Pharmaceutical supply in the EU: status and outlook from the perspective of statutory health insurance

The most important aspects of the pharmaceutical legislation Reform of document protection and the consequences for the finances of the statutory health insurance

A particularly important provision to be reformed with the legislative package is the timeframe for document exclusivity for newly marketed medicinal products. The current regulation provides for a maximum combined protection of document exclusivity and market exclusivity of eleven years. According to the EU Commission's plans, this period would be increased to a maximum of twelve years, while the EU Parliament's plans provide for a period of eleven and a half years. ¹ Both reform proposals have in common that they would like to modulate the protection period more strongly depending on certain criteria (see Figure 1).

Extending data protection or market exclusivity delays the emergence of generic competition. According to calculations by the German Social Insurance European Representation (DSV), additional regulatory protection translates into additional expenditures for statutory health insurance of more than one billion euros each year. Considering the entire European market over the same period, the additional costs amount to more than three billion euros. ² These figures clearly demonstrate the significant impact this regulation can have not only on the financial viability of the healthcare system in Germany, but also on the healthcare systems in other EU member states (see Figure 2).

Regulatory intellectual property rights and patent protection grant companies a temporary monopoly. This is intended to give them the opportunity to refinance their research and development expenses. However, once the protection period has expired, free-market competition should quickly begin, reducing prices and freeing up resources that can be used for further innovations.

The aim of the so-called "Bolar Exemption" is to allow this generic competition to begin on day 1 after the expiration of any protection period. Pharmaceutical companies producing generic medicines and biosimilars should be given the opportunity to conduct drug studies with the reference medicine. These studies are often necessary for the approval of the generic medicine. The EU Parliament's position calls for a broad interpretation and legally sound clarification. These studies for approval and reimbursement decisions, as well as for conducting HTA, should be possible while the reference medicine is still under patent protection. This also includes all related activities. Furthermore, the EU Parliament's proposal clarifies in a separate article that patent protection must not influence decisions regarding approval, HTA, and reimbursement (prohibition of so-called "patent linkage"). This regulation could lead to earlier price competition. This price competition is particularly important for the diversity and financial viability of the German pharmaceutical supply.

Resistant pathogens do not stop at national borders. The rising incidence of microbial resistance is therefore a common European challenge. Based on figures presented by the Scientific Institute of Local Health Insurance Funds (WIdO) on antibiotic prescriptions in Germany, a significant increase in prescriptions for reserve antibiotics was observed. The number of prescriptions for medicines used sparingly rose by 18.4 percent in 2023 compared to the previous year. ³ As the number of prescriptions for reserve antibiotics increases, so does the risk of resistance. It is particularly important to prevent the development of serious or resistant infections in advance and to limit the use of reserve antibiotics, in particular, in human and veterinary medicine to a necessary minimum.

Furthermore, further research is needed into antimicrobial therapies that can be used against pathogens with critical resistance. The EU Commission and the EU Parliament intend to introduce transferable vouchers as an incentive for developing a drug against such priority pathogens. Following approval of the drug, the pharmaceutical company will receive a voucher for a maximum of twelve months of additional data protection.

This voucher can be resold once. It can therefore be assumed that these vouchers will be purchased by pharmaceutical companies that intend to use them for high-revenue medicines. This prediction is also supported by the EU Commission's impact assessment report. ⁴ This would primarily benefit not the companies that developed the antibiotic, but rather the companies that purchased the voucher for particularly high-revenue medicines.

These so-called "windfall profits" would place a disproportionate burden on the financial viability of the German healthcare system without providing any effective and targeted benefits for research-based companies. Vouchers also provide no support for research-based companies during the critical phase of drug development. Alternatives that support companies during the research phase are so-called "push and pull incentives."

A proposal for this incentive system can be found in the position paper of the European Parliament. Within the framework of a "Milestone Payment Program," certain milestones during the research phase, such as the completion of clinical phase I, would be rewarded with funding. While these funding grants are considered "push incentives," guaranteed purchase quantities of drugs often associated with low sales are classic "pull incentives."

The problem cannot be solved solely by developing new active ingredients; the existing active ingredients must be used rationally and sparingly.

Similar to the current situation with reserve antibiotics, the special regulations for orphan drugs were once justified by the diagnosis of market failure. For diseases affecting fewer than 5 in 10,000 people in the EU, it was assumed that drug therapies could not be developed economically without further incentives. Given the developments of the last 25 years, this general thesis can no longer be maintained.

On the one hand, many very rare diseases remain unexplored; on the other hand, significant market dynamics with high profits have developed for some comparatively common, chronic "orphan diseases" ("clustering"). To ensure the funding of therapies for rare diseases is firmly established for the next 25 years, a refocusing of incentives on actual cases of market failure in highly rare diseases and on genuine therapeutic breakthroughs is urgently needed.

With the COVID pandemic and the associated turmoil in global trade, the security of pharmaceutical supply has entered the political agenda. Pharmaceutical companies and wholesalers are obligated to ensure an adequate and continuous supply of the relevant medicinal product within their areas of responsibility to meet patient needs (Section 52b Paragraph 1 of the German Medicines Act and Article 81 of Directive 2001/83/EC). The draft "Critical Medicines Act" now raises the question of how this obligation can be supported by supplementary regulations to effectively ensure the supply of medicinal products.

Drug supply shortages can have a variety of causes: Problems can arise even during the production of an active ingredient. A prominent example from the past is the nitrosamine contamination in the production of sartans. If the production of the active ingredient cannot be compensated for by other manufacturers, widespread delivery and supply bottlenecks can arise.

After the active ingredients are manufactured, they are often transported to Europe for secondary production of the drug. Transportation problems can arise, such as the blockage of important supply routes. A prime example is the incident at the Suez Canal about four years ago, when a cargo ship blocked this globally important transport route. Even if the drugs have already been produced, miscalculations in inventory can still occur, especially if the inventory control processes are not fully digitalized.

In addition, an unforeseeable increase in demand, due in part to seasonal fluctuations in morbidity, can be responsible for a supply shortage. There are also a variety of suitable measures for the diverse causes of supply shortages. It is important that these measures are evidence-based and transparent. Isolated price increases without associated obligations are therefore not appropriate. One suitable instrument is the diversification of suppliers in the production and supply chain. This should make Europe less dependent on individual producers from third countries. Appropriate warehousing based on digital recording systems can mitigate transport and logistics problems. In times of seasonally increased demand for certain medicines, improved and digital demand planning can help (see Figure 3).

The now published draft of the Critical Medicines Act must be meaningfully integrated with the pharmaceutical reform. The interplay of the legal acts could, for example, be used to establish an EU-wide early warning system for supply shortages. This could serve as an important tool for preventing shortages. To avoid supply shortages in the future, marketing authorization holders should report impending supply shortages in a timely manner.

In addition to prioritizing so-called "strategic projects," the draft calls for priority supply to EU member states for medicines that have benefited from state aid. Furthermore, new mandatory procurement criteria are to be introduced for "critical medicines" and "medicines of common interest." ⁵ Mandatory inclusion would severely interfere with the German pharmaceutical supply system and limit the freedom to design rebate agreements. The bureaucratic burden would also be immense. Furthermore, the proposed regulation creates legal uncertainty regarding the treatment of contracting states to the EEA and other agreements. This legal uncertainty must be clarified before the Critical Medicines Act is introduced into current EU law.

Existing law already obligates the marketing authorization holder, within the scope of their responsibility, to ensure an adequate and continuous supply of their products. However, as long as these regulations are neither sanctioned nor enforced, there is an incentive to implement cost-cutting measures that lead to greater vulnerability in the supply chain. Only with appropriate sanctions do competitive incentives arise to accept higher production costs in order to avoid potential fines. Without sanctions, however, even new regulations that merely encourage "best efforts" will likely ultimately remain inconsequential.

German law already contains extensive regulations regarding the stockpiling of pharmaceuticals. For example, pharmaceuticals for which a discount agreement has been concluded must be kept in stock for six months close to the point of supply. In addition to the German regulations, voluntary use of the EU Solidarity Mechanism for Medicines under European coordination can be used for crisis situations. Supply shortages are often due to a problem with the delivery of the active ingredient. Therefore, the Critical Medicines Act could examine whether stockpiling active ingredients as a strategic EU reserve would be appropriate. Effective stockpiling of pharmaceuticals and efficient coordination in crisis situations require the ability to record and track stocks digitally and in real time.

2025 is undoubtedly an exciting year for European pharmaceutical legislation. Given current geopolitical and trade tensions, common European solutions and efficient and agile supply structures are needed. Above all, innovative solutions are needed that enable efficient, high-quality pharmaceutical supply while simultaneously ensuring the financial stability of healthcare systems.

Dr. Antje Haas is a specialist in internal medicine, hematology, internal oncology, and hemostaseology. She has headed the Pharmaceuticals Department of the National Association of Statutory Health Insurance Funds (GKV-Spitzenverband) since 2012. From 2008 to 2012, she served as a department head in the Hospitals Department of the National Association of Statutory Health Insurance Funds (GKV-Spitzenverband). Prior to that, she worked for many years in clinical and research positions in inpatient and outpatient healthcare.

Maximilian Blindzellner is a pharmacist. Since May 2025, he has headed the Drug Supply Department of the National Association of Statutory Health Insurance Funds (GKVSpitzenverband). From 2017 to 2025, he served as a specialist consultant in various departments of the Drugs Department of the National Association of Statutory Health Insurance Funds (GKVSpitzenverband). Previously, he worked in community pharmacy and in the pharmaceutical industry in the field of market access. During the COVID-19 pandemic, he also served as the technical director of the Berlin Velodrom Corona Vaccination Center.

Robert Pecak is a pharmacist. Since March 2024, he has been a specialist in the Drug Supply Unit in the Pharmaceuticals Department of the National Association of Statutory Health Insurance Funds. Previously, he worked in community pharmacies and the pharmaceutical industry in the areas of medical affairs and pharmacovigilance.

¹ Reform of the EU pharmaceutical legislation - European Commission https://health.ec.europa.eu/medicinal-products/legal-framework-governing-medical-products-human-use-eu/reform-eu-pharmaceutical-legislation_en (as of March 21, 2025)

² Calculations on additional sales through exclusivity protection – DSV https://dsv-europa.de/lib/Hintergrund/2024-03-07-DSV-Berechnungen-zum-Mehrumsatz-durch-Exklusivitaetsschutz.pdf (as of February 20, 2025)

³ Tagesspiegel: "Antibiotic consumption increases by almost a fifth: Saarland is the most generously prescribed" https://www.tagesspiegel.de/gesundheit/antibiotika-verbrauch-steigt-um-fast-ein-funftel-im-saarland-wird-am-grosszugigsten-verordnet-13241926.html (as of February 24, 2025)

⁴ Impact assessment report and executive summary accompanying the revision of the general pharmaceutical legislation – European Commission https://health.ec.europa.eu/publications/impact-assessment-report-and-executive-summary-accompanying-revision-general-pharmaceutical_en (as of March 21, 2025)

⁵ Critical Medicines Act - European Commission https://health.ec.europa.eu/medicinal-products/legal-framework-governing-medical-products-human-use-eu/critical-medicines-act_en (as of March 21, 2025)