What the New Digital Health Legislation in Germany Means for Startups

In November 2019 the Federal Ministry of Health of Germany passed a bill, the “Digitales Versorgung-Gesetz” (DVG), that evoked excitement within the German community of digital health providers. The German government – not necessarily known to be the most proactive in regards to digitalization – thus has laid the groundwork for sustainably integrating innovation into the highly regulated medical market. As a digital health startup we are following this development attentively. Since the topic is rather complex and as of now only available in German we asked Sarah, our Junior Product Manager, to give us an introduction of what the DVG actually means and to explain to us the most important changes in legislation.

What exactly is the DVG for?

In order for startups to succeed in the German medical market it used to be the case that they needed to find a way to distribute their product on their own. Since the medical field is highly regulated and exceptionally competitive there are high barriers to entry, an obstacle many startups failed to overcome. With the new DVG the government hopes to overcome these barriers by offering a quicker entry into the market. That’s why this is of interest to us at xbird.

How does it work?

The Federal Ministry of Health plans on opening an official database of digital health applications which doctors can then prescribe to patients while the public health insurances take over the costs. While the applications listed in this database still need to conform to standard medical measures there will be a one-year trial period startups can enter given they can plausibly explain that using their digital health application will lead to a positive supply effect. The main advancement is that in order to join the trial period there is no need to have a finished study to prove these effects. Through entering the database and getting access to more patients the companies get the number of participants they need in order to validate their product.

What do the companies providing a digital health application have to prove?

First, they have to prove that they are a medical device according to the European Union’s Medical Device Regulation (MDR). For this the main purpose of the app has to be medical, such as diagnosing, prognosing and/ or monitoring of diseases.

Secondly, the term “positive supply effects” means both therapeutic effects and procedural improvements of the German healthcare system. Therapeutic effects refer to achieving a better health condition, a shorter sickness span, a longer life or generally an improvement of the quality of life. Procedural improvements refer to help with coordination, access to care or reduction of efforts in connection with therapy.

What does that imply for digital health applications planning to get registered?

For one, it provides a huge opportunity through quick access to the market without the need of negotiation with multiple healthcare providers and insurances.

However, it also comes with additional effort. On top of the registration as a medical device the startups need to be well prepared for their one-year trial period. While being listed in the database comes with immense advantages this does not automatically mean that doctors will prescribe the application to the patients. Well-engineered communication strategies will be necessary in order to achieve awareness of the product. It needs to be easily understood by doctors as well as patients and provide benefits for both of these groups, otherwise most doctors will presumably not put up with the effort of getting to know various digital health applications.

Where does this leave us?

The new DVG provides a tremendous opportunity for the digitalization of the German healthcare market. It gives smaller companies, such as xbird, who otherwise might not get the range, a high number of patients to conduct the studies they need for their registration. However, it also requires the startups to know their product well and have a well thought-through marketing strategy at hand to use the one-year trial as best as they can.

The first companies can apply this summer and the plan of the Federal Ministry of Health is to adapt and optimize the process on the go. So, the procedure certainly will get more sophisticated in due time. We here at xbird are closely following the development of the DVG and are curious what the future has in store for us.

This project is co-financed via the European Regional Development Fund (ERDF)