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Germany Allows First Healthcare Apps for Prescription: Sustainable Pricing Strategies Are Now Crucial for Companies

Eleven months after the German federal government passed the Digital Healthcare Act (DVG), two health apps are now officially available for prescription. While this creates many opportunities for the (digital) healthcare industry, it also introduces risk. Digital health experts Jan Bordon and Gabor Kiss from the global strategy and marketing consultancy Simon-Kucher & Partners explain what app providers should pay attention to, particularly with the upcoming price negotiations.

Munich, October 15, 2020 – The first hurdle has been overcome: On October 5, the Digital Healthcare Act (DVG) officially granted doctors in Germany permission to prescribe apps to their patients. Currently, two apps have been approved. While only six percent of patients have used paid medical apps in the past, almost 60 percent would use these digital tools if their physician prescribed them and the costs were covered by the payer.

For healthcare companies whose offerings also include digital solutions and apps, this development offers completely new opportunities. This is particularly true for digital health startups, which have little experience and should therefore develop a well-structured approach to this topic. When generating evidence, it’s important to not only focus on the digital healthcare application (DiGA) directory listing requirements set by the Federal Institute for Drugs and Medical Devices (BfArM).

Particular attention should be payed to the requirements for price negotiations with the National Association of Statutory Health Insurance Funds (GKV-SV), which will take place after the final inclusion of the app in the German DiGa directory. Healthcare companies should not underestimate these. Based on our experience with negotiations involving the Act on the Reform of the Market for Medicinal Products (AMNOG), we know how important it is to develop a clear pricing strategy.  Without a thorough preparation and a structured plan and strategy for negotiations, companies will not succeed. In addition, the health insurance association will leverage its knowledge and experience from AMNOG processes, so companies should be prepared for tough price negotiations.

If an app is already on the market and paid out of pocket, its selling price will impact its potential future reimbursement price. Furthermore the GKV-SV may reference reimbursement prices in other countries that integrate models similar to the German approach in their healthcare systems, and this may affect price negotiations. The initial assessment and price negotiations with the GKV-SV will be a learning process for all parties involved and will inevitably require further adjustments. This makes it all the more crucial for providers to have a comprehensive pricing strategy ready at an early stage.