.org/mrindex/index.html).

Monitoring compliance and imposing penalties

The competent authorities have the same powers to monitor and enforce compliance as for manufacturing authorisations (see Question 8, Monitoring compliance and imposing penalties).

Parallel imports

13. Are parallel imports of medicinal products into your jurisdiction allowed?

The treatment of parallel imports generally follows the leading cases of the European Court of Justice (ECJ). Any interference with free trade between EU member states is prohibited, unless it can be justified on strictly defined grounds.

Companies with a dominant position in the market cannot refuse to deal with parallel traders. The parallel importers need a manufacturer authorisation. To benefit from a simplified procedure, the parallel imported medicinal products must have exactly the same active component, formulation, indication and therapeutic effect as the equivalent medicinal products already in the member state.

The member states can pass national regulations to control medicinal products in the interests of public health. Finished medicinal products, which require marketing authorisation, can only be imported into Germany if they have been authorised (section 73, Drug Act).

There is conflicting case law on the repackaging of drugs.

Intellectual property (IP) rights (in particular, patent and trade mark rights) can be used to fight parallel imports from outside the EEA provided the relevant IP right is not exhausted. Exhaustion usually occurs if the products are put on the market by, or with the consent of, the IP right holder within the EEA.

For information on pharmaceutical patents, trade marks, competition law, patent licensing, generic entry, abuse of dominance and parallel imports, visit Pharmaceutical IP and Competition Law in Germany: overview ( www.practicallaw.com/0-566-1151) .

 

Restrictions on dealings with healthcare professionals

14. What are the restrictions on marketing practices such as gifts, sponsoring, consultancy agreements or incentive schemes for healthcare establishments or individual medical practitioners?

Legal provisions

The relationship between the pharmaceuticals industry and physicians is characterised by a tension between the law regulating public services and prohibiting corruption, and the need for co-operation between the industry and the hospitals and physicians using its products.

Physicians working for universities or public hospitals must not demand or elicit a promise of benefits or accept benefits, either:

  • As consideration for carrying out public services in breach of their duty, which amounts to bribery (section 332, Criminal Code (Strafgesetzbuch)).

  • For the performance of their work (acceptance of a benefit by a public official (section 331, Criminal Code)).

The same applies to staff of companies that offer, promise or confer on physicians benefits as consideration for carrying out public services in breach of their duty or generally for performing their public service work. Rewards and gifts can only be accepted by public servants if a superior has authorised the gift and there is no reason to believe that the benefits influenced procurement decisions.

In contrast to employed physicians, the law has been unclear whether self-employed physicians can be found guilty of corrupt business practices under section 299 of the Criminal Code or section 331 et seq of the Criminal Code due to their involvement with public insurance companies. The Grand Senate for Criminal Matters of the German Federal Supreme Court of Justice (Bundesgerichtshof) (Supreme Court) clarified that private practitioners who treat patients insured through the public sick funds are not subject to section 331 of the German Criminal Code (that is, the prohibition of bribery of public officials) or section 299 of the German Criminal Code (that is, the prohibition of commercial bribery) (Decision of 29 March 2012 (GSSt 2/11)). The Supreme Court excluded the applicability of criminal liability in this context, as the Criminal Code does not classify private practitioners as public officials or agents. The Supreme Court suggested that the legislature may wish to enact new legislation which would prohibit potentially criminal activity arising from suspect interactions between industry and private practitioners.

As co-operation between industry, physicians and medical institutions is indispensable and politically desirable, the issue is what principles must be established to ensure that industry and physicians avoid accusations that they acted in breach of the law.

Principles to minimise the risks

There are four basic principles that, if observed, can minimise the risk of criminal liability:

  • Separation. This requires a clear distinction between the need to advance research and the procurement of products. It would, for example, be illegal to grant or accept discounts for the purchase of products in the form of payments for further research projects.

  • Transparency. This requires the disclosure of any benefits conferred on those actively working in hospitals or other medical institutions, or anything that might be seen as a benefit. It requires increased involvement by employers, superiors and hospital administrations. This applies to:

  • the conclusion and implementation of research and consulting agreements;

  • the grant, acceptance and management of research and development (R&D) grants; and

  • support received for attending medical conferences.

  • Documentation. This requires that all services or benefits provided to hospitals, other medical institutions or those acting in them must be agreed in writing, whether or not they are given free of charge.

  • Equivalence. This requires that the remuneration paid by a company for services provided by hospitals, other medical institutions or those acting in them must represent a fair market value for the services.

For university hospitals, the Federal Supreme Court has ruled that there is no "wrongful agreement" if transactions to third-party fund accounts are notified to the administration of the university hospital and the administration consents to the transaction (Third Party Funding Act (Drittmittelrecht)).

Recommended organisational measures

To put these principles into practice, companies should take the following organisational measures:

  • Implement a central contract management department, preferably with a link to R&D departments.

  • Use a central contract management system to counter accusations of bribery. Experience in recent investigation proceedings in the context of healthcare fraud and abuse has shown that, in particular, clinical trials and product observation projects are considered acceptable under criminal law, if their results are followed up and documented.

  • If possible, enter the budgeting and expenditure accounts for R&D projects into the R&D accounts instead of the marketing accounts. This helps to avoid an assessment that the company has been using marketing resources to influence the procurement decisions of physicians.

  • Check the deductibility of R&D costs and other costs in connection with co-operation activities. There are several statutory provisions preventing the deduction of expenses if they are a result of an infringement of criminal statutory provisions or qualify as gifts.

  • Inform and educate staff of the rules of conduct to be observed through relevant internal guidance and staff training (for example, in brochure form to avoid expensive and time-consuming explanations in individual cases).

To provide the industry, hospital administrators and physicians with legal guidance for their future co-operation, the leading trade associations, and the hospitals' and doctors' associations published, in October 2000, A Common Position on the Assessment in Criminal Law of the Co-operation between Industry, Medical Institutions and their Employees (Common Position).

Implementation of the above measures and the recommendations in the Common Position is recommended for all companies in the pharmaceutical and medical device industry. They are particularly important for companies with US parent companies or companies listed on the US stock exchange, all of which are subject to the US Foreign Corrupt Practices Act 1977. Under this Act, actual or supposed acts of corruption in Germany can have repercussions that could extend to preventing the admission of a parent company's shares to the relevant US stock exchange.

The FSA Code

Voluntary Self-regulation for the Pharmaceutical Industry (FSA) (see www.fs-arzneimittelindustrie.de) is an independent organisation established to safeguard:

  • Necessary collaboration between the pharmaceutical industry and all healthcare professionals.

  • Control of compliance with the existing legal conditions created for such collaboration.

It is open to all companies and operates under its bye-laws, procedural rules and code of conduct, which contains the rules and requirements of conduct for all member companies based on voluntary self-regulation (FSA Code).

The current FSA Code (published on 22 April 2004, last amended on 1 December 2011, see www.fs-arzneimittelindustrie.de/verhaltenskodex.html) as adapted to meet the requirements of the current code of the European Federation of Pharmaceutical Industries and Associations (EFPIA). It now also covers advertising for medicinal products and collaboration with members of specialist groups.

The amended FSA Code was recognised as competitive regulations by the Office of Fair Trading on 23 August 2012. Arbitrators of the FSA monitor and sanction the conduct requirements of the FSA Code and deal with infringements of it. They can impose fines at first instance and on appeal from EUR5,000 up to EUR400,000 and issue a public reprimand.

The FSA has adopted a new Code of Conduct on Collaboration with Patient Organisations (FSA Code of Conduct Patient Organisations), which became effective on 15 October 2008 after recognition as competitive regulations by the Office of Fair Trading (last amended on 1 December 2011). It implements the EFPIA Code of Practice on Relationships between the Pharmaceutical Industry and Patient Organisations. It aims to structure collaboration with patient organisations according to principles of neutrality and independence, but also makes clear that such collaboration should not be used to circumvent the laws prohibiting advertising of prescription-only medicines.

The FSA has adopted a new EFPIA Transparency Code in the FSA Transparency Code of Conduct. The new code requires all members to disclose transfers of value to HCPs and HCOs as of 2016 regarding all transfers in 2015. In Germany, the disclosure of a transfer of value is subject to data privacy.

Section 128 of the German Social Security Code V

Co-operation with social health insurance (SHI) authorised physicians, in particular preventing undue influence on their prescription practice, has already been regulated. The legislator believes these provisions have not been sufficiently effective to prevent abuses of such co-operation.

The new provisions of Section 128 of the Social Security Code V (section 128, SGB V) create a social law rule to protect the prescription practice of SHI-authorised physicians in the outpatient sector against certain third-party economic influences. Violations are to be punished by the health insurance funds. It has been in force since 1 April 2009, and has already been revised and significantly expanded by the 15th Amending Law of the Drug Act. It now covers hospital doctors, hospital operators and other healthcare facilities. It continues to allow certain forms of participation by doctors in care provided with medical aids, although only under social law contracts with the health insurance funds. Apparently, the health insurance funds are to assume a watchdog role, given the strong distrust of the legislator relating to the integrity of doctors and service providers.

The purpose of the regulation is to prevent the grant of impermissible benefits to SHI-authorised physicians, and therefore to protect insured members' rights to choose from among different service providers. Section 128 SGB V prohibits:

  • The dispensing of medical aids and certain other products through depots kept by panel doctors (depot prohibition).

  • Special benefits for participation of panel doctors in care provision (participation prohibition).

  • Special benefits in connection with prescription practice (prohibition of special benefits).

  • Payment of remuneration for additional private medical services (prohibition of payment of individual healthcare services).

These prohibitions affect not only the area of medical aids, but also the dispensing of drugs, dressing materials, medical products similar to drugs and enteral feeding.

 

Sales and marketing

15. What are the restrictions on selling medicinal products? Are there specific regulations for the sale of medicinal products on the internet, by e-mail and by mail order?

The marketing of medicinal products through an electronic or traditional mail order system is allowed. However, only owners of a public pharmacy in Germany (that is, a pharmacy which must ensure the supply of medicinal products to the German population for the public benefit) can market medicinal products this way, and only:

  • In addition to their normal pharmacy.

  • If a quality assurance system has been established.

  • If medicinal products are carefully packed and delivered only to the buyer.

  • If a pharmaceutical consultant service is provided in German.

 

Advertising

16. What are the restrictions on advertising medicinal products?

Legislation and regulatory authority

Title VIII of Directive 2001/83/EC on the Community code relating to medicinal products for human use (Code for Human Medicines Directive), regulating the advertising of medicinal products for human use, has been implemented. There are strict regulations on advertising campaigns that target the public. The regulation also distinguishes between advertising activities that are limited to healthcare professionals and those that are also addressed to potential patients. For medical devices, advertising provisions are less restrictive under the Healthcare Advertising Act, which applies to product-related promotional advertising.

Supervision of medicinal product advertising is the responsibility of the federal states. The competent authority is determined by the federal states and is usually the general regional government authority (Regierungspräsidium) or the local or regional public health authority (Gesundheitsamt).

Because of the increasing need for consistent supervision, a centralised co-ordination of supervision of the federal states has been set up (Zentralstelle der Länder für Gesundheitsschutz (ZLG)).

Restrictions

Medicinal products cannot be advertised before the necessary marketing approval is obtained (section 3a, Healthcare Advertising Act). Further, advertising prescription medicinal products to patients is prohibited (section 10, Healthcare Advertising Act).

The following issues, among other things, are prohibited:

  • Misleading advertising.

  • Gifts and other advertising giveaways.

  • Promotional activities aimed at the general public must not contain any advertising statements relating to prescription medicinal products or to (severe) diseases explicitly mentioned in the Healthcare Advertising Act. (However, there are plans to reduce the list of severe diseases.)

There are also detailed regulations on the inadmissibility of marketing activities using, for example, expert opinions, certain illustrations and samples. These additional requirements do not apply to advertising activities that only target healthcare professionals. However, some advertising restrictions have been liberalised under the 16th amendment to the Drug Act (16. AMG-Novelle) which came into force in 2012.

A company can only advertise if a responsible person or company with a seat in the EU or EEA has been expressly entrusted to assume the obligations arising from the Healthcare Advertising Act (section 13, Healthcare Advertising Act). There is a minimum standard for information in marketing strategies (for example, the product's side effects and specific warning notices).

Internet advertising

The same principles apply to internet advertising (see above, Restrictions).

 

Data protection

17. Do data protection laws impact on pharmaceutical regulation in your jurisdiction?

There are several data protection laws in Germany that have an impact on pharmaceutical regulation in Germany, that is:

  • The Federal Data Protection Act (Bundesdatenschutzgesetz, FDPA).

  • Various specific regulations in the Social Security Code V (SGB V) (relating to the reimbursement of patient treatment by the statutory health insurance companies).

From a general perspective, the collection, processing and use of personal data is only permitted if such data processing operation is permitted or ordered by law (section 4(2)(1), Federal Data Protection Act), or data subjects have consented to such processing (section 4(1), Federal Data Protection Act, in connection with section 4a, Federal Data Protection Act).

In addition, health data is considered as a special category of personal data (section 3(9), Federal Data Protection Act) which is subject to stricter rules than data such as name or address of an individual person (see section 13( 3), Federal Data Protection Act).

Section 305a of the SGB V limits the disclosure of information/data about physicians' prescription behaviour. It is argued that data provided to a pharmaceutical entrepreneur/service provider might lead to conclusions about the physicians' prescription behaviour.

 

Packaging and labelling

18. Outline the regulation of the packaging and labelling of medicinal products.

Legislation and regulatory authority

Title V of the Code for Human Medicines Directive, regulating the labelling of medicinal products for human use and on package leaflets, has been implemented by sections 10 to 12 of the Drug Act. Labelling medicinal products used in clinical trials is regulated by the GCP Ordinance (section 5, GCP Ordinance).

The BfArM has issued guidelines on labelling and on drafting text for labelling according to section 11 of the Drug Act (see www.bfarm.de/cln_103/DE/BfArM/Bekanntm/bekanntm-node.html).

The rules on packaging sizes for short-, medium- and long-term use must be read in conjunction with the pricing rules (see Question 4).

The regulatory authorities are determined by the federal states and are usually the general regional government authority or the local or regional public health authority.

Information requirements

Labelling of packages must contain, among others (section 10, Drug Act):

  • The name or firm and the address of the pharmaceutical company.

  • The name, the amylum and pharmaceutical form of the medicinal product.

  • The approval number, details of the cost, content of the package (weight, size or number of units), method of application, active ingredients and expiry date.

  • Depending on the individual case: "prescription only", "pharmacy medicines", "sample not for sale" and special precautions.

Other conditions

The information for labelling must be well written, generally understandable, durable and in German.

 

Product liability

19. Outline the key regulators and their powers in relation to medicinal product liability.

The Pharmacovigilance Division of the BfArM:

  • Continuously informs about adverse drug reactions and interactions related to the use of medicinal products which have become known.

  • Ensures that patients, medical doctors and other interested parties are made aware of existing risks as well as of possibilities to decrease them.

If, due to the risk assessment of a medicinal product, its marketing authorisation status needs to be adopted to the state of scientific knowledge, the Pharmacovigilance Division of the BfArM co-ordinates the measures necessary for risk prevention and informs patients, medical doctors and other interested parties accordingly.

The competent authorities (the local authorities where the company has its place of business) will issue any necessary directives to rectify any offences which have been identified and to prevent offences in the future. They can, in particular, prohibit the marketing of medicinal products or active substances and order their recall from the market and seize them if, for example (see section 69, Drug Act, with additional examples):

  • The required marketing authorisation or registration of the medicinal product has not been submitted or its suspension has been ordered.

  • The medicinal product or the active substance has not been manufactured according to the recognised pharmaceutical rules or does not possess the appropriate quality in keeping with recognised pharmaceutical rules.

  • The medicinal product is lacking in therapeutic efficacy or there is sufficient reason to suspect that the medicinal product has harmful effects which exceed the bounds considered justifiable according to the prevailing standard of scientific knowledge.

 
20. Are there any mandatory requirements relating to medicinal product safety?

The Drug Act provides that information obtained during the use of a medicinal product must be continuously and systematically collected and evaluated after the marketing authorisation is granted. This is done for all finished products on the market in Germany.

Germany requires the nomination of a local pharmacovigilance responsible person. This person is called the "Stufenplanbeauftragter" (officer of the graduate plan) and is defined in section 63a of the Drug Act.

The obligations of marketing authorisation holders and pharmaceutical companies to submit regularly updated reports on the safety of medicinal products (Periodic Safety Update Reports, called PSURs) are laid down in section of the Drug Act and in Directive 2010/84/EU amending, as regards pharmacovigilance, the Code for Human Medicines Directive.

The marketing authorisation holder must:

  • Keep documents on all suspected adverse reactions as well as information on the quantities supplied.

  • Record every suspected serious adverse reaction in Germany, which he gains knowledge of, and electronically inform the competent higher federal authority immediately, or at the latest within 15 days of acquiring this knowledge.

  • Record every suspected serious adverse reaction in a third country which he gains knowledge of, and electronically inform the competent higher federal authority and the European Medicines Agency immediately, or at the latest within 15 days of acquiring this knowledge.

The competent higher federal authority can require the marketing authorisation holder to also record suspected non-serious adverse reactions that occur in Germany and electronically inform the competent higher federal authority of them immediately or at the latest 90 days after acquiring this knowledge.

Information letters and so-called Rote-Hand-Briefe must be sent out by pharmaceutical companies, informing healthcare experts about newly identified major drug-associated risks and measures to reduce them.

Any non-compliance with the pharmacovigilance regulations in Germany can be considered an administrative offence and can lead to penalties for the company.

 
21. Outline the key areas of law applicable to medicinal product liability, including key legislation and recent case law.

Legal provisions

Liability can arise from the Product Liability Act (Produkthaftungsgesetz), which is attributed to the law of tort, and it can also arise from the Drug Act (Arzneimittelgesetz). Drugs are only subject to product liability under section 84 of the Drug Act, as the Product Liability Act is not applicable (section 15, Product Liability Act).

Substantive test

There is no substantive test under the Product Liability Act. A manufacturer can only be found liable in tort if either the:

  • Medicinal product, used according to its defined application, has adverse effects which exceed, according to the findings of medical science, a reasonable level of risk and which occurred during the development or production of the medicinal product.

  • Injury occurred because the labelling, expert information or instructions for use did not comply with the knowledge available in medical science.

The Drug Act imposes strict no-fault liability (section 84) and requires companies to take out sufficient insurance to cover potential claims. An injured patient must show that a defect existed in the drug and that the defect was the cause of the injury or suffering (case law confirms that section 84 of the Drug Act does not shift the burden of proof). To prove the causal connection, it is sufficient if there are facts that indicate a certain typical course of events (prima facie proof).

 
22. Who is potentially liable for defective medicinal products?

Under the Product Liability Act, manufacturers, suppliers, spare part suppliers and domestic importers can be liable. Under the Drug Act, the pharmaceutical entrepreneur, usually the holder of the marketing authorisation or registration, is liable. In the event of an off-label use, the pharmaceutical entrepreneur may be excluded from any liability relating to the medicinal product, as the product is not used according to its defined application. Depending on the informed consent of the patient, the treating physician may also be excluded from any liability.

However, the pharmaceutical entrepreneur may be liable in the event of off-label use, if the pharmaceutical entrepreneur was aware of the off-label use or even promoted such use (depending on the individual case).

 
23. What defences are available to product liability claims? Is it possible to limit liability for defective medicinal products?

No liability is imposed if a patient suffers injury to his health as a result of (section 84, Drug Act):

  • Using a medicinal product for something other than its defined field of application (not necessarily identical with the indication mentioned in the marketing authorisation).

  • Exceeding or not taking the full recommended dose.

The labelling of the product, expert opinion and instructions for use must have contained sufficient information, at least as far as is possible within the bounds of the current level of knowledge available to medical science.

 
24. How can a product liability claim be brought?

Limitation periods

Liability claims under the Drug Act and the Product Liability Act are statute barred after three years, starting from the date when the person entitled to make a claim becomes aware of his injury or of the circumstances which constitute the basis for the claim. All claims are barred after 30 years.

Class actions

Class actions are not generally permitted. Each injured party must bring an action individually. However, civil procedure rules allow a number of individual claimants to join their claims if they share the same factual and legal background (section 59, Civil Procedure Code (Zivilprozessordnung)). In a joint action, each claimant remains a fully independent party.

A court can also connect several actions if there is a legal coherence between them (section 147, Civil Procedure Code).

 
25. What remedies are available to the claimant? Are punitive damages allowed for product liability claims?

Claimants must file a liability action with a:

  • Local court (Amtsgericht), if the value of the dispute is up to and including EUR5,000.

  • Regional court (Landgericht) for disputes exceeding EUR5,000. A claimant using a regional court must be represented by a lawyer.

Liability under the Product Liability Act is limited to EUR85 million. There is no de minimis threshold for personal injuries, but the claimant will not receive the first EUR500 paid for property and monetary damages. Liability under the Drug Act is limited to EUR120 million.

If a company is found liable, it can pay a lump sum or an annual amount to the claimant. The level of penalty is capped.

German civil law does not recognise the concept of punitive damages.

 

Reform

26. Are there proposals for reform and when are they likely to come into force?

The FSA has recently introduced a new FSA Transparency Code following the EFPIA requirements. According to the new Transparency Code, for the first time the FSA member companies must disclose payments and other benefits from 2016 onwards (covering payments and benefits provided in 2015) (see Question 14).

There are ongoing discussions regarding the implementation of a new criminal provision covering the bribery of private practitioners (and other stakeholders in the healthcare sector, such as pharmacists). There is a strong political will to introduce such a law. A draft of a new section 299a of the Criminal Code has already been submitted to the Federal Parliament (Bribery in the Healthcare Sector, Bestechung und Bestechlichkeit im Gesundheitswesen) at the end of the last legislative period. Under the agreement of the current coalition partners (CDU/SPD) this goal has been confirmed. Therefore, it is to be expected that payments or other benefits to private practitioners and/or pharmacists, which aim to unduly influence the prescription decision and/or the provision of pharmaceuticals, will be considered bribery of a private practitioner under the forthcoming legislation (expected at the end of 2014/the start of 2015).

For information on pharmaceutical patents, trade marks, competition law, patent licensing, generic entry, abuse of dominance and parallel imports, visit Pharmaceutical IP and Competition Law in Germany: overview ( www.practicallaw.com/0-566-1151) .

 

Online resources

German Federal Ministry of Justice

W www.gesetze-im-internet.de

Description. This website contains relevant legislation. It is official and up-to-date. English translations are for guidance only and can be found at www.gesetze-im-internet.de/Teilliste_translations.html.

German Federal Patent Court

W www.bundespatentgericht.de

Description. This is the official website of the Federal Patent Court. It is up-to-date and contains case law since 2011.

German Federal Court of Justice

W www.bundesgerichtshof.de

Description. This is the official website of the Federal Court of Justice. It is up-to-date and contains case law since 2000.

WIPO Lex

W www.wipo.int/wipolex/en

Description. This is an official website, containing IP-related legislation of members of WIPO. It is potentially out-of-date and English translations are for guidance only.



Contributor details

Peter Dieners, Partner

Clifford Chance

T +49 211 4355 5469
F +49 211 4355 5600
E peter.dieners@cliffordchance.com
W www.cliffordchance.com

Professional qualifications. Germany, Frankfurt bar, 1992; Düsseldorf bar, 1994

Areas of practice. Life sciences: cosmetics; food; chemistry and the marketing of these products.

Recent transactions

  • Advising manufacturers and distributors of pharmaceuticals and medical devices in regulatory matters, including marketing authorisation proceedings, contract negotiations, drafting and management, advertising, distribution and reimbursement.

  • Advising on anti-corruption and on healthcare fraud and abuse prevention matters.

  • Acting for trade associations and companies before government agencies in relation to legislative projects.

Claudia Milbradt, Partner

Clifford Chance

T +49 211 4355 5962
F +49 211 4355 5600
E claudia.milbradt@cliffordchance.com
W www.cliffordchance.com

Professional qualifications. Germany, Frankfurt bar, 1999

Areas of practice. Intellectual property including patents; German Employee Inventions Act; licensing law; technology transfer; trade marks; copyright.

Recent transactions

  • Advising clients from industries including pharmaceutical, medical devices and biotech industry.

  • Experienced in litigation (preliminary injunctions, actions on the merit and nullity proceedings) and any form of product piracy law.

  • Advising on non-contentious matters, particularly licences, co-operation and research and development agreements.

Marc Oeben, Senior Associate

Clifford Chance

T +49 211 4355 5471
F +49 211 4355 5600
E marc.oeben@cliffordchance.com
W www.cliffordchance.com

Professional qualifications. Germany, Düsseldorf bar, 2008

Areas of practice. Healthcare; life sciences.

Recent transactions

  • Advising pharmaceutical, biotech and medical device companies in transactions and on regulatory, contractual, competition, distribution and product liability issues.

  • Advising companies on anti-corruption and abuse prevention matters.


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