Life Sciences and Healthcare

Life sciences and healthcare in Germany: the legal framework

Life sciences and healthcare companies in Germany operate in Europe's largest healthcare market and under one of its most complex regulatory systems. Medicinal products need a marketing authorisation under the Medicinal Products Act (Arzneimittelgesetz, AMG) or the EU centralised procedure; medical devices and in vitro diagnostics must comply with the EU Medical Device Regulation (MDR) and In Vitro Diagnostic Regulation (IVDR); prices and reimbursement for the statutory health insurance, which covers the large majority of the population, are determined under Book V of the Social Code (SGB V); and advertising, cooperation with healthcare professionals and data use are tightly regulated.

Hospitals are being restructured by a major reform, digital health applications can be prescribed and reimbursed, and the European Health Data Space will open new possibilities for the use of health data.

This page summarises the main legal issues for pharmaceutical, biotech, medical device and digital health companies, hospital operators and investors in German life sciences and healthcare. It is part of our sectors coverage and links to related practice pages and insights.

Medicinal products and clinical trials

A medicinal product may only be placed on the market in Germany with a marketing authorisation granted by the Federal Institute for Drugs and Medical Devices (BfArM), the Paul-Ehrlich-Institut for vaccines and biologics, or the European Commission in the centralised procedure, which is mandatory for many innovative products. The AMG governs manufacturing and import authorisations, pharmacovigilance, labelling and distribution, and creates strict liability for damage caused by medicinal products, combined with mandatory coverage. Regulatory data protection gives the originator eight years of data exclusivity and ten to eleven years of market protection under current law (§ 24b AMG).

The EU pharmaceutical package, proposed by the Commission in April 2023 and politically agreed in December 2025, will reform the regulatory framework, including regulatory protection periods, incentives for unmet medical needs and antimicrobials, obligations to prevent shortages and shorter assessment times. Companies should plan their portfolios and launch sequences with the transition in mind. See our insight on the EU pharma package.

Liability for medicinal products

German law has a special strict liability regime for medicinal products. If a person is killed or suffers significant injury to body or health as a result of using an authorised medicine supplied to a consumer in Germany, the pharmaceutical company that placed it on the German market is liable under § 84 AMG, regardless of fault, where the harmful effects exceed what is acceptable according to medical knowledge or result from inadequate labelling or information.

Injured persons have a right to information against the company and the authorities, which eases proof. The company must ensure that it can meet its liability, through insurance or a bank guarantee (§ 94 AMG). This regime applies in addition to general tort law and differs from the general product liability rules.

Supply chains and shortages

Shortages of essential medicines have led to new obligations for manufacturers and wholesalers, including reporting of supply bottlenecks, stockpiling requirements for certain products and changes to tender rules for generics to favour supply security and European production. Supply and manufacturing agreements in the life sciences sector should allocate the risk of shortages, regulatory changes and quality failures clearly, including the costs of recalls and replacement supply. Contract manufacturing and quality agreements must also meet good manufacturing practice requirements.

Clinical trials and medical research

Clinical trials of medicinal products are governed by the EU Clinical Trials Regulation, which provides a single application through the EU portal and coordinated assessment by the Member States concerned. In Germany, ethics committees and the federal authorities share the assessment. Germany's Medical Research Act of 2024 aimed to speed up approvals, introduce standard contractual clauses for trials and strengthen Germany as a research location. Trial agreements with sites and contract research organisations, which are often negotiated under time pressure, must address data protection, publication rights, indemnity and insurance, and compliance with anti-corruption rules.

Medical devices under the MDR and IVDR

Medical devices may be placed on the market only if they comply with the MDR or IVDR, have undergone the applicable conformity assessment, usually involving a notified body for higher-risk classes, and bear the CE marking. Manufacturers must maintain a quality management system, clinical evaluation, technical documentation and post-market surveillance, and must register devices and economic operators in the European database EUDAMED.

Because notified body capacity was insufficient, the EU extended the transition periods: under Regulation (EU) 2023/607, legacy devices can remain on the market until 31 December 2027 or 31 December 2028 depending on risk class, if conditions are met, and Regulation (EU) 2024/1860 extended the IVDR transition periods to 2027, 2028 or 2029. The Commission proposed a targeted revision to simplify the rules in December 2025. See our insight on MDR and IVDR transition and reform.

In Germany, the Medical Devices Implementation Act (MPDG) supplements the regulations, and state authorities enforce them. Software is a medical device if intended by the manufacturer for a medical purpose, and AI-based medical software is additionally subject to the AI Act, whose high-risk obligations for products covered by Annex I, including medical devices, apply from 2 August 2028 following Regulation (EU) 2026/1744.

Pricing and reimbursement under the AMNOG

For new medicinal products, the AMNOG procedure determines the price reimbursed by the statutory health insurance. At launch, the manufacturer submits a dossier, and the Federal Joint Committee (Gemeinsamer Bundesausschuss, G-BA) assesses the additional benefit compared with the appropriate comparator therapy (§ 35a SGB V). On the basis of this assessment, the National Association of Statutory Health Insurance Funds negotiates a reimbursement amount with the manufacturer, which applies to all statutory health insurers (§ 130b SGB V); if no agreement is reached, an arbitration board decides. Products without additional benefit are generally priced at the level of the comparator, and guardrails introduced in recent reforms restrict prices further.

The design of the clinical development programme, the choice of comparator and the dossier strategy therefore have a direct effect on revenue in Germany. Medical devices are reimbursed through different routes, including hospital remuneration, aids and appliances lists and new examination and treatment methods assessed by the G-BA. Pharmacy and wholesale pricing, rebate contracts with health insurers and the Pharmaceutical Pricing Ordinance complete the picture.

Digital health and health data

Germany was the first country to make digital health applications (Digitale Gesundheitsanwendungen, DiGA) prescribable and reimbursable. Insured persons have a right to DiGA listed in the BfArM directory, which covers medical devices of risk classes I, IIa and IIb (§ 33a SGB V). The BfArM decides on listing within three months of a complete application; a trial phase with provisional listing is available, and manufacturers must demonstrate positive healthcare effects. Prices are freely set in the first year and then negotiated, and since 2026 a share of the price must be success-dependent. Data protection and security requirements are strict. See our insight on digital health applications.

The European Health Data Space (Regulation (EU) 2025/327) will generally apply from 26 March 2027, with staggered dates; its rules on the secondary use of health data for research, innovation and policy apply mainly from 2029. Germany's Health Data Use Act (GDNG) already created a data access and coordination body at the BfArM and allows healthcare institutions to further process their own data for research and quality purposes. Life sciences companies using health data must navigate the GDPR, German data protection law and professional secrecy. See our insight on the European Health Data Space.

Hospitals and healthcare providers

The hospital reform is reshaping the German hospital landscape. The Hospital Care Improvement Act (KHVVG) of December 2024 introduced service groups with quality criteria, a capacity-based component of remuneration and a transformation fund, and the Hospital Reform Adjustment Act (KHAG), adopted by the Bundestag in March 2026, adjusted the reform, including the number of service groups and the timetable for capacity-based remuneration. The transformation fund under § 12b of the Hospital Financing Act supports restructuring from 2026 to 2035. Hospital mergers that are funded under the reform can be exempt from merger control for a transitional period.

For hospital operators, the reform means decisions on service portfolios, cooperation with neighbouring hospitals, closures and conversions, with employment law and public law consequences. For investors, it creates opportunities in hospital transactions, outpatient care centres and specialised providers, but ownership of medical care centres by investors is politically contested and may be restricted further. See our insight on hospital reform and healthcare transactions.

Pharmacies and distribution

Distribution of medicines to patients is reserved largely to pharmacies. A pharmacist may operate one pharmacy and up to three branch pharmacies with a licence from the competent authority (§ 1(2) ApoG), and non-pharmacists cannot own pharmacies. Mail-order pharmacies require a separate permit, and pharmacies from other EU Member States can supply German patients by mail order subject to German and EU rules. Wholesale distribution requires a licence and compliance with good distribution practice. These restrictions shape the business models of digital health platforms and investors, who often work with partner pharmacies rather than owning them.

Healthcare compliance, advertising and cooperation

Cooperation between industry and healthcare professionals is subject to criminal law, professional law and industry codes. Healthcare professionals who demand or accept benefits in return for preferring a company's products in prescribing or referrals commit an offence (§ 299a StGB), as does the company offering such benefits (§ 299b StGB). Consultancy agreements, sponsoring, samples, events and research cooperation must follow the principles of separation, transparency, equivalence and documentation.

The Therapeutic Products Advertising Act (HWG) restricts advertising of medicinal products and medical devices, in particular to the public and for prescription-only medicines. Compliance programmes in life sciences companies should cover these rules, as well as anti-corruption and data protection. Transparency codes of the industry associations require disclosure of payments to healthcare professionals and organisations, and internal approval processes for events, grants and consultancy agreements should be documented so that they can be shown to prosecutors and auditors if questions arise. See our page on compliance management systems.

Life sciences transactions, licensing and disputes

Life sciences transactions include acquisitions of biotech and medtech companies, licensing and co-development deals, carve-outs of product portfolios, and investments by venture capital and private equity. Due diligence focuses on IP and regulatory exclusivities, marketing authorisations and CE certificates, clinical data, manufacturing and supply chains, reimbursement status and compliance. Licence agreements need precise rules on development obligations, milestones and royalties, regulatory responsibilities and pharmacovigilance.

Investment screening can apply to acquisitions of companies developing or producing vaccines, medicines, medical protective equipment and certain diagnostics by investors from outside the EU. Disputes in the sector include patent litigation, often involving preliminary injunctions against generic or biosimilar entry, reimbursement disputes and product liability claims. See our pages on patent litigation and foreign investment control.

Financing biotech and medtech companies

Life sciences start-ups depend on venture capital, public grants and partnerships with larger companies. Financing rounds are documented in investment and shareholder agreements with liquidation preferences, anti-dilution protection and investor consent rights, and employee participation is typically structured through virtual or real share programmes.

Grant funding from federal and EU programmes comes with conditions on use of funds, IP and reporting that must be reconciled with investor rights and later licensing deals. Because development timelines are long and binary, financing documents should anticipate milestone-based tranches, bridge rounds and the possibility of partnering or selling individual assets rather than the whole company. See our page on venture capital and start-ups.

How TRW & Co helps

We advise pharmaceutical, biotech, medical device and digital health companies, hospital operators and investors in life sciences and healthcare. We support market access strategies, including AMNOG dossiers and negotiations, DiGA listings and reimbursement routes, advise on MDR and IVDR compliance, clinical trial agreements and health data use, and design healthcare compliance programmes. We act on licensing, collaboration and M&A transactions, including regulatory due diligence and investment screening, hospital transactions and restructurings, and represent clients in patent, reimbursement and regulatory disputes. To discuss your matter, please contact us. This page provides general information, not legal advice.