0:03 Eugene Borukhovich
Welcome to the Digital Therapeutics Edition of Digital Health Today. I’m your host, Eugene Borukhovich. In the last episode, I had the pleasure of getting to know Chris Wasden, the head of Happify DTx. That episode, unfortunately, concluded our segment with trailblazers of US-based digital therapeutics companies. There are so many more amazing entrepreneurs that I would have loved to have on the show, but given this as a limited series, we needed to move on. Maybe more to come. Let’s see.
We now kick off the next segment by hopping over to Europe, specifically Germany. On December 19, 2019, Germany passed into law the Digital Health Care Act (Digitale-Versorgung-Gesetz), or the DVG. With this law passing, any approved DiGA (digital health application) will become fully reimbursable by the German statutory health insurers, as long as they’re prescribed by a physician or psychotherapist. For this topic, I could not think of anyone better than a dear friend, Christian Dierks.
Christian is a managing partner at Dierks+Company and was absolutely instrumental in getting the DVG off the ground. Since we recorded this episode in January, many things transpired, such as more approved digital therapies on the list (now 13), and some early sprinkles of multiple sources on the prescription data.
But before we begin, I met Christian over a decade ago when I first began travelling to Europe for a large pharmacy benefit manager. Christian is a deep thinker, lover of art and food, but most importantly, his calm and soothing nature impressed me from the first time I met him. And now we’ll jump to my conversation with Christian.
I’m here with Christian Dierks, co-founder and managing partner of Dierks+Company. Christian, welcome to this podcast. We’ve known each other for quite a while, but many of our listeners do not know you. So why don’t you tell us a little bit of your background and how you came into digital health, and more specifically digital therapeutics.
2:13 Christian Dierks
Thank you, Eugene gladly. Basically I started off in this life as a physician. After a while, I had to join the Navy due to the draft in Germany. I spent some time on the vessel, and spent some time diving, and I got in touch with the administration of the Navy, and I found that if you manage rules and administration, you can change a lot of things. I adapted that to the health care system, and I said if you can actually work along the regulatory issues of this healthcare system, you can produce a lot of benefit and can change a lot of things, far more than I could in my own physician’s practice just with one single patient.
So I thought about it, I studied law, became a lawyer and founded my own very first law firm, which grew and grew and grew. In 2017, we had about 80 people in this and more than 50 lawyers working in the health care environment. But still, there was something missing. The thing missing is that I always sensed that there is a connection between information technology and health care that needs to be liaised by means of the regulatory framework. That, according to my opinion, was moving far too slow.
The reason for that was an incident that happened in New Delhi. When I was visiting Delhi for the first time, we actually had a visit to the Escorts Heart Centre in the far east of New Delhi. The chief surgeon introduced to us a tele-monitoring system for his heart patients. We went out into the suburbs, visited a patient in his shed, and he had this device to monitor his heart condition, together with the Escort Heart Centre. Now the bad news is this was in 1994.
4:08 Eugene Borukhovich
I was gonna ask, yeah.
4:09 Christian Dierks
Yeah, 1994. And that is incredible. It immediately got me hooked onto digital health at a time when there was no such thing like digital health or e-health. Little that we knew about this. The internet wasn’t really working to an extent that we are used to now. There were no apps, there was no iPhone, none of that. I started working mainly on data protection issues, data banking, and realizing that an important source would be creating the data around the patient. This took me a while, to get in a position to be an advisor to the ministry and to many other associations. So I also acquired a position at the Charité University here in Berlin, where I became a professor for health services research. In that position, I always try to contribute a little to the progress in this area.
5:08 Eugene Borukhovich
Look at that I learned something new about you today as well.
5:13 Christian Dierks
Well, you never asked before.
5:17 Eugene Borukhovich
So, you took us back to 1994 and your love for what was probably not called digital health then. Fast forward a little bit. You and I met probably close to a decade ago, if not longer, and there was some bubbling of digital health in Germany. Take us back on that history train. What was the trigger for DiGA?
5:55 Christian Dierks
Incidentally, there’s a nice story behind that. DiGA stands for Digitale Gesundheitsanwendungen, which means digital healthcare application. Now, in the first draft of that process, which we’ll get to in a while I suppose, the first wording that was used by the health care insurances in Germany was Digitale Versorgungsanwendung, which means just care application. The acronym would have been DiVA. Now, when I entered that stage, I said no way should we have DiVA, because a diva is something whimsical.
6:31 Eugene Borukhovich
It does not translate well, right.
6:33 Christian Dierks
And it doesn’t go where we want it to be. So I said, let’s change this term to something else. And so we drooled over that for a while, and we came up with DiGA. So this is where this word came from.
6:48 Eugene Borukhovich So what year was that? Just to give the listeners a perspective, because obviously, it’s in the news and hot now.
6:53 Christian Dierks
That was 2018. Well, the whole thing started in 1997, when the specialists from the insurance funds, by the name of [inaudible] wrote an article about the tremendous cost that the handling of paper prescriptions brings about to the system. The idea was to get it off paper into a digital environment and communicate from a smart card via the internet over to the pharmacy.
It took us five more years to get into the idea of producing something like an electronics prescription as the basic platform that would pry open the space for more digital applications. The ministry challenged me to write an opinion with a fit-gap analysis for the legal framework for electronic prescriptions in 2003. This is what put me into the position to become more knowledgeable about this. We produced such a draft in 2004, which was adapted by Parliament.
The idea was to have a chip card, and a reading device– a connector. That was the technology from the late 1990s of course, we believed that would be the right thing to do. What we did not take into account was that there were three opponents to the whole system. Oddly enough, that was the three major stakeholders.
Physicians were taken by the fear that they would become very transparent about their prescription behavior, and what they wouldn’t be prescribing on certain indications and whether this might be wrong or not. The insurance funds were worried about how to finance the whole setup. The pharmacists, of course, were extremely worried that electronic prescriptions would travel anywhere but not their own pharmacy.
For more than 12 years, there was a stalemate, nobody was moving. And as the German system is not controlled by the government– the government just suggests the laws that are passed by Parliament– and the whole setup is to give a framework for the self-governance of contracting companies and insurances, it didn’t move for quite a while.
Up came a new player onto the stage that is our current Minister of Health Jens Spahn. He’s a very agile person and he’s also very energetic. He was really looking at the issue and said, “We’ve been trying to introduce this electronic prescription, and actually, it’s not really state-of-the-art anymore. But we will not kill it because there’s so many people involved in this that we would just rather transform it into a platform of digital health.”
9:40 Eugene Borukhovich
Too big to fail.
9:42 Christian Dierks
Well, we spent a billion euro on this, just to develop it! That’s a lot of money. So it shouldn’t fail, but it should be transformed into something else. In those days (that was 2017), we had some digital applications that already made it onto the register of medical aids. Now medical aids are like a wheelchair or hearing aid, and the difficulty was that the software products aren’t really something that you could get from a pharmacy and take home. So it didn’t really fit into that description of a medical aid. We realized by-and-by that it could be very useful in the healthcare environment of surveilling patients, supporting patients, building a link between physicians and patients in situations where there usually is no link, and so forth.
There was a publication on a questionnaire throughout the EU that pointed out that Germany was second or third to last in digitalization in health care throughout the EU– which is dreadful for the proud German people who are very technology hyped and take great pride in their technology. That really got them going to say we need expertise. Somebody had to write an expertise on how we can integrate digital applications into the healthcare environment of the statutory health insurance.
This expertise was outsourced to the University of Bielefeld. Now Bielefeld is a small city, but it has a very good faculty on health economics with my colleague, Wolfgang Greiner. Wolfgang Greiner knocked on our door and said, “Would you help us and write the legal framework for our expertise on how apps can be integrated into the statutory health insurance?” There we were, and at the end of the story, we found ourselves on February 19, when we published our expertise. It took us a while to get this going because we had to do a lot of interviews and focus groups and align all players along the field.
11:44 Eugene Borukhovich
Still quicker than the Berlin airport. But that’s a different podcast altogether.
11:50 Christian Dierks
Which airport are you talking about?
11:53 Eugene Borukhovich
The new Berlin airport.
11:55 Christian Dierks
Yeah, of course, we’ve been a little quicker, right you are. We promulgated the idea of integrating that, and that set forth a lot of energy. Then the law on the digital healthcare applications was drafted.
Honestly, there’s never been a law where any ministry has gone so much into detail to make it possible that the applications make their way onto the road; after the law had been passed, the ministry also passed a bylaw for further details, to make it easy for the applicants. The federal institution that is in charge of creating the list, the BfArM (Federal Institute of Pharmaceuticals and Medical Devices), also published a guideline to make it easy for the applicants. So there’s a lot of assistance and it’s available in English too, because we’re well aware that there are companies from all over the world that would be interested to get into this German market with 80 million inhabitants.
12:58 Eugene Borukhovich
I’m hoping that there are going to be some revisions as the ministry and the environment learns, but how close was that original version to what’s out there now? Any major pivots or changes along the way? Any key discussion points that made some of those changes come true, as it was published in 2019?
13:33 Christian Dierks
Yeah, I understand. Of course, usually if you come up with an expertise and a suggestion for the lawmaker, you will find that the committees will take it apart and put it together for something else. In the end, you will not recognize your very early suggestion anymore. That’s what happened, by the way, in 2003 to our electronic prescription suggestion. As I think Churchill once said, a camel is a racehorse that has been designed by a committee. But this has not happened– quite the opposite.
What we did is we came up with five different suggestions. We said it would make sense to have a different body take care of the assessment and the listing, then the joint commission that is taking care of everything else in the healthcare system. We said it would make sense to have a preliminary listing and have it exit if it doesn’t prove its concept. We said it would make sense to add other criteria than just randomized control trials, especially for applications that are used by a patient. And we said it should be a fast-track procedure.
So in the end, all these suggestions were in the room, and guess what– the ministry said we’ll take them all. It was beyond what we suggested actually, and it took us by surprise that the ministry picked it up and turn it into reality. So far there hasn’t been any pedaling back, so we’re currently executing what has been suggested and what passed through parliament. Right now, we’re in the face of little adaptations. We’re looking for different options to amend this to be more in the detailed region.
15:16 Eugene Borukhovich
Absolutely. Brian Dolan is my journalistic partner, so he’s keeping track of the DiGA directory, and it’s amazing to see that there are now 10 companies or 10 products that are listed in a relatively short time. So kudos for getting that built out quicker than the Berlin airport. As you mentioned, Germany is open to business (from a digital therapeutics/digital health perspective) to the world: there’s a process, there’s help, it’s in English. But it’s also important to understand what DiGA is not. What it’s not is even more interesting.
16:04 Christian Dierks
What is not a DiGA? First of all, I think the most important is to realize that if it’s not a medical device, it cannot be a DiGA. It needs to be a registered and certified medical device, according to Risk Class 1 or 2A, according to the medical device regulation of the EU. We’ve seen some pretty good apps with our clients. We looked at it and, well, it’s a cool app, but all it does is documentation or communication, or it’s just wrapping things up and making things easier, or putting some efficiency or rationale into it. But it’s not supporting the diagnosis or treatment of a disease. If it’s not, then it can’t be a DiGA.
This is creating a very interesting effect, because certifying a medical device is a cumbersome exercise. It requires money, and it requires ongoing efforts to monitor the product. So far, everybody has tried to avoid being a medical device with certain tools. Now, people are trying to do the opposite, and if it’s not a medical device, change the purpose of the tool to be more like a medical device. This is the main focus.
One other message I would have for those who are planning to introduce a DiGA onto the German market is if you go for that goal, you really need to go for it wholeheartedly. This is not like, “I’m a medical device, and I could enter the German market and become a DiGA, and we’ll take this along the way.” It’s not as easy. It takes a lot of time and energy; you need to devise the clinical studies, the proof-of-concept and create the evidence. It’s something that requires the whole team to strive towards that goal.
The interesting thing is that from our clients, what we’ve heard (and we have been counselling some of the companies that are in the list right now) [is that] once you are on the list, there’s a complete shift of attention. It’s away from getting listed into distribution and marketing. That’s a complete shift of mind, and it’s extremely interesting because it requires different skills and different targets and different plans.
18:19 Eugene Borukhovich
I’m sure we’ll continue diving deeper into that because when we talk about digital therapeutics, how we get to market is a big component of that. You and I met under this pharmacy benefit management/disease management model. There are plenty of companies in the market in Germany and beyond in disease management; [some are] combining services, devices, etc. [but if you look] at what’s been approved in DiGA, [others are] digital therapeutics as a standalone. I’m curious for your thoughts. Are the two melding? How’s DiGA looking at disease management 2.0, if at all?
19:10 Christian Dierks
Disease management is something that was introduced in Germany 20 years ago. The headline was “programs to manage chronic diseases,” and still, it’s about one patient and one chronic disease. This is something that we– in my opinion– definitely need to change.
If you look out on the street, you will find that out of 100 people, 19 will have one disease, but 23 will have two or more diseases. Most of the digital applications are not fit, not equipped, and not targeted to a multi-disease situation. My conviction is that such an application is far better equipped to deal with several diseases at the same time than a physician would be without special training, because there are so many interactions and therapeutic remedies that interact or contradict each other or have side effects, that it needs a proper balance.
That’s where we need a lot of data, a lot of databases, and research on implementation of AI to get along with this. This is where I see the upcoming playing field to integrate apps for people with diabetes and kidney disease, with high blood pressure and pancreatic cancer. This is where we still have deficiencies that need to be completed with technology. This is the new role, and this is why it’s not only disease management 2.0, it’s also digital healthcare applications 2.0.
20:57 Eugene Borukhovich
It’s time for a question from my journalistic partner on this podcast, Brian Dolan, who is the founder of Exits & Outcomes, and as I like to call him, the digital health detective. Let’s see what question Brian has for our guest today.
21:10 Brian Dolan
Okay, here’s my question. What does the marketing push for DiGA’s prescriptible digital health products look like? In other words, how do prescribers know about them? Is it up to the individual digital health companies to drive that awareness? Or does the government help?
21:26 Christian Dierks
Well, thank you, Brian. That’s an interesting question. So far, the main promotion has been from the ministry. When we started the whole process, there were several meetups in the ministry with some of the upcoming healthcare application providers. These meetups have been broadcasted, and there was a lot of publicity to it. It was never about pushing a single healthcare application provider, it was always about the general approach overall.
In those days, when I spoke with the physicians, or the representatives of physicians associations, they were rather skeptical and said, “Why should I prescribe an app?” The reason for this is they were afraid that they would be a back end to something that they could not cope with; that they would need to spend time on something they would not get remuneration for; that they would take on liability for cases they cannot control; or that they would be liable for the finances involved, for taking on the cost of the applications.
Now, over the past two years, this has changed. We’ve seen recent polls that say that the appreciation of digital healthcare applications has grown tremendously from 29% or 30% to 70% right now. That means the old truth that you never get anything innovative into the healthcare system if you’re not joining forces with physicians– who are the prime advice to any patient– is coming true once again.
Now we have a situation in which by-and-by, slowly and surely, the physicians are trying to prescribe this. It’s a phase in which the digital healthcare application providers address the physicians; they tried to convince them about using it, and it will be up to the physicians to try out and find out what the benefits are for them– what’s in it for them. I’m not speaking about money. I’m speaking about Medicare, about more efficiency, about creating spare time for other patients that need personal attention. This is where the whole society needs to work. There will be more acceptance and give these applications a chance.
23:51 Eugene Borukhovich
Let me chime in here. You touched on the word “consumer.” Stereotypically, in the US consumer healthcare is alive, and when we talk about the EU (and specifically Germany), people always assume that people don’t want to pay out of pocket. So when it comes to these 10 applications that have been approved, where is the consumer in this picture, in Germany specifically?
24:23 Christian Dierks
Let us focus on that, because this is one of the most important topics. If we look at data collection in the life of a person, it actually starts before birth, with the first pictures taken from the fetus. Then it goes on with the first laboratory findings on the newborn, with all the investigations and assessments before they go to school. Then they change position, change insurance funds, become a family, and maybe change plans (in Germany it’s not changing with the employer but for other reasons). And until death, the only constant, the only thing that remains the same throughout the life of this person, is the person itself. This is why I say that the prime responsibility for data in your life is with the patient.
The terminology is that the patient is the citizen– is the consumer, and vice versa. That brings up a responsibility; this responsibility is not like a duty that is imposed onto the citizen because nobody else wants to do it. It’s imposed on him because he can do it best, and he’s also the one who has the most benefit from doing it properly. In order to do that, you need empowerment, you need education. This is why I devised a regulation for the statutory health insurance that they need to pay for courses [for you] to get educated about data management.
Of course, myself being a liberal thinker, you also need the right to deny this responsibility. You need the possibility to evade this. Hand-in-hand with that goes the right to delegate it and say, “I need this, but I don’t want to do it myself.” So I see that there will be new professions coming up, like the personal health data manager, that will offer a service; I take your data, I will manage it, I will take care that it is where it needs to be at the time of treatment, at the point of care, and I will supply the service for 49.99 per month for you. This will be something very natural in a couple years, like a tax advisor is natural today and was not 150 years ago.
26:53 Eugene Borukhovich
As we talk specifically about digital therapeutics, there’s so much data being generated. If you look at any of these companies like Akili, even GAIA, and many others, there’s a tremendous amount of data. So to the entrepreneurs that are listening out there, Christian just gave a freebie of an idea. Have you heard or seen any statistics? Is BfArM planning to publish some statistics on usage? We keep talking about transparency or pricing in the US market, but obviously in the EU it’s very different.
27:32 Christian Dierks
I haven’t seen any yet. We’re waiting for the first data to be published by the insurance funds of what the cost is that they had to reimburse so far. But we have looked into our clients’ records, and they have done some research in the field of the prescribers. When we spoke with our clients, they found that out of 10 physicians that have the notion to prescribe an app, until this is really in the hand of the patient, there will be nine that will get lost on the way. So there’s a diffusion rate, due to several shortcomings in the system (bureaucracy, technology, etc.), and it’s not really set up and running as yet. It will get faster, of course, but this is all on the side of the funds, and they’re working on it to get it done. They’re not over-exaggerating– they’re not acting in haste, to put it mildly. But that will get better.
Currently, we’re still in a situation where there is no corridor, where there is no limits to the pricing; it needs to be reimbursed. We’re still waiting for that framework agreement that will have some barriers and some benchmarks as to what it may cost and what it may not cost before/after the first year the negotiated price will get into action. So we’re still waiting for the data, and we’re very curious. I think the good thing is that the market is not flooded with apps, but it’s making some progress, and at a speed where we can still assess and adjust if necessary.
29:12 Eugene Borukhovich
Do you know when it’s expected to get the data? I know it takes time to gather a lot of this out in the wild.
29:20 Christian Dierks
I would expect that it would still be in the first quarter of this year.
29:24 Eugene Borukhovich
Okay, perfect. You know, lots of work was done in two years and 10 companies are now being reimbursed to 10 products. What’s next for DiGA specifically?
29:36 Christian Dierks
Yeah, we’ve got something coming up, Eugene! How did you know?
29:39 Eugene Borukhovich
I actually didn’t!
29:43 Christian Dierks
Well, my company [has] been working in ambient assisted living for a while now, so we actually wrote an expertise on behalf of a consumer association in Germany, called the Verbraucherzentrale. With this expertise, we suggested to integrate certain digital tools into the settings of care in fostering homes and in housing for elderly people.
Now, this is something that really comes [out] about our society; people get older, they live by themselves because we no longer have these huge family settings, and they have to take care of themselves. They get 70, 80, 90 years old, and things are getting difficult. They want to live in their own flat or house, and they have some difficulty.
But there are some other people that have the same goal. The landlord, of course, needs somebody to pay the rent. The family that would appreciate it if grandma is still in her own flat. And of course, the pension funds and the statutory health care insurance appreciate that as well.
Now, the common goal is to make it possible, and there is a lot of software [and hardware] that can aid this goal. Consequently, we have suggested adapting this, and there is now a draft bill coming up to integrate digital care applications, which [are] not healthcare applications, but care for people who need attention from caregivers. There are several services and products that can be bridged with digital applications. This is what will be set up in a couple of weeks and months, and this is the next level for this.
There is a difficulty in that. The difficulty is that these products are no longer– or at least not necessarily– medical devices that have been certified by a notified body. So the quantity assessment and the purpose have not been assessed by another procedure in the system. This is something that needs to be amended, where the producer needs to get his own proof of quality and efficiency and other criteria that still need to be supplied. It’s a bit of a different story, but it will be very beneficial to keep people living independently and in their self-sustained environment. That of course has an acronym to it, it’s called DiPA.
32:25 Eugene Borukhovich
Okay, at least it’s not DiVA again.
32:28 Christian Dierks
Digitale “Pflegeanwendung,” for “care application.”
32:35 Eugene Borukhovich
We started with your story where we learned more about you. For our listeners, this is a very difficult space, pushing something new. So what is your why? What gets you up every morning?
32:48 Christian Dierks
I’m convinced that we have not yet really unlocked the “e” in e-health. And after consulting in the healthcare environment for almost 30 years now, I have a lot of experience, I know a lot of people, we have good connections, and we are driven by the idea to align all of this for one common goal– to create the best benefit for the patients, to allocate the resources in a most efficient way, and to relieve burdens and pain that are still out there on a huge scale. So far, every time we achieve this goal a little further, it is a very grateful moment. I’m extremely grateful for a history that has put us in a position to contribute to this. Getting back to 1994 and my experience in New Delhi, I couldn’t hope for more than what has been realized now.
33:47 Eugene Borukhovich
Amazing. Christian, thank you for joining us here. All eyes have been on DiGA in the last year, so we’re looking forward to DiPA and a lot more news and some transparency out there. Thank you again for joining us.
34:02 Christian Dierks
It’s a pleasure. Thank you, Eugene.
34:05 Eugene Borukhovich
Thanks so much for tuning into the Digital Therapeutics Edition of Digital Health Today, a production of Mission Based Media. Be sure to hit that subscribe button to this podcast on your favorite podcast player, so you’re then automatically notified when we post our upcoming episodes, where I speak with dozens of leaders and trailblazers who are forging the path for digital therapeutics. If you’d like to learn more about Your Coach Health, or Brian Dolan’s Exits & Outcomes, you can always find the links to this and more in the show notes for this episode. You can connect with me personally on Twitter @HealthEugene, or follow my journey of writing my first book, Hard Pill to Swallow at hardpilltoswallow.substack.com. I’m Eugene Borukhovich. Catch you next time.