DiGA & Health Tech Startups under german law
Info from lawyers for founders, investors, doctors and patients in Germany
The "app on prescription" has been around since the end of 2019 - and since then, start-ups bringing digital health apps (DiGA) to the market have been springing up all over Germany. What founders and investors, but also prescribing doctors and insurance companies need to know about health tech startups under german law, we have collected for you on this page:
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1. Our services for DiGA Startups in Germany
Our team of lawyers, Certified specialists for corporate law, medical law, intellectual property law & tax law as well as tax advisors in Hamburg, Berlin, Frankfurt, Munich, Cologne and Hanover advise health tech start-ups and investors throughout Germany on the classic DiGA topics, in particular on the following focal points:
- German corporate law: formation and financing of start-ups in Germany, investor agreements, general start-up issues (employee share ownership VSOP/ESOP, management, company valuation for start-ups), M&A: exit, sale of shares, IPO.
- German intellectual property law: copyright protection, especially patenting as well as registration and protection of trademark rights in Germany and Europe
- German distribution law: distribution agreements, licences and franchise agreements, framework agreements and drafting and review of general terms and conditions (GTCs)
- German medical law: General advice on medical law, including liability risks for medical devices in Germany: Determining, avoiding, minimising risks, also in the context of licensing and certification issues; advising doctors on medical liability as well as on hospital law
- IT law & data protection: app development and software law, advice on data protection law on the use and storage of personal (possibly sensitive) data in compliance with data protection law, preparation of data protection declarations.
- German tax law: Strategic advice on tax law, tax-optimised foundation and tax-optimised sale of shares, ongoing tax advice.
Please use the contact form at the bottom of the page for a non-binding and free-of-charge mandate enquiry.
2. What are so-called DiGA under german law?
Digital health applications (DiGA for short) are medical devices based on digital technologies. They are usually apps or websites that help patients in Germany to detect, monitor, treat and/or alleviate ailments, diseases, injuries or disabilities.
Advantages and benefits of DiGA in german practice
In addition to helping patients in Germany, DiGAs also relieve the burden on doctors and other care providers by, among other things
- Reducing on-site appointments, creating efficient structures and enabling applications for patients at home,
- Coordinating treatments, monitoring progress and improving patient safety,
- Creating access to care and overcoming bottlenecks, including in rural areas, congestion in urban areas and large cities, and treating stigmatising diseases from home.
3. Approval of DiGA apps under german law
With the German Digital Health Care Act (DVG) coming into force on 19 December 2019, the legal basis for providing patients with DiGA was created in Germany. The law updates the regulations of the Social Code (SGB) V, which regulates the prerequisites for reimbursability by the health insurance funds. It concretises requirements, criteria and procedures for digital health applications under german law.
From a regulatory point of view, the requirements of german medical law, specifically the European Regulation (EU) 2017/745 (so-called Medical Devices Regulation) must be complied with, as the reimbursable applications must necessarily be (approved) medical devices.
4. What rights do patients & users of DiGA have in Germany?
Since October 2020, insured persons have a right to have DiGA prescribed by doctors and psychotherapists in Germany and to have the costs reimbursed by their health insurance funds. In german practice, this is referred to as the "app on prescription".
However, even without a prescription or other doctor's order, patients in Germany can claim reimbursement of the costs of some selected DiGA from their health insurers if they can prove that there is a corresponding indication.
Procedure: How do I redeem a DiGA prescription in Germany?
Each application can first be downloaded free of charge from the App Store or the Google Store or from the manufacturers' websites.
The insured persons receive - either after submitting a prescription or after an application for approval of a DiGA with proof of the present indication - a prescription code from the german health insurance company with the prescription of the app. With this code, the app can be activated in german practice.
5. Certification: How to become a DiGA under german law?
Manufacturers of DiGAs must meet various criteria and go through procedures to be approved as one and to be considered eligible for reimbursement in Germany. When a manufacturer submits an application, the following criteria are examined as part of the review process under german law.
In order to generate sufficiently robust data for the necessary evidence, a proven application is often required in german practice. The reliability of such studies is repeatedly criticised. Manufacturers can make appropriate agreements with physicians in Germany, but they should always take out appropriate contractual safeguards with regard to liability risks under german law.
The official guideline for the procedure in Germany is available here: BfArM Guideline for DiGA
Step 1: Safety, functional capability, quality under german law
The SGB V requires the manufacturer of a DiGA to prove the product safety and functional capability of the DiGA as part of the application process in Germany. This also includes verification of interoperability and robustness, user-friendliness and compliance with consumer protection.
In german practice, this proof is generally considered to be provided by the attestation of conformity of the CE certificate.
Step 2: State-of-the-art data protection & security under german law
Another prerequisite under german law is that the data collected with the healthtech applications are also collected, processed and stored in compliance with data protection regulations.
A first point to secure the users' data are the prescription codes in Germany: These are anonymised so that the manufacturer cannot gain any knowledge about the identity of the user. The manufacturer must ensure that they are not recorded in any other way.
However, DiGA also use medical data that come from measuring devices or are entered by the user of the app himself. Manufacturers in Germany must therefore confirm when applying that they comply with the requirements of European data protection rules and only use data that is absolutely necessary.
Attention: From 2023 onwards, the company must provide proof of data protection compliance issued by an auditing body! After large health tech start-ups came under public criticism for their lack of data protection compliance, high requirements under german law will also be expected here in the future.
Step 3: Positive supply effect in Germany
First of all, the manufacturer must prove that its product has a positive effect on care either for patients or for doctors and providers in Germany. Specifically, this means evidence of:
- Medical benefit for patients in Germany: Improvement in health status, shortening of disease duration or prolongation of survival, or improvement in overall quality of life and/or.
- Patient-relevant structural or procedural improvements: reduction of disease-related burdens, therapy coordination, access to care, patient safety, etc.
If the positive effect on care is not yet sufficiently demonstrable at the time of application, approval can still be granted on a trial basis for an initial period of 12 months.
6. Procedure & inclusion in the german DiGA directory (BfArM)
The German Federal Institute for Drugs and Medical Devices (BfArM) is reviewing the DiGA for inclusion of the application in the so-called DiGA directory. For this purpose, an application portal was published at the end of May 2020, where manufacturers of digital medical devices can register their applications and have them reviewed in Germany. The BfArM must make the decision within 3 months.
Applications can either be included in the list by the BfArM on a trial basis or - as soon as the positive supply effect is sufficiently proven - directly on a permanent basis. In german practice, the trial period initially lasts 12 months, after which the company can get another year's extension if it justifies why the proof is not yet available up to three months before the end of the trial period. After 24 months at the latest, however, the manufacturer must prove the positive supply effect.
The patient is provided with information in the german DiGA directory on, among other things, the objective, mode of action, content and use. Possible additional costs, for example for heart rate monitors or additional (premium) functions, are also listed. For professionals, information on scientific studies and medical data is provided.
Click here to go to the DiGA directory of the BfArM: DiGA directory of the BfArM
7. How much does a DiGA cost in Germany?
From the time a DiGA is included in the german DiGA list, its use can generally be prescribed by doctors/dentists, psychotherapists or doctors in hospitals. Thus, from this point on, insured persons in Germany also enjoy a legal entitlement to be provided with DiGA as well as to reimbursement of the resulting costs.
For the first 12 months after registration in the register, the actual price of the manufacturer is the basis for reimbursement in Germany. After this period, a final reimbursement amount is negotiated between the GKV-Spitzenverband and the manufacturers. The fact that reimbursement is thus possible before a positive proof of supply is even available is repeatedly criticised in professional circles in Germany.
The GKV-Spitzenverband has already set up an arbitration board for the price negotiations under german law. This consists of an impartial chairman, two representatives each from the health insurance funds and the manufacturers of digital health applications, as well as two further impartial members.
In addition, a framework agreement is to be concluded between manufacturers and the umbrella organisation in Germany. In this agreement, maximum or minimum prices can be set.
8. Liability of manufacturers for medical devices under german law
The manufacturers of DiGAs are liable for them as for regular medical devices under the German Product Liability Act (Produkthaftungsgesetz) for property damage and personal injury resulting from the product. Manufacturers in Germany must then pay damages and, if applicable, compensation for pain and suffering.
Operators, doctors and users, on the other hand, are liable like manufacturers under german law if they use the medical device for a purpose other than that intended by the manufacturer.
In the context of a legal dispute, the decisive factor in german product liability is whether the damage was caused by a defective product or whether the user may have "only himself to blame" because he used the product incorrectly. Startups and doctors in Germany absolutely have to fulfil their duties of care comprehensively here.
For german DiGA start-ups, this means above all a complete instruction and briefing of doctors and patients, which can also be proven accordingly. In addition, clauses on the limitation of liability should be used as far as possible.
9. Liability and other risks for doctors in Germany
For german doctors, using and prescribing a DiGA may well involve legal risks under german law.
First of all, before recommending or even prescribing the apps, doctors should use them themselves, understand them and convince themselves of the functionality and positive care effect of the app. This helps to prevent risks and minimise liability in german practice. Because within the framework of the treatment contract, the doctor is liable to the patient for errors. In the case of DiGA, there is first of all the risk that the app is prescribed although the manufacturer has not intended it for this specific situation. Whether the software was faulty in a specific case or whether it was only unsuitable for the purpose intended by the doctor cannot always be answered quite clearly in the event of a dispute in Germany. Therefore, caution on the part of the doctor is required here in german practice.
Whether and to what extent the doctor is liable under german law if the software is faulty remains to be seen before the courts in the future. The scope of a doctor's responsibility is disputed in german case law and difficult to determine clearly from a legal point of view. Reproachability in relation to the duty of suction should be avoided at all costs. It remains to be seen whether liability is absolutely ruled out with sufficient examination and selection of the app.
10. Open questions and criticism of DiGA in Germany
The legal regulations affect an area that was previously completely unregulated in german law. Many questions will have to be answered (anew) in the course of time, and first experiences from german practice will make it necessary to correct some adjusting screws.
In particular, decisions will have to be made on the publicity of data from the german DiGA register and on the prescription and extension of the prescription of DIGA without a medical diagnosis in Germany. Physicians also see room for improvement in the requirements for studies to prove efficacy.
Finally, there will also be a need for adjustments in pricing in german practice - for example, on the question of whether reimbursement should also be made if the application is not used or not used as prescribed.
And finally, the liability risk for doctors and manufacturers in Germany is in many cases not yet fully foreseeable or (financially) calculable.
11. Health treatments without certification under german law
If an app is not qualified as a medical device and has not undergone the corresponding certification under germna law, patients can still use it and doctors can still recommend it - but at their own risk. For german doctors, this means that they must convince themselves of the app's functionality.
In case of doubt, the recommending doctors in Germany are then liable for risks and damages caused to the patient by the use on the one hand from the treatment contract with the patient and on the other hand the manufacturers of the product themselves from the general law on damages - but not from the law on medical devices.
12. DiPA = DiGA in the german care sector
Since 2022, there will also be digital health applications for care in Germany - which will then be referred to as so-called digital care applications (DiPA for short).
Applications are intended, for example, to determine the state of health of older people, monitor it continuously and improve it through exercises for body and mind. But also the communication of older people with relatives, doctors and specialists as well as nursing staff can be improved in german practice. Currently, the Ministry of Health is drafting a legal ordinance for concrete implementation under german law.
The long-term care insurance fund will cover the costs for a DiPA in Germany if the BfArM has determined the benefit for people in need of care and has recognised the DiPA as a DiGA and included it in the german DiGA directory.
In principle, under german law a digital care application must - in addition to the requirements for safety, functional capability and quality as well as data protection and data security that also apply to DiGAs above - have a so-called care benefit.
Persons in need of care or their authorised representatives must apply to the long-term care insurance fund for the costs of the DiPA to be covered. A doctor's prescription is not required in Germany. On request, long-term care insurance funds can also cover the costs of care apps that are not listed with the BfArM as a voluntary benefit.