Germany has the largest European pharmaceutical market and is the fourth largest worldwide after the US, China, and Japan. Both market demand and location factors make Germany a preferred choice for many national and international companies. Market growth is driven by various global trends. Key social developments include demographic change and technological trends such as digitisation.

In 2022, the pharmaceutical market volume was around EUR56.5 billion and there were around 105,000 medicinal products authorised for the German market (source: Statista).

According to the Association of Researching Pharmaceutical Companies (Verband Forschender Arzneimittelhersteller, vfa), 36 newly authorised medicinal products were introduced into the German market in 2022 (as of November 2022). That continues the strong innovation trend from 2021, when 46 new medicinal products were introduced (excluding biosimilars).

With around 83 million inhabitants, Germany as Europe's most populous country also represents the biggest health care market in Europe, with expenditure continuously rising.

More than 500 pharmaceutical companies are located in Germany, including domestic corporations and subsidiaries of international companies. These range from big corporates to small innovative biotechnology starts-ups. SMEs constitute the backbone of the pharmaceutical industry, with around 90% of manufacturers having less than 500 employees. The German pharmaceutical industry has a workforce of around 143,000 people (2020; source: Statista).

Germany's biotechnology sector alone secured investment of EUR 2.4 billion in 2021, the second-highest amount ever after the record first year of the coronavirus pandemic in 2020 (EUR3.1 billion). Funding in the sector has increased by 170% since 2019 according to figures published by a leading consulting firm. In 2021, publicly traded biotech companies saw a 551% increase in revenue.

Germany provides a very good environment for the development and production of research-intensive technologies and products. In 2020, private institutions, universities, and the industry invested more than EUR106 billion on research and development (in all sectors; source: Federal Statistical Office (Destatis)). The total number of personnel in research and development (expressed in full-time equivalents) is around 735,000 (source: Federal Statistical Office (Destatis)).

Science and innovation conducted in Germany frequently leads to the commercialisation of cutting-edge technology. This is particularly the case in the life sciences sector which includes a wide range of high-tech sectors and fields, such as molecular diagnostics, mRNA-based vaccines and therapeutics, (bio-)pharmaceuticals and biomaterials, artificial intelligence, and medical devices.

Market trends in Germany correspond widely with global market trends in the sector. Digitisation, Big Data, and artificial intelligence are accelerating the transformation of the pharmaceutical industry. Technological progress is enabling companies to improve drug development and patient care beyond the mere treatment of diseases, opening new revenue streams. Digital solutions enable integrated treatment approaches to patient care, from prevention to screening, diagnosis, treatment, and follow-up, that is, not just focusing on illness.

In addition, technological progress and new therapeutic approaches have the potential not only to treat but ultimately to cure diseases, or to identify and treat risk factors before a disease develops. Part of this development is personalised therapies.

Other medical innovations such as precision medicine, cell and gene therapy, and immuno-oncology are also opening new avenues of prevention and detection and have potential to revolutionise the treatment of many diseases.

Generally, there are several ways to receive funding which can often be combined. Technologically innovative start-ups often have to rely solely on financing through equity such as venture capital which has become more difficult recently. Public institutions such as development banks (publicly owned and organised banks at national and state level) may also offer partnership programmes at the early development stage.

Debt financing is a central financing resource and the classic supplement to equity financing. It is available to companies with continuous cash flow. Loans can be provided to finance long-term investments, working capital and operational costs (R&D, personnel), and for bridging temporary financial gaps. Besides offers from commercial banks (including Volksbanken and Sparkassen), investors can access publicly subsidised loan programmes.

For research or setting up production and service facilities, investors can rely on a number of different public funding programmes.

In Germany, health insurance is compulsory for the whole population. Salaried workers and employees below a gross annual income of around EUR66,000 (Versicherungspflichtgrenze Krankenversicherung; in 2023) are automatically enrolled into one of about 97 statutory health insurance funds (Gesetzliche Krankenkassen). Self-employed and people with a higher income can choose private insurance instead. The ratio is about 90% to 10%.

The biggest statutory health insurance funds are the Allgemeine Ortskrankenkassen (AOK), a cluster of 11 local, independent funds with around 20.9 million members and Barmer GEK with around 8.7 million members (as of April 2023). The number of persons actually covered through membership is significantly higher (for example, 27 million people covered by AOK) because the statutory health insurance includes family insurance. Spouses with no income of their own and children are automatically covered without a surcharge (subject to specific requirements).

Persons insured with statutory health insurance fund pay income-related contributions. The rate is fixed every year and the same across all statutory health insurance funds. In 2023, the contribution is 14.6% of gross income, up to a certain income level (Beitragsbemessungsgrenze).

The employer and an insured employee share the costs equally. Insurers can and often do charge extra fees (individual additional health insurance rate, currently 1.6% on average), which are shared by the employer and the insured employee. All contributions are transferred to a health care fund administered by the Federal Social Insurance Office (Bundesversicherungsamt). From the health care fund, payments are allocated to individual statutory health insurance funds based on, among other things, the number of insured persons, the risk structure of the respective persons, and social aspects.

For health insurance, certain provisions of the German Social Code V aim to relieve the burden on the statutory health insurance funds by imposing, for example, mandatory discounts provided by pharmaceutical companies.

These statutory discounts can be supplemented or replaced by individual arrangements (rebate agreements) between pharmaceutical companies and statutory health insurance funds. The law refers to rebates and discount arrangements depending on therapeutic success (outcome-based schemes). In this respect, statutory health insurance funds act as public contracting authorities under procurement laws when voluntarily concluding discount contracts and are therefore subject to EU public procurement rules.

For medicinal products with new active pharmaceutical ingredients, the AMNOG procedure applies, based on the Pharmaceuticals Market Reorganisation Act (Arzneimittelmarkt Neuordnungsgesetz, AMNOG). It consists of a health technology assessment (HTA) and price negotiations between the Central Association of Health Insurance Funds (Spitzenverband Bund der Krankenkassen) and the relevant pharmaceutical company.

Alternative pricing schemes, such as outcome-based schemes, risk share agreements, or special discount schemes, may be negotiated between the parties when agreeing the reimbursement price for a new pharmaceutical.

Pharmaceutical manufacturers are free to determine the selling price for medicinal products. Pharmacies and wholesalers add surcharges onto manufacturer selling prices. The state only stipulates the amount of surcharges for the services of pharmaceutical wholesalers and pharmacies that are reimbursed. The basis for the surcharges is the manufacturer's uniform selling price.

Wholesalers are reimbursed with a maximum amount of 3.15% per pack, up to a maximum of EUR37.80, plus a fixed surcharge of 73 cents per pack, for the procurement, stockpiling, and distribution of medicinal products from manufacturers to pharmacies.

Pharmacies are reimbursed by a maximum of 3% of the manufacturer's selling price. In addition, they receive a fixed amount of EUR8.35 per pack plus 21 cents to promote the provision of emergency services. Therefore, a prescription drug has the same price in every pharmacy in Germany.

Manufacturers must provide evidence of added benefit to patients for medicinal products with new active substances immediately on launch (early benefit assessment). The Federal Joint Committee decides whether and what added value a new drug has. On this basis, the manufacturer agrees a reimbursement amount with the statutory health insurance fund.

In Germany, a large number of preparations of comparable quality, with comparable effect and partly identical composition, are available at very different prices. So that the health insurance funds (and therefore insured persons) do not pay for an expensive drug if cheaper and equivalent medicinal products are available, there are fixed prices for groups of comparable medicinal products, especially generics (reference prices).

The reference price of a medicinal product is the maximum amount reimbursed by the statutory health insurance fund; it is not a state-fixed price. If the price of a medicinal product is higher than the reference price, the patient generally pays the difference or receives a therapeutically comparable medicinal product (with no additional cost). Most medical care is now provided with reference-price medicinal products. Their share of prescriptions is about 80% (as of 2023).

For every drug prescribed under the Federal Association of Statutory Health Insurance Funds, insured persons must make a co-payment of 10% of the selling price but at least EUR5 and no more than EUR10 and no more than the pharmaceutical price. Medicinal products priced at least 30% below the reference price may be exempted from this out-of-pocket payment.

There are statutory prescribed discounts for health insurance companies. In addition, a health insurance company can negotiate further discounts with pharmaceutical companies (see Question 3).

The German regulation of pricing and reimbursement of pharmaceuticals is a complex area. In November 2022, the Act for the Financial Stabilisation of the German Statutory Health Insurance System (Gesetz zur finanziellen Stablisierung der gesetzlichen Krankenversicherung, GKV-FinStG) entered into force. The new act was subject to controversial discussions in the German parliament (Bundestag) and between affected stakeholders. The new rules will affect almost all players in the health care system, including health insurers, doctors, hospitals, pharmacies, and especially the pharmaceutical industry. The new law includes significant cost-containment measures, as the health care system faces increased costs and reduced funding.

According to the explanatory memorandum of the GKV-FinStG, the cost increase is particularly due to the disproportionate increase of expenditure on medicinal products. Therefore, a number of new rules specifically target the pricing and reimbursement of pharmaceuticals. Key elements of the GKV-FinStG include the following:

A patient with a prescription for a particular medicinal product obtains it in a pharmacy without having to pay for it (only the co-payment). The pharmacist is subsequently reimbursed by the patient's statutory health insurance fund (GKV fund). The pharmacist cannot claim reimbursement of the product's full retail price because mandatory discounts are deducted from the pharmacist's reimbursement claim against a GKV fund. This rule does not apply to pharmaceuticals grouped in reference price groups. The pharmacist can claim back the manufacturer's discount for patent protected pharmaceuticals and the generics discount for generics from the pharmaceutical manufacturer. The pharmacist's discount must be borne by the pharmacists.

In October 2020, after years of research and negotiation, the German parliament adopted the Law on Strengthening Local Community Pharmacies (Gesetz zur Stärkung der Vor-Ort-Apotheken) and legally stipulated the right of patients to clinical pharmaceutical services (CPS, pharmazeutische Dienstleistungen). All health insurance companies (statutory and private) are legally obligated to provide pharmacies with a total of about EUR150 million per year for the provision of these CPS. The EUR150 million is available on top of the normal reimbursement scheme for dispensing and advice on prescribed drugs.

Medicinal products can be prescribed by physicians, dentists, and veterinarians.

In general, prescription medicinal products can only be dispensed to patients through pharmacies, including online pharmacies. A pharmacist is only allowed to operate up to three subsidiaries near their main pharmacy, so there are no large pharmacy chains. There is also a ban on non-pharmacists owning or even owning shares in pharmacies, so online pharmacies cannot buy direct stakes in German pharmacies. Instead, firms tend to buy logistics firms or pharma wholesale suppliers.

Mail order selling of pharmacy-only medicines is allowed. The same legal requirements apply for mail order pharmacies as for any retail pharmacy. Every website offering medicinal products to the public by mail order must display the common EU security logo and be registered in the national register. This register only includes pharmacies that have an official permit for mail order of medicines for Germany.

Retailing outside of pharmacies of medicinal products that are released for trade outside of pharmacies can only be carried out if the entrepreneur, the legally appointed representative of the enterprise, or a person commissioned by the entrepreneur to head the enterprise or its sales section, has the necessary expert knowledge. Enterprises with several branch premises require a person with the necessary expert knowledge for each branch premises.

Wholesaling is defined in section 4(22) of the Medicinal Products Act (Arzneimittelgesetz, AMG) as any professional or commercial activity for trading purposes that consists of procuring, storing, selling, or exporting medicinal products, except for the sale of medicinal products to customers other than doctors, dentists, veterinarians, or hospitals.

Any person who engages in the wholesale trading of medicinal products in Germany requires authorisation under section 52a(1) of the Medicinal Products Act. In addition, the Guidelines on Good Distribution Practice (GDP) and the Ordinance on Wholesale and Brokering of Medicinal Products (Verordnung über den Großhandel und die Arzneimittelvermittlung, AM-HandelsV) are particularly relevant to wholesalers.

The federal higher state authorities of the state in which the wholesaler is established supervise medicine distribution activities.

Operating a wholesale business with medicinal products without an authorisation under section 52a of the Medicinal Products Act is a criminal offence and an administrative offence.

Under the Medicinal Products Act, importing is the conveyance of products that fall under the Medicinal Products Act from third countries that are not parties to the EEA agreement on free circulation.

The following is required to import medicinal products and certain active ingredients:

Section 72 of the Medicinal Products Act refers to the regulations on manufacturing authorisation in relation to the requirements to grant an import authorisation, which apply accordingly. An import authorisation may be refused if grounds for refusal are present. In particular, the applicant must have the required reliability. If the applicant is a natural person, they must have the required reliability. If the applicant is a legal entity, its bodies must have the required reliability. In any case, there must be at least one qualified person who meets certain requirements relating to their expert knowledge.

When applying for an import authorisation, the applicant must prove the required expert knowledge to the authority, for example through suitable certificates and other documents. In short, proof of the required expert knowledge is provided by a licence to practise as a pharmacist or a certificate attesting the successful completion of a university course in pharmacy, chemistry, pharmaceutical chemistry and technology, biology, human or veterinary medicine, of at least four-years' duration, and a period of at least two years' practical experience in qualitative and quantitative analysis and other quality testing of medicinal or veterinary products.

Parallel imports occur where a third company, independent of the marketing authorisation holder or manufacturer, acquires medicinal products in another EU or EEA member state and imports them into Germany.

Before the parallel importer can market the medicinal product in Germany, it must obtain a simplified national marketing authorisation. In particular, the imported medicinal product must have the same active component, formulation, indication, and therapeutic effect as the equivalent medicinal product already in Germany. An exception is the parallel distribution of centrally authorised medicinal products, which must comply with the EMA notification procedure for parallel distribution.

Parallel imports of medicinal products authorised and marketed outside the EU or EEA are prohibited.

Under trade mark law, a parallel importer must fulfil several requirements, including providing information in advance to the marketing authorisation holder about the planned import.

The legal framework for advertising and promoting medicinal products in Germany is set out in the Law on Advertising in the Field of Healthcare (Heilmittelwerbegesetz, HWG). The Law against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb, UWG) must also be observed.

Further, a large part of the industry has agreed to comply with industry codes relating to, for example, advertising to health care professionals (HCPs), collaboration with patient organisations, and collaboration with partners in the health care system and their employees, for example the:

These self-regulatory codes bind member companies and compliance is monitored and sanctioned. They are also relevant to non-members, as they may be used by the courts when assessing whether certain activities infringe the law.

The Law on Advertising in the Field of Healthcare does not define advertising or advertisement in relation to pharmaceuticals.

The Federal Court of Justice has found that product or service-related statements are advertising if they are designed to attract the attention of the target public, to arouse their interest, and therefore to promote the sale of goods or services and that advertising a medicinal product includes all product or service-related statements designed to promote the sale of the advertised drug. Therefore, the term is understood in a very broad way and covers all kinds of channels and communications.

German law differentiates between product-related sales advertising and other forms of business advertising such as corporate or image building advertising. Product-related sales advertising means advertising of a specific product, while other forms of business advertising mostly refer to the company itself or the entire range of medicinal products but not to a specific product. Only product-related sales advertising is subject to the Law on Advertising in the Field of Healthcare, while other forms of business advertising are covered by the Act Against Unfair Competition.

The COVID-19 vaccination campaign run by the Federal Ministry of Health as a governmental measure of danger prevention and precaution does not fall under the term of advertising.

Section 74a of the Medicinal Products Act stipulates that any person who, as a pharmaceutical entrepreneur, places medicinal products on the market, must appoint an information officer responsible for ensuring that labelling, package leaflets, expert information, and advertisements correspond with the content of the marketing authorisation.

Otherwise, there are no direct arrangements that companies must have in place. In particular, there are no explicit legal or code requirements for companies to establish standard operating procedures (SOP). However, such SOP are recommended due to the general obligation to have appropriate rules and proceedings as part of the organisation's overall compliance. An internal procedure with a required sign-off of promotional campaigns can be helpful for the supervision and control of documents and marketing material published by the company (including that published by employees, agents, and so on, which companies are also liable for).

Under German law, advertising of medicinal products does not have to be approved by a regulatory authority before use. Further, a post-publication disclosure of advertising material to regulatory authorities is not required.

Under German law, comparative advertising of medicinal products (prescription-only or over-the-counter (OTC)) is not allowed if it is directed to the general public.

Comparative advertising for medicinal products addressed to HCPs is permissible, subject to a number of restrictions.

Under the Law on Advertising in the Field of Healthcare, any advertising activity concerning a medicinal product is only permissible if it has the relevant marketing authorisation. Any advertising of unauthorised products during the development phase is therefore generally considered unlawful. The same applies to indication or pharmaceutical forms not covered by the marketing authorisation (off-label, see section 3a of the Law on Advertising in the Field of Healthcare).

However, the exchange of medical and scientific information during the development or marketing authorisation phases of a medicinal product is permissible, provided that such activities are not considered part of product-related advertising.

There are no specific legal provisions for advertisements on the internet/in social media postings. The general restrictions apply with certain peculiarities, for example, since advertising prescription-only medicinal products is limited to HCPs, it is necessary to restrict access to comply with German law.

In practice, advertising on social media is limited to OTC medicinal products, since advertising prescription-only medicinal products is not allowed to the general public and an access restriction, as used on websites, is technically not feasible on social media.

The rules of the Law on Advertising in the Field of Healthcare are primarily enforced by civil courts. If a company violates the Law on Advertising in the Field of Healthcare, it is also an act of unfair competition. Therefore, many alleged violations of the Law on Advertising in the Field of Healthcare are pursued between competitors or by industry and consumer protection associations. Due to time-pressure in advertising cases, many court cases are interim injunction proceedings, where courts can grant injunctive relief by issuing a cease-and-desist order, which is the most important remedy in practice.

The rules of the Law on Advertising in the Field of Healthcare can also be enforced by public authorities through administrative offence proceedings (Ordnungswidrigkeitenverfahren) but this is rare in practice.

There are also arbitration boards set-up by self-regulatory industry associations that adjudicate on violations of industry codes of conduct. However, such boards are only competent for infringements committed by members of the association.

In rare circumstances, an offence against the prohibition of misleading advertising under section 3 of the Law on Advertising in the Field of Healthcare can lead to criminal proceedings brought by locally competent state prosecutors.

Medicinal products cannot be advertised before the necessary marketing authorisation is obtained (section 3a, Law on Advertising in the Field of Healthcare).

Further, advertising prescription-only medicinal products to patients is prohibited (section 10, Law on Advertising in the Field of Healthcare). Only advertising of OTC medicinal products is in principle allowed to the general public, subject to a number of restrictions.

In addition, health-related advertising claims cannot be misleading. There are particularly stringent requirements about the correctness, unambiguity, and clarity of health-related advertising claims.

Advertisements directed to the general public must contain the name of the medicinal product, its therapeutic indications, and warnings (if any). This mandatory information (Pflichtangaben) must be clearly set out, well separated from the other advertising claims, and easily legible. The advertising must also contain the following advice: "For further information on risks and side effects, please read the package leaflet and consult your physician or pharmacist."

In principle, section 7 of the Law on Advertising in the Field of Healthcare does not allow the offering or supplying of gifts or other benefits to patients, to prevent undue influence on patients. There are a few exceptions, such as items of insignificant value, where courts tend to be very strict.

Patient support programmes (PSPs) specifically tailored to a particular product provided to patients and/or physicians free of charge can qualify as gifts or other benefits that could fall under the prohibition in section 7 of the Law on Advertising in the Field of Healthcare.

Requirements are set out, among others, in the FSA Code of Conduct on Collaboration with Patient Organisations (see Question 9). In collaboration with patient organisations, member companies must stay neutral and respect the organisation's independence. A collaboration must proceed in a transparent and open manner. It must not involve recommendations for individual prescription-only medicinal products or groups of medicinal products. An appearance of member company representatives at patient organisations must not aim to make promotional references to prescription-only medicinal products.

Health care professionals (Fachkreise) are defined in section 2 of the Law on Advertising in the Field of Healthcare as members of the health care professions or the health care industry, institutions serving human or animal health, or other persons, insofar as they legally trade in medicinal products, medical devices, procedures, treatments, objects, or other means or use them in the exercise of their profession.

Institutions (organisations) are in particular hospitals, public health departments, and central purchasing bodies for medicinal products established on a statutory basis and recognised by the competent authority and training centres for the medical professions.

HCPs must obtain complete information on medically and pharmacologically relevant factual statements, so that they can form their own picture of the benefits and risks of a medicinal product in advance of consultation, prescription, use, and sale. Therefore, any advertisement to HPCs must contain the name or company name and registered office of the pharmaceutical entrepreneur, the name of the medicinal product, its composition, indications for use, contraindications, side effects, warnings, and the indication "prescription-only" if applicable.

Advertising prescription-only medicinal products is only permissible to a restricted part of the HCPs as defined in section 2 of the Law on Advertising in the Field of Healthcare (see above), namely the group of persons conclusively listed in section 10 of the Law on Advertising in the Field of Healthcare. This includes physicians, regardless of their specialty, pharmacists, and persons permitted to trade in prescription-only medicinal products.

The relationship between the pharmaceutical 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 hospitals and physicians using medicinal products.

In Germany, there are several regulations and industry codes dealing with different aspects of compliance. Some are generally binding, while others are individually binding.

For example, the Act on Fighting Corruption in the Health Care Sector (Gesetz zur Bekämpfung der Korruption im Gesundheitswesen) entered into force in 2016. Criminal offences of taking and giving bribes in the health care sector were incorporated into the Criminal Code (Strafgesetzbuch, StGB) at sections 299a and 299b.

In relation to sections 299a and 299b of the Criminal Code, the key question is whether medical practitioners obtain an "advantage" or not. An advantage is any benefit to which the recipient has no legal claim and which objectively improves their economic or personal situation. Material benefits include, for example, financial contributions, arranging and granting additional income, rebates, provision of consumer goods, invitations to holidays, or premiums. Intangible benefits can be obtaining an award, promoting career advancement, or awarding honorary offices. Gifts, sponsoring, consultancy agreements, or incentive schemes are likely to be considered such advantages, but it depends on the circumstances of the case.

Only individuals can be liable under German criminal law, not health care organisations.

In principle, section 7 of the Law on Advertising in the Field of Healthcare prohibits the offer or supply of gifts or other benefits or the acceptance of them, with a limited number of exceptions.

The Professional Rules for German Physicians prohibit acceptance of any gifts or benefits that might influence their prescribing or therapeutic decisions, or that could be considered a reward for previous such decisions.

Co-operation with social health insurance authorised physicians, in particular preventing undue influence on their prescription practice, is regulated in section 128 of the Social Security Code V.

The FSA Code of Conduct on Collaboration with Health Care Professionals aims to safeguard necessary collaboration between the pharmaceutical industry and HCPs and to ensure legal compliance for collaboration.

In principle, the above rules on offering and granting gifts and other benefits to HCPs also apply to medical organisations.

Germany has not yet enacted sunshine laws and does not require drug and device companies to disclose payments and transfers of value they make to HCPs.

The coalition agreement of the German government formed in 2021 has announced more transparency about financial contributions to HCPs to avoid conflicts of interests.

Non-compliance with the rules on marketing to HCPs can have a range of legal consequences, such as cease and desist claims of competitors, criminal offences, and boards of a relevant association may find an infringement of the relevant code.

Patent protection for Germany can be obtained through different national and international routes. Irrespective of the selected route, a medicinal product is only suitable for patent protection if it is or involves an invention, and the invention is new, involves an inventive step, and is capable of industrial application. Further, clear and complete disclosure of the invention is mandatory.

A national German patent can be obtained under the Patent Act (Patentgesetz) and a number of national ordinances (Verordnungen), providing in particular further details on the filing and application requirements. The Patent Act governs in particular patentability, opposition, infringement and invalidity proceedings, and licensing.

In Germany, inventions can also be protected as utility models under the Utility Model Act (Gebrauchsmustergesetz). A utility model is similar to a patent and also requires an invention, novelty of the invention, an inventive step, and the invention must be capable of industrial applicability. It can be obtained a lot faster and cheaper than patent protection, mainly because the substantive requirements are not reviewed during the application. Utility model and patent protection are often applied for in parallel.

Patent protection for Germany can also be obtained through international routes, in particular under the European Patent Convention (EPC). The EPC allows applicants to obtain patent protection in the 38 EPC member states by filing a single patent application at the European Patent Office (EPO). However, an applicant does not become the proprietor of a single patent valid in up to 38 member states. An EPC patent only gives its proprietor the same rights as conferred by a national patent granted in an EPC member state. Therefore, national law, in Germany the Patent Act, applies to, for example, infringement or revocation of an EPC patent in a specific EPC member state.

The Patent Cooperation Treaty (PCT) provides an even wider international option to apply for patent protection. By filing only one PCT patent application, applicants can start the process to seek national patent protection in up to 152 countries, including Germany.

From 1 June 2023, a unitary patent is a further option to obtain patent protection in Germany and 16 other EU member states (UPC member states). The application process for a unitary patent is the same as for an EPC patent, except that after it is granted, the patent proprietor can request unitary effect. A unitary patent is a single right for the UPC member states, governed by the same rules in any of these countries.

Pharmaceutical inventions can be protected as product (substance) claims. Such claims can refer to, for example:

Manufacturing an active ingredient or a medicinal product can be protected by a process claim. Process claims cover the process as such but also the direct product of a process.

The following categories among others are excluded from protection:

(Sections 1(3), (1a), and (2), Patent Act.)

Methods for treatment of the human body by surgery or therapy and diagnostic methods practised on the human body are excluded from protection. However, products for use in any of these methods can, generally, be patented. Therefore, a product in the state of the art is still patentable for use or specific use in one such method, provided that its use for any such method is not in the state of the art ("X for use in treating Y"). In other words, first and second medical use patents are permissible.

The options to obtain patent protection for biotech inventions are relatively limited. The general guidelines have been set by the EU Biotech Directive (98/44/EC).

The human body, at the various stages of its development, and the simple discovery of one of its elements, including the sequence or partial sequence of a gene, are not patentable. However, an element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, can be a patentable invention.

Plant and animal varieties as well as essential biological processes for manufacturing plants and animals generally cannot be patented. It is possible to patent inventions which concern either:

Applications for a national German patent must be filed with the German Patent and Trademark Office (GPTO). The GPTO website provides guidance on the application procedure and fees in both English and German.

Applications for an EPC patent can be filed with the European Patent Office (EPO) in Munich, its branch at The Hague, or its sub-office in Berlin, but not with the EPO's further sub-offices in Vienna and Brussels.

Applications for an EPC patent can also be filed with the central intellectual property office or other competent authority of an EPC member state if the law of that country permits or prescribes (in Germany, with the GPTO). Guidance on the application procedure and fees is available on the EPO website in English, French, and German. Application proceedings are the same for a unitary patent.

The filing options for an international patent application under the PCT largely depend on national law and the applicant's nationality or place of residence. Applicants residing in Germany can file the application with the GPTO, the EPO, or directly with the World Intellectual Property Organisation (WIPO). Further information is available on the GPTO website and on the WIPO website.

The GPTO reviews whether obvious obstacles to patenting exist. The application remains secret for 18 months. Upon payment of the examination fee and filing of a request for examination, the application is fully examined for substantive patentability.

Applicants can also file a search request with the GPTO before filing the request for examination (section 43, Patent Act). In this case, the GPTO examines, without guarantee of completeness, the protectability of the invention applied for and provides a detailed search report.

After the examination, the patent can be granted. The grant is published in the Patent Gazette (Patentblatt) and in the GPTO patent register.

Any third party can oppose a patent within nine months after publication of the grant of the patent on certain grounds.

The GPTO claims that the patenting procedure for national German patents takes about two and a half to three years on average, provided that the examination request is filed within four months from the filing date and the examination fee is paid. In practice, the duration of proceedings depends on the technical sector and complexity of the invention and the patent.

The maximum term for patent protection in Germany is 20 years, for a national German patent, the German part of an EPC patent, and a unitary patent.

In Germany, protection for medicinal products can in principle be extended by obtaining a supplementary protection certificate (SPC) under the SPC Regulation (469/2009) and section 16a of the Patent Act.

The SPC Regulation provides for a mechanism to extend protection for up to five years for medicinal products, and for up to five and a half years for medicinal products for paediatric use, after the relevant patent expires.

An SPC can be obtained if the filing deadlines and other formal requirements of the application are met and:

An SPC only covers an individual EU member state but it is possible to obtain various SPCs to cover different member states. A unitary SPC law has been proposed by the European Commission to complement unitary patents.

Under section 9 of the Patent Act, the patent proprietor has the exclusive right to use the patented invention within the scope of the law. In the absence of the proprietor's consent, third parties are prohibited from:

Under section 10 of the Patent Act, any third party is prohibited, in the absence of the proprietor's consent, from supplying or offering to supply, within the territorial scope of the Patent Act, persons other than those entitled to exploit the patented invention with means relating to an essential element of the invention for use within the territorial scope of the Patent Act if the third party knows or it is obvious in the circumstances that those means are suitable and intended for using that invention.

Uder section 12 of the Patent Act, patents have no effect in respect of a person who, at the time the application was filed, had already begun to use the invention in Germany or had made the necessary arrangements for so doing. That person is entitled to use the invention for the needs of their own business in their own workshops or in the workshops of others.

Under section 13 of the Patent Act, patents have no effect in a case where the Federal Government orders that the invention is to be used in the interest of public welfare. Further, it does not extend to a use of the invention ordered in the interest of the security of the Federal Republic of Germany by the competent highest federal authority or by a subordinate authority acting on its instructions.

Infringement of a patent occurs if the relevant action falls into the protected scope of the patent. A patent's scope of protection is determined by its claims, whereby the patent's description and the drawings are used to interpret the claims.

If the court concludes that the relevant product or process falls within the meaning of the claim as construed, it will consider the patent to be literally infringed, subject to any applicable defences of the alleged infringer.

If the relevant product or process does not fall within the meaning of the claim as construed by the court, it may still infringe the patent by equivalent means under the doctrine of equivalents. This is determined by a three-step test.

German patent law distinguishes between direct and indirect patent infringement.

It is also prohibited to intentionally induce a third party to commit or assist a third party in the commission of a direct and indirect patent infringement (abetting and aiding).

The main defence is that the allegedly infringing act does not fall within the patent's scope of protection because the patent holder is relying on incorrect facts and/or an incorrect construction of the asserted patent claim(s).

Research exemption. The effect of a patent does not extend to, for example (see section 11 of the Patent Act):

IP exhaustion. If the infringing product has been put on the market in an EU/EEA member state with the patent holder's consent, the patent holder's rights to that product are exhausted in the entire EU/EEA.

Other exemptions. There are specific exemptions for SPCs which were introduced by the legislation amending the SPC Regulation EC/469/2009. Subject to complying with certain safeguards, the proposed waivers mean that:

Other defences. Other defences available to an alleged infringer include:

The Patent Act provides for a number of claims that can be raised against an infringing party. Therefore, an entitled person, normally the patent owner, can request the infringing party to:

German law allows, in particular, to enforce a cease-and-desist claim through a preliminary injunction. Preliminary injunctions can even be granted ex parte.

In Germany, jurisdiction over patent litigation and patent validity cases is split between different courts (bifurcated system).

Germany is a party to the following key international IP treaties, among others.

WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

The Patent Cooperation Treaty (PCT).

The European Patent Convention (EPC).

Regulation 1257/2012 on the creation of unitary patent protection (unitary patent).

The Agreement on a Unified Patent Court (UPC Agreement), which provides for a pan-European patent court system and substantive law on, among others, the validity and infringement of certain European patents.

The WIPO Madrid Agreement Concerning the International Registration of Marks 1891.

The Paris Convention for the Protection of Industrial Property 1883

German national trade marks are governed by the Trade Mark Act (Markengesetz, MarkenG), which implements the EU Trade Mark Directive (2015/2436).

EU trade marks are governed by the Trade Mark Regulation (2017/1001), the Trade Mark Delegated Regulation (2018/625), and the Trade Mark Implementing Regulation (2018/626).

International registrations that extend to Germany are governed by the Madrid Protocol, the Madrid Agreement, and the Trade Mark Act.

To be registered as a trade mark, a sign must be capable of distinguishing the goods or services of one undertaking from those of other undertakings in a legal manner.

A sign must also be capable of being represented in the register so that the competent authorities and the public can clearly and unambiguously identify the subject matter of the protection (Article 8(1), Trade Mark Act). This includes graphics, words (including personal names), designs, letters, numerals, shapes of goods or packaging, and colours (or combinations of colours), and also sounds, videos, or multimedia data.

Signs are not eligible for registration if they fall within one of the absolute grounds for refusal (section 8, Trade Mark Act).

German trade mark law allows unregistered trade marks if certain requirements are met, particularly certain thresholds as to the degree of awareness of the trade mark among the relevant market participants.

The GPTO registers German national trade marks. Its website provides guidance on the application procedure and fees in both English and German.

EUTMs must be filed with the European Union Intellectual Property Office (EUIPO). Its website provides guidance on the application procedure and fees.

There are a number of routes to file international applications under the Madrid Agreement and Madrid Protocol. Guidance on the procedures and fees is on the GPTO website and the WIPO website.

Once an application for a German trade mark has been filed, the GPTO reviews the application for compliance with formal requirements and absolute grounds for refusal. The GPTO does not review relative grounds for refusal.

If the GPTO has no objections to the registration of the trade mark it will usually be registered three to eight months after filing. Requesting an accelerated review normally reduces this period to three to six months. If the GPTO rejects the application in whole or part, up to two different options for an appeal can be used.

Within three months after publication of a trade mark registration, third parties can file an opposition with the GPTO based on relative grounds for refusal, that is, older rights. The GPTO decision can be appealed.

An EUTM is usually registered six to eight months after an application has been filed, including a three-months' opposition period.

National legislation. The main legislation is the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB). The object is to protect competition in Germany against all restraints, whether caused in or outside Germany.

EU legislation. The Treaty on the Functioning of the European Union (TFEU) includes competition rules to combat cartels (Article 101, TFEU) and monitor abusive practices (Article 102, TFEU). These are complemented by various regulations, notices, and recommendations of the European Council and the European Commission.

The EC Merger Regulation (139/2004) is an instrument for examining concentrations and the European Commission has exclusive competence to apply it.

The German Federal Cartel Office (Bundeskartellamt) and the other EU competition authorities have far-reaching competencies to apply Articles 101 and 102 of the TFEU in relation to cartels and abuse control.

The Federal Cartel Office applies these EU rules in addition to the Act against Restraints of Competition if anti-competitive practices are likely to affect trade between member states. The rules in the Act against Restraints of Competition and the TFEU are essentially identical.

At EU level, a number of important developments relevant to the pharmaceutical sector occurred in 2022. The European Commission continues to target the sector as one of its enforcement priorities, especially when protecting innovation. Some highlights in 2022 were:

At national German level, in January 2023 the Federal Cartel Office issued a statement of objections in its investigation into alleged co-ordinated price increases by a group of associations of medical aids suppliers. The associations had jointly requested price increases from health insurance companies for their products and services under existing supply contracts. Under German law, suppliers of medical aids can enter into collective negotiations with insurance companies but this should not result in anti-competitive conduct. In this case, a syndicate represents around 80% of the relevant medical supply stores providing medical aids in Germany. The FCO considers that it was therefore able to act as a quasi-monopolist and push through co-ordinated price increases to the detriment of health insurance companies. The FCO's final decision should hopefully provide helpful clarification on how to differentiate between legitimate collective negotiations and the exercise of quasi-monopoly powers.

In August 2022, the FCO cleared a joint venture between NOWEDA, an association of several thousand pharmacies and Burda, a publishing house whose publications include medical information for the wider public. NOWEDA operates the platform IhreApotheken.de that facilitates online orders of pharmaceuticals from local pharmacies via a central platform. The FCO identified a general trend towards developing comprehensive digital health platforms linking health information with a mail order pharmacy platform and expressed no substantial concerns over the transaction. It noted that especially in this early market phase, it is important that consumers and pharmacies can use several platforms in parallel and switch platforms if required. Under the joint venture, pharmacies in the NOWEDA association remain free in their choice of platform.

Topics at EU level concerning the pharmaceutical sector and IP include:

Under both German and EU competition law, any activity between actual and potential competitors which is capable of reducing uncertainty between them can infringe section 1 of the Act against Restraints of Competition or Article 101 of the TFEU. This is particularly true in relation to settlement agreements containing reverse payments in the context of pharmaceutical patent litigation. In particular, where payments are made by originator pharmaceutical companies to potential generic competitors in return for their agreement not to enter the market (for a period of time) or to operate in a market in a particular way (pay-for-delay agreements). A number of cases have imposed substantial fines against the companies involved, for example:

Illegitimate de facto patent extensions in connection with awards of public contracts raise similar concerns.

A large number of competition law issues may occur in the pharmaceutical and health care sector. They may occur during the various stages in the development, production, and distribution of a medicinal product. There can be vertical agreements between non-competitors and horizontal agreements between competitors which must be distinguished in terms of competition law. This is particularly important for the application of, for example:

Article 101(1) of the TFEU prohibits agreements between companies that restrict competition. However, under Article 101(3) TFEU, such agreements are compatible with the single market, provided they contribute to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefits and without eliminating competition.

The VBER exempts from the prohibition in Article 101(1) of the TFEU agreements between companies that are active at different levels of the production or distribution chain, subject to conditions. The rules therefore provide for a safe harbour where certain agreements are block exempted. A safe harbour that is too generous will not comply with Article 101 TFEU. A safe harbour that is too narrow will increase compliance costs for businesses. The VBER is accompanied by the Guidelines on Vertical Restraints that provide guidance on how to interpret and apply the VBER and how to assess vertical agreements that fall outside the VBER safe harbour.

The HBER exempt R&D and specialisation agreements that meet certain conditions from the prohibition in Article 101(1) of the TFEU, therefore creating a safe harbour for those agreements. The HBER are accompanied by the Horizontal Guidelines, which provide guidance on how to:

An acquisition of patents, trade marks, or licences may be subject to merger notification if these assets constitute a substantial part of the total assets of an undertaking. According to Federal Court of Justice case law, a part of the assets of an undertaking is considered substantial if it corresponds to the substance of the market position of the seller, in that the acquisition would result in a transfer of this market position to the acquirer. Accordingly, patents or trade marks can constitute a substantial part of an undertaking's assets. This can also be true for a licence if it is concluded for a significant period of time.

When licensing or transferring patents to foreign parties, there are certain restrictions, particularly under the export control regime for technology transfer and technical assistance. These apply regardless of the funding of the technology (unless there are restrictions in the terms of the funding).

There are no particular formal requirements to make a licence enforceable.

The Pharmacovigilance Department at the Federal Institute for Drugs and Medical Devices must constantly inform about known adverse reactions of medicinal products and interactions associated with their use, and ensure that patients, physicians, and other interested parties are made aware of these risks and, where appropriate, of ways to reduce them.

The competent authorities must issue directives to rectify any offences that have been identified and prevent offences in the future (section 69, Medicinal Products Act). 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:

In Germany, a specific liability regime applies to medicinal products under the Medicinal Products Act. Section 84 et seq. of the Medicinal Products Act imposes strict liability on the pharmaceutical entrepreneur if a person dies, or the body or health of a person is substantially damaged, due to the administration of a medicinal product distributed to the person under the Medicinal Products Act which is subject to compulsory marketing authorisation or is exempted by ordinance from the need for a marketing authorisation.

The liability to compensate only exists if:

The intended use depends on the medicinal product's approval and the information about the indication and safe use of the product on the packaging, the user, and technical information.

Off-label use is not part of the intended use. However, any use of the medicinal product based on scientifically recognised therapeutic habits of which the pharmaceutical company knew or ought to have known is part of the intended use. Such off-label use is part of the intended use if the pharmaceutical company does not expressly exclude it.

Further grounds for product liability can apply, especially under the law of tort (Deliktsrecht). Product liability claims under the law of tort are based on negligence or fault liability. Any such liability requires a breach of a duty of care (Verkehrspflicht). According to German case law, there are several categories of duties of care, namely construction, production, instruction, and product monitoring obligations.

Under the Medicinal Products Act, the pharmaceutical entrepreneur who placed the medicinal product on the market under the Medicinal Products Act is liable. A company that markets a medicinal product under its own name is liable but is not liable for counterfeit medicines.

Another company that has developed or manufactured the medicinal product can, in addition to the pharmaceutical entrepreneur, be liable under tort law.

The pharmaceutical entrepreneur is exempted from liability to pay damages, if the facts indicate that the damaging effect of the medicinal product is not attributable to its development and manufacturing process (section 84(3), Medicinal Products Act).

It is not possible to exclude or limit liability for defective medicinal products in advance. Agreements to the contrary are null and void (section 92, Medicinal Products Act).

Liability claims under the Medicinal Products Act are statute-barred after three years, starting from the date when the claimant becomes aware of their injury or of the circumstances that are the basis for the claim.

The German Parliament passed a law on the implementation of a civil procedural model declaratory action (Gesetz zur Einführung einer zivilprozessualen Musterfeststellungsklage) which entered into force on 1 November 2018. Since then, a number of class actions have been filed. From what can be seen, the class action has not been used in the pharmaceutical sector.

Claimants must file an action with a local court or a district court, depending on the value in dispute.

Under the Medicinal Products Act:

German law does not allow punitive damages.