Guest Article by Ekaterina Alipiev
A bureaucratic obstacle course - challenges for company founders in the German healthcare segment
The business model is viable, the business plan is clear and financing has been secured. At this point, the majority of founders are already faced by the next big challenge: a whole range of regulatory requirements that must be fulfilled before they can access their intended market. The number of regulations, laws and standards that must be borne in mind is enormous, especially in the German healthcare sector.
Ekaterina Alipiev, founder of the e-Health start-up Jourvie and co-initiator of the Healthcare Hub Berlin, has compiled a list of the six most challenging bureaucratic obstacles faced by healthcare start-ups for us:
Obstacle 1: Certification as a medical product
The first big obstacle for many founders is the legal classification of their application. Many e-Health applications must be classified and certified as medical products before they can be marketed within the European Union. The ‘visa’ for the EU is the CE label. Before they can earn this label, founders will find themselves subjected to a so-called conformity assessment procedure that, depending on their application, may turn out to be a very elaborate process. The procedure can be extremely complex, intransparent and laborious, in particular for founders unfamiliar with the healthcare sector.
Obstacle 2: Access to the first healthcare market
In Germany, many start-ups hope to find their way into the first ‒ reimbursable ‒ healthcare market. This is often a hard road to travel, because eligibility for reimbursement from health insurers generally involves long-drawn-out studies and/or health economic analysis. For many founders, the logic of health insurers is bewildering: ‘What criteria must my product fulfil to be eligible for reimbursement from health insurers? Where must particular care be taken when drafting a contract?’. These are only two of the numerous questions that founders will be faced with when planning to work with health insurers. For health insurers, the question is how digital innovations with added value can be classified within existing systems. Although there are several healthcare apps on the market, only a few of them are available ‘on prescription’ and eligible for reimbursement of costs by health insurers.
Data privacy in healthcare is a critical issue ‒ keyword: ‘transparent patient’. Access to personal data is, however, essential for many of these start-ups – when, for example, they need to evaluate patient data from wearables. Here, founders must take a number of regulations into account, for example, the German Data Protection Act (Bundesdatenschutzgesetz). In addition to this, the European General Data Protection Regulation (GDPR) brings new regulations for the collection, storage and processing of personal data. In addition to more stringent compliance requirements, founders of e-Health start-ups violating them can also face higher penalties.
Obstacle 4: Liability
Data privacy can also lead to criminal or civil liability proceedings if, for example, health data are stolen or disclosed. When manufacturers of medical products fail to classify their applications correctly, or if app malfunctions lead to damage or injury to users, they face the risk of being held liable under law and must be prepared to face corresponding sanctions or claims for compensation.
Obstacle 5: Remote treatment
For start-ups planning to specialise in telemedicine, one of the biggest obstacles they face is the ban on remote treatment. This forbids physicians to make initial contacts with patients by video, on the phone or by similar means. Nevertheless, a light can already be seen at the end of the tunnel. On 10 May 2018, the German Medical Association voted by a clear majority in favour of a liberalisation of the remote treatment ban. Before this can take effect, it must however be adopted [OV2] by the medical associations of each of the individual federal states. Previous experience suggests that this may take another one or two years.
Obstacle 6: Marketing
Founders who have already launched their products and wish to advertise them face another challenge, the Law on Advertising in the Healthcare System (HWG). The Law on Advertising in the Healthcare System prohibits the advertising of prescription medicines and, amongst other things, regulates the advertising statements permissible for medical products. It also defines particular mandatory information that manufacturers must provide, such as: ‘Please consult your doctor or pharmacist about any risks and side effects’. In the worst-case scenario, founders failing to observe these regulations and requirements can face imprisonment for up to 12 months or substantial fines.
As you can see, the German healthcare system is strictly regulated and extremely complex. This makes market access extremely difficult for many e-Health start-ups. In view of this, the Pfizer Healthcare Hub Berlin regularly holds a Start-up Sprechstunde, a forum for founders of start-ups in the digital healthcare segment. Here, experts with practical experience smooth the way for innovations in healthcare in dialogue with founders.
About Ekaterina Alipiev:
Ekaterina Alipiev founded the E-Health start-up ‘Jourvie’ in 2013 to help people with eating disorders on their way to recovery with the aid of an app. She is also the co-initiator of the Pfizer Healthcare Hub Berlin. There, she collaborates with start-ups in the search for digital solutions that meaningfully complement existing therapies and products.
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