Open House Procedure

The open house procedure (also open house model or admission procedure) is a special form of public procurement in which a contracting authority concludes a contract with every suitable company on identical, unilaterally set conditions. The decisive difference from a classic procurement procedure: there is no selection decision between competing offers. Anyone who meets the requirements and accepts the prescribed conditions becomes a contract partner – without ranking, without evaluation, without exclusivity.

This inverts the usual logic of a tender. In a normal procurement, bidders compete for a scarce award: there are winners and losers. In the open house model there is no scarcity – the authority does not limit the number of contract partners and does not compare the offers against each other. Economically it is a "joining model": the authority defines price, discount, quality requirements and duration, and the market decides who participates on those terms.

Three features characterise a genuine open house procedure:

1. No selection / no exclusivity. The authority makes no economic choice between providers. All suitable applicants receive the same contract.
2. Fixed conditions. Price and terms are set by the authority ("take it or leave it"). There is no competition on price.
3. Transparent, non-discriminatory publication. The joining offer must be advertised publicly and EU-wide so that all potential providers know about it and have equal access.

The by far most important use case is statutory health insurance (GKV): insurers conclude open house contracts for pharmaceuticals – as an alternative or complement to the classic, exclusive discount agreement. The model also appears for standardised services, framework agreements without volume commitment, and services of general interest, e.g. consultant pools or social services. Anyone monitoring tenders across more than 180 portals with Patterno Hit often spots open house notices by key terms such as "admission procedure", "open house" or "join on fixed conditions" – even though there is no formal procurement-law obligation to publish.

The distinctive feature of the open house procedure is that it sits outside classic procurement law – without application of GWB Part 4, the VgV or VOB/A. This classification is not set out in any statute but rests on European case law.

CJEU "Dr. Falk Pharma" (C-410/14, judgment of 2 June 2016). The landmark ruling arose in a dispute between Dr. Falk Pharma GmbH and DAK-Gesundheit, referred by the Higher Regional Court (OLG) of Düsseldorf. The CJEU (Fifth Chamber) held: a system in which a health insurer concludes contracts with all manufacturers of an active ingredient at a predetermined discount, without making a choice between providers, is not a public contract within the meaning of Directive 2004/18/EC. Reasoning: the selection of an offer – and thus of a contractor – is inextricably linked to the concept of a public contract. Where that selection is absent, the constituent element is missing and procurement law does not apply.

CJEU "Tirkkonen" (C-9/17, judgment of 1 March 2018). The CJEU (Third Chamber) confirmed and refined this approach in a Finnish case on agricultural advisory services. Core finding: what matters is solely the absence of a selection decision that compares competing offers and ranks them. Notably, Tirkkonen clarified that an ongoing right to join at any time throughout the term is not strictly required – what is decisive is the absence of comparative selection, not the permanent openness of the system.

Transparency obligation despite exemption from procurement law. Even though procurement law does not apply, an open house procedure is not entirely free of form. The CJEU requires compliance with the primary-law principles of equal treatment and transparency (Arts. 49, 56 TFEU). In practice this means: EU-wide publication (often on TED), clear and unalterable joining conditions, and non-discriminatory access for all interested parties.

Social-law basis – § 130a (8) SGB V. This provision empowers health insurers to agree discounts with pharmaceutical companies for medicines dispensed at their expense. It is the basis for both exclusive discount agreements and open house contracts – the distinction depends solely on how the procedure is designed. Implementation at pharmacy level is governed by § 129 SGB V.

Legal remedies. Because there is no public contract, there is no procurement-law remedy via challenge, review proceedings or the procurement chamber. Disputes – e.g. over a refused entry or discriminatory conditions – are heard before the ordinary civil courts or the social courts. The line between open house and a procurement-bound procedure remains contested: as soon as the authority does introduce a selection or volume limit, the procedure tips into procurement obligation (cf. VK Bund, decision of 11 January 2023).

A large statutory health insurer wants to broadly secure the supply of a patent-free active ingredient – say ibuprofen 400 mg, film-coated tablets – without tying itself to a single supplier. Instead of an exclusive active-ingredient tender, it chooses an open house procedure.

Here is how it unfolds:

1. Publication. The insurer publishes an "admission procedure" on TED and a national procurement platform. It states the active ingredient, strength, dosage form, the fixed discount rate on the manufacturer's selling price, supply and quality requirements, and the term – all non-negotiable.
2. Joining window. Any pharmaceutical company that proves a valid insurance admission and supply capability and accepts the fixed conditions can join. There is no evaluation and no ranking.
3. Contract with all. Three, five or twelve manufacturers join – the insurer concludes the same contract with each of them. None is excluded, none gets exclusivity.
4. Supply at the pharmacy. Because several discounted products exist, the pharmacy may choose among the joined manufacturers (unlike the exclusive discount agreement, where only one product is dispensable).

Economically, for the manufacturer this means: no award risk, but also no guaranteed volume – the volume is shared among all entrants. For the insurer it means: maximum supply security and supply-shortage resilience, but less price pressure than under genuine competition.

Anyone using Patterno Hit for the pharma sector receives such open house notices, matched to their own portfolio, in the daily briefing on the day of publication. Because open house joining windows are often open for only a few weeks and appear at short notice, systematic monitoring is especially valuable here – a missed window means missed revenue with no second chance.

Precisely because the open house procedure seems "simpler" than a classic tender, errors creep in on both sides – for contracting authorities and for providers:

• A hidden selection criterion built in. As soon as the authority does compare offers, introduces a volume limit or caps the number of contract partners, a selection decision arises – and the procedure becomes subject to procurement law. Then publication, standstill period and remedies are missing, leaving the whole procedure open to challenge.
• Confusing open house with a discount agreement. Providers wrongly treat an open house joining offer like an exclusive tender and bid aggressively for "the award". In reality there is no award – only joining or not joining on fixed conditions, and the volume is never guaranteed.
• Expecting procurement-law remedies. Anyone trying to challenge a refused entry via challenge and the procurement chamber hits a dead end: absent a public contract, only the civil or social court route is available.
• Margin not properly calculated. The conditions are non-negotiable. Joining without a robust margin model risks a loss-making deal – especially because volume is shared among all entrants and the assumed quantity is rarely reached.
• Missing the joining window. Open house contracts are often published at short notice and outside the major tendering rounds. Whoever does not monitor systematically learns of them too late – and a procedure that is not permanently open (permissible after Tirkkonen) then offers no second chance.
• Underestimating supply obligations. Even without exclusivity, open house contracts often require binding supply capability. Breaches can lead to termination of the contract and reputational harm with the insurer.

Whether you are a contracting authority setting up an open house model on a sound legal footing, or a provider wanting to join profitably – these principles help:

• Consistently preserve freedom from selection (authority). To keep the procedure free of procurement law, there must be no comparative evaluation and no volume limit. All suitable providers must receive the same contract. Any form of ranking endangers the open house classification.
• Publish transparently and EU-wide. Even without a formal obligation: a TED notice and clear, unalterable joining conditions satisfy the primary-law principles of transparency and equal treatment and prevent disputes.
• Weigh open house against a discount agreement (authority). Open house maximises supply security and resilience; the exclusive discount agreement maximises the price advantage. The choice depends on the active ingredient, the number of providers and the supply-shortage situation.
• Check the portfolio match before joining (provider). Do strength, dosage form, pack sizes and admission exactly match the required conditions? A systematic comparison prevents joining contracts your own portfolio cannot fulfil.
• Calculate the margin model before deciding to join. Translate the fixed discount rate, the supply obligations and the expected (shared) volume into a bottom-up margin model. Only a positive result justifies joining.
• Automate open house monitoring (provider). Because joining windows appear at short notice and close quickly, automated monitoring beats manual portal searching. Patterno offers a dedicated open house monitoring with real-time alerts that matches new joining offers against your own active-ingredient portfolio.
• Actively track changes in conditions. Successor contracts often change individual clauses – discount rate, supply obligation, term. A diff-check against the previous version shows immediately whether re-joining is still economical.