Challenges for company founders in the German healthcare segment
Ekaterina Alipiev, founder of the eHealth startup Jourvie and co-initiator of the Healthcare Hub Berlin, has compiled for us a list of the six biggest bureaucratic hurdles that healthcare startups are faced with:
Challenge 1: Certification as a medical product
The legal classification of their product is the first major hurdle for many founders. Many eHealth products need to be classified and certified as medical devices before they can be marketed within the European Union. The "passport" for the EU is the CE marking. To obtain it, founders must go through a conformity assessment procedure that can be very time-consuming depending on the product. Especially founders who do not come from the healthcare sector can perceive this procedure as being very lengthy and complex and lacking transparency.
Challenge 2: Access to the primary healthcare market
Many startups in Germany would love to make their way into the primary - hence reimbursable - healthcare market. However, this path is often difficult, because reimbursement eligibility usually requires extensive studies and/or health economics considerations. For many founders, the rationale behind health insurance companies' decisions is confusing: "Which criteria does my product have to meet in order for health insurance companies to reimburse its cost? What do I have to pay attention to when preparing the contract?". These are just two of the many questions that founders must ask themselves when working with health insurance companies. On the other side, health insurance companies wonder how to integrate digital innovations with added value into existing systems. While there are already a number of health apps on the market, only a few of them are available "on prescription" and are reimbursed by health insurance companies.
Challenge 3: Data protection
Data protection is a major issue in healthcare – keyword: "transparent patient". However, many startups will need access to personal data – for example, if they evaluate patient data through wearables. In this respect, founders must observe a wide range of regulations, such as the Federal Data Protection Act. In addition, there are new regulations for the collection, storage, and processing of personal data due to the new EU General Data Protection Regulation. In addition to stricter compliance requirements, founders of eHealth startups can now expect higher penalties for violations.
Challenge 4: Liability
Data protection can also have legal liability implications for founders if, for example, health data is stolen or published. Also, if manufacturers of medical products do not classify their application correctly or even cause damage to users through faulty apps, they incur a liability risk and will have to reckon with corresponding sanctions.
Challenge 5: Remote treatment
For startups that want to specialize in telemedicine, one of the biggest hurdles is the ban on remote treatment. The ban forbids physicians from making initial contact with patients via video, phone, or the like. But there is some hope on this matter, as on May 10th 2018, the German Physicians' Congress voted by a large majority to soften the ban on remote treatment. However, for the regulation to come into effect, it must first be adapted by the state medical associations, which could easily take another one to two years.
Challenge 6: Advertising
Founders who have already launched their products and want to advertise their innovations face another challenge: the German Drug Advertising Act. The Drug Advertising Act prohibits the advertising of prescription drugs and regulates, among other things, which claims are permitted for medical products. The act also sets out special mandatory information that manufacturers are required to provide ("For Risks and Side Effects, Ask Your Doctor or Pharmacist"). If these regulations are not observed, in the worst case, founders can expect heavy fines or a prison sentence of up to one year.
In short: The German healthcare system is highly regulated and very complex. This makes it enormously difficult for many eHealth startups to enter the market. That's why the Pfizer Healthcare Hub Berlin regularly organizes startup consultations for founders of startups in the digital health sector. This is an opportunity for experts and founders to exchange ideas in order to pave the way for innovations in the healthcare sector.
About Ekaterina Alipiev:
Ekaterina Alipiev founded the eHealth startup "Jourvie" in 2013 to support people with eating disorders on their path to recovery with the help of an app. She is also one of the co-initiators of the Pfizer Healthcare Hub Berlin. There, she works together with startups on digital solutions that provide a valuable addition to existing therapies and products.