The new digital health law in Germany – turning point or flash in the pan?

On July 15, the federal government in Germany has passed the new Law on Digital Healthcare (Digitales Versorgungsgesetz – DVG). For the first time, all citizens under public health insurance schemes (88% of the German population) can claim to use digital health services and solutions.

Germany is the largest digital health market in Europe. The new digital health law will significantly boost market expansion over the coming years so that we can expect a compound annual growth rate of between 25-30% until 2025.

The 2 most prominent regulations in the new digital health law in Germany are:

• Electronic Patient Records will become compulsory: public health insurers have to offer Electronic Patient Records to their customers from January 01, 2021 onwards. Healthcare providers such as doctors or hospitals, as well as pharmacies, are obliged to supply patients with their digital healthcare, intervention and medication data upon request.
• Digital health apps can be prescribed and reimbursed: as of January 2020, digital health apps that are certified as medical products and fulfil criteria of data security, quality and functionality can become part of the standard care offering which makes them eligible for reimbursement by the public health insurers.

For all stakeholders in German healthcare the new law implies significant changes. Many already talk about an upheaval of the whole healthcare system.

Especially the above described “fast track” that enables health app publishers to introduce their solutions much more quickly to a broader market audience is expected to boost digital innovation in the healthcare sector.

But how will “fast track” work and what are the pre-requisites for health apps to become reimbursable?

The route to medical prescription for any digital health app consists of 5 major steps:

1. Medical product certification: all health apps in the fast track scheme need to be certified as medical products in classes I or IIa. The basis for certification is the European Medical Device Regulation (MDR). Especially for smaller and medium-sized companies, this can result in a considerable investment. For class I solutions, it is only necessary to submit a technical documentation. The effort for a class IIa certification is much higher. Usually, clinical evaluations have to be submitted and in addition, a qualified quality management is required. Audits can only take place by so-called “Notified Bodies”. As of today, very few Notified Bodies are existing which could result in a potential bottleneck.?
2. Application for listing: health apps with a product certification can apply to the Federal Agency for Drugs and Medical Products BfArM) for being officially listed. In order to achieve the listing, applicants need to fulfil requirements on data security and safety, as well as on quality and functionality. In addition, each app will have to show positive effects on quality of care which can include either medical or structural benefits. To date, all of these requirements have not yet been defined in further detail. For app providers, this may create a relevant level of uncertainty, as many of them will be faced with additional documentation and verification efforts.
3. Official listing: the Federal Agency (BfArM) has committed itself to decide on applications within a period of 3 months. Once an app is included, it can be prescribed and reimbursed by public health insurers. For those apps that have failed to provide data on quality of care, there is still the possibility to obtain a preliminary listing and create respective evidence within 12 months.
4. Price negotiations: all price negotiations directly take place between the app providers and the roof organization of the public health insurers (GKV).
5. Reimbursement: during the first 12 months of listing, health apps are reimbursed based on the app publishers’ own selected price. Afterwards, app publishers will have to negotiate a price with the GKV.

What are the implications of “fast track” for health app publishers and established healthcare stakeholders?

In spite of the fact that a number of details still have to be detailed, the new law has the potential to become the long awaited game changer for digital health in Germany. The healthcare system finally seems to open up and embrace digital innovation. However, the new law can only keep its promises if the involved political and regulatory stakeholders can resist the temptation to fall back into mechanisms of the “German Krankheit” and overregulate the fast-track process.

“The new law will boost the digital health market in Germany to grow to over 60 bill USD in 2025.” Rainer Herzog, VP at R2G

For health app publishers, starting preparations to obtain MDR certification is the most eminent item to tackle. The certification is the prerequisite to enter the fast track process. In case a class IIa certification is required, app publishers need to prepare themselves for considerable evaluation and documentation requests.

For established players such as health insurers, providers or industry, the new digital health law enables to construct a portfolio of digital applications and solutions. This does not only offer better quality and support in everyday care, but also allows them to create new business models, product and service offerings.These players should therefore take advantage of the opportunities offered by the new law and quickly tackle the development of a digital solution portfolio.

We expect that the competition for the best apps will increase significantly in the foreseeable future, since – at least in the beginning – the number of eligible solutions will be limited.

If you want to have a closer look at how to build your ecosystem of app partners and how to successfully integrate them into your organization and business, reach out to us.