General considerations for entering the European market for digital health solutions

Digitization has taken hold of European healthcare systems: Individual European countries are increasingly advancing their healthcare systems through digital solutions. The aim is not only to provide better care for patients, but also to increase efficiency and save costs. In the COVID-19 era, digital delivery of healthcare services has been forced. This compulsion has meant that even those stakeholders in healthcare have had to engage with digital solutions that were not previously using them, or only marginally. Video consultations and other telemedicine solutions that were hardly common (and in some cases even banned) in some countries before the pandemic had to be introduced in the course of COVID-19, and it is to be expected that they will play a much greater role in the future.

European market access as an individual challenge for the developer of digital health solutions

A large number of digital health solutions are already on the market and thousands more are being developed. The developers of these solutions come from a wide variety of backgrounds: startups and technology companies entering the healthcare sector for the first time, startups that come from the healthcare industry and were founded by medical professionals, for example, startups that have already successfully launched a digital health solution outside of Europe and now want to tap into the European markets. In addition to startups, there are also established healthcare companies that develop digital health applications. This can have different reasons, for example, a pharmaceutical company can improve compliance for a drug through a digital health solution.

The very different background of the developers means that both the level of knowledge about healthcare systems and the expectations for market access are heterogeneous. The fast pace that tech startups from other industries are used to cannot be realized in healthcare. Product launches in healthcare always take longer than in other sectors, and the long timelines that developers in biotech and medtech are used to for market access and reimbursement often apply to digital health solutions as well, especially when they are intended to be reimbursed by public healthcare systems and address serious conditions. A careful, well-planned path to market and reimbursement is needed.

Expectations of the European market

Startups sometimes envision big profits, which they are used to seeing in other sectors. Substantial profits are indeed achievable in healthcare, provided the complex reimbursement conditions are met. However, even startups that have received large amounts of seed funding fail to target reimbursement procedures in a timely manner. This applies not only to companies outside Europe, but also to those based in Europe. These failures then often cannot be remedied in the short term, with the result that the digital innovation cannot be commercialized in European markets, or can only be commercialized at a low price.

European payers for digital health solutions

The vast majority of digital health solutions are medical devices, so they are subject to medical device law. The United Kingdom is implementing its own regulatory process for medical devices after leaving the European Union. In the European Union, the CE procedure is carried out, based on which a medical device is then marketable. This applies to the entire EU, so there is no need to conduct an individual procedure for each EU member state.

Marketability versus reimbursability

Once the digital health solution is marketable, it may be marketed. However, marketability says nothing about the reimbursability of the digital health solution.

The importance of state and public health systems for digital health products

If a digital health solution is not to be paid for by the patients themselves, reimbursement by the public or state healthcare systems can be considered. The healthcare systems of European countries are not uniform across Europe, but vary from country to country, so reimbursement must be carried out separately for each European country. Some European countries, on the other hand, do not have a uniform nationwide healthcare system, but rather a separate system for each region.

Who wants the innovation and who is willing to pay for it?

Often, startups in particular are convinced that their digital innovation has great market potential because it is capable of saving costs for the healthcare system. However, the savings potential for the healthcare system as a whole is not automatically a carte blanche for the commercial success of a digital healthcare solution. Rather, it is crucial that there are incentives for the payer, the prescriber and the user to use the digital health solution.

Digital health solutions in competition

Potential savings often come at the expense of established providers in other areas, and digital innovations sometimes fail due to resistance from these established providers. The key here is to prove the savings potential to payers and to gain allies: Patients, prescribers or other partners in the healthcare system.

Knowing the market therefore means understanding which stakeholders have incentives to adopt a solution. Even if the medical benefits have been proven and the overall economic benefits to the healthcare system have been convincingly demonstrated, certain stakeholders are more likely to be won over than others. These are the ones the company should focus on.

Reimbursement pathways for digital health products

Finally, it is also important to consider that for some innovations, there is no reimbursement pathway, or none that is appropriate. To the extent that a reimbursement pathway exists for a competing procedure, the prescriber will regularly choose it. This is true even if the prescriber knows that the prescribed procedure is inferior to the innovation that cannot be reimbursed.

The following example illustrates this dilemma:

A company had developed an innovative digital imaging procedure that produces diagnostic images without the use of X-rays, providing better diagnostics than the established procedure that uses X-rays. The company had chosen a payment in Germany that was equivalent to what physicians received for the conventional procedure. However, because the innovative procedure provided a large number of images, while the conventional procedure provided only one (albeit much less conclusive) physicians had little interest in the new procedure. This was because they now had to view and evaluate a large number of images, which was much more time-consuming and was not remunerated separately. The company therefore had to choose a different reimbursement path that adequately compensated physicians for the time it took to evaluate the large number of images.