Later this month, Germany will go to the polls to elect a new governing coalition, following the collapse of the center-left SPD’s “traffic light” coalition in November.
There is much at stake for the healthcare industry, which is eager to know that the new administration will be ready to champion the medical device, in vitro diagnostic, digital and healthtech agendas collaboratively with stakeholders.
For the present, there is a standstill in all national legislation. Germany has had a minority government since November, and laws can only get through parliament with the opposition’s support – which has not been forthcoming.
“As a result, things have come to a complete stop,” Martin Walger, chief executive of the national diagnostics industry association, the VDGH, told Medtech Insight. Two legislative procedures with significance for the diagnostics sector have been affected.
One was focused on improving early detection of cardiovascular disease – embracing both behavioral change and early diagnosis. The other was health minister Karl Lauterbach’s planned pharmacy reform. This proposed that pharmacies should be allowed to carry out point-of-care (POC) testing on a larger scale, especially for infectious diseases.
“We hope these ideas will be taken up by the new federal government,” Walger said. Whether Lauterbach is there to pick up the baton again, should he once more be handed the health portfolio, will depend on many variables.
“Growth initiatives should include tax relief initiatives for industry and better framework conditions for the economy”
Martin Walger
But unlike some other industry commentators, VDGH chief executive Walger does not necessarily believe that it is all over for the SPD minister who last year drove the major hospital and DRGs reform, Krankenhausreform, into law.
Current speculation is that coalitions between the center-right Union parties (CDU-CSU) and Green party; or SPD and Union parties are the two most likely outcomes. In mid-January, it appeared possible that erstwhile coalition partner, the free democrat Liberal FDP party, might well be technically disqualified from parliamentary representation. That would happen if its vote failed to reach the 5% threshold.
Whichever coalition emerges after the 23 February vote, the in vitro diagnostics industry, via the VDGH, will aim to build a progressive business relationship with a growth-focused government.
Walger believes the new Bundestag could be constituted in late March and a new federal government formed anytime after late April/May. In that case, legislative processes would be able to recommence in early summer.
Tax Relief, Government Dialog
The IVDs industry recommends that government growth initiatives should include tax relief initiatives for industry and better framework conditions for the economy. Accordingly, strengthening the €50bn-€55bn ($52bn-$57bn) medtech industry, two thirds of whose revenues are made outside Germany, should be elevated to a government priority, Walger said.
While medtech-IVDs is a key industry for Germany, it has not benefited from government support in the same way that the pharma industry has in the past two years, Walger observed. He pointed out that 10% of German medtech revenues are reinvested in R&D, which is a higher rate of return than in pharma.
Moreover, Germany’s medtech sector has 210,000 employees, making it a significantly larger sector than pharma in staffing terms too.
“The VDGH has asked for a national medtech strategy and for a political dialog with all the relevant federal ministries – health, economics, and research and education.” Fellow medtech industry association BVMed has proposed a “medtech commission of the federal government.”
The medtech-IVDs industry enjoyed interdepartmental government dialog several years ago. “We want it again, and we want industry to be involved in healthcare projects.
“But it sometimes feels like we are not at the negotiating table,” Walger said. He challenged the government to focus more on “high tech” industries like medtech and biotech, and less on “mid-tech.” His view is that the government should support the “industries of the future.”
Coming Around Again? The Roundtables
Improved dialog with stakeholders was apparently happening under an initiative led by economy minister Robert Habeck (Green party). He arranged cross-industry round tables under the previous government, inviting other ministries to attend. The final round table discussion was scheduled for February 2025. It will not happen now; however, Walger considers that the initiative may yet provide the basis to call for a new national medtech strategy – whether it be addressed to the health or economy ministry.
The VDGH is in the midst of assembling a list of demands for the new government. Walger stressed how the IVD industry would enjoy better commercial success if it were not choking on bureaucracy from both Germany and the EU. “We need a political initiative to reduce unnecessary bureaucracy and not duplication of national and EU rules,” he said.
“There should be no requirements without proof of benefit. If there are product safety benefits, then ‘yes, do it.’ If not, push it away.”
A good example of additional national requirements is environmental legislation, he said. The EU has passed the Green Deal and sustainability directives, while Germany has imposed another set of stricter national-level rules regarding supply chain compliance (Lieferkettensorgfaltspflichtengesetz, LkSG).
Lauterbach promised to present a law on reducing bureaucracy in the healthcare sector. Ultimately it did not materialize, but this theme is taken up in a recent joint initiative of the industry, whereby VDGH, BVMed and Germany’s third major medtech industry association, Spectaris, have submitted a 50-point sector improvement plan to the health ministry.
“I believe the new government will come back and discuss the suggestions we made,” Walger said. Crucially, there is a need to focus more on adoption of digital processes. “We need the government to ensure faster digitization of the public administration, and to keep to the principle of data minimization,” he added.
EU IVDR And MDR: Industry’s Chief Bugbears
No discussion about bureaucracy overload in EU medtech circles is complete without reference to the EU regulatory framework for medical devices and diagnostics.
The passage of the IVD and Medical Device Regulations has led to a situation where products are being withdrawn from the EU market because the costs of keeping them there “are so incredibly high.” It is a particularly acute problem for niche and small market products.
VDGH, among others, has observed the increasing shift of innovative product market launches to non-European countries. “We ask for a fundamental revision of the IVDR and the MDR,” said Walger, reiterating his call for all regulations that do not improve patient safety to be “scaled back.”
Walger also wants the MDR/IVDR’s rules on automatic recertification of existing products to be reviewed and reformed, and for standardized processes and cost structures to apply to the auditing work done and charged for by the EU notified bodies.
The VDGH is, however, “quite optimistic” about its chances of securing some change. Walger notes a certain rethinking among EU level stakeholders on this subject. Germany and France – countries with major IVD and medtech markets and industries – have again taken the initiative to the European Commission. In December, they led nine EU member states in calling for a revision of the IVDR/MDR to develop more industry- and patient-friendly EU medtech regulations.
Health commissioner Olivér Várhelyi reacted positively to the member states’ initiative, and indicated that the new commission would be open to sensible changes. Walger further notes that, at parliament level, “we have a big majority in the European Parliament ready to take action to revise both pieces legislation.”
Walger said: “I’m keen to see what will happen on a European level in 2025.”
IVD Sector’s Troublesome Reimbursement Issues
The suboptimal system of reimbursement of laboratory services in Germany, still, pushes the burdensome EU IVDR very close when it comes to the biggest hindrance to delivery of products to the market and continuum of patient quality of care.
Another example of IVD reimbursement shortcomings was evidenced in the 1 January reform of Germany’s lab reimbursement for doctors and private practice. The reform, decided by Germany’s self-governing solidarity system and led by the joint federal committee (G-BA), cut technical services reimbursement by an average of 9-10% – and 70% at the extreme.
“These reductions – which are very high for the IVD industry – are not based on economic calculations, but are seen as a way of closing funding gaps elsewhere. We believe this is wrong.” The association has called for a review, jointly with lab doctors. “What is clearly lacking is an appreciation of lab medicine and lab diagnostics,” Walger said.
The VDGH has in vain told the health ministry that it finds itself in a pincer movement –the IVDR on one side and reimbursement failings on the other. “They will not help us. Our only chance is that the self-governing system will discuss and review its decision later this year.”
POC Could Be Pushed Backwards
The reduction in fees GPs can charge will have a knock-on effect their use of POC testing. POC is normally employed to check whether infections are bacterial or viral. “Reducing reimbursement means GPs won’t be inclined to use POC testing in patient management. It is the wrong decision.”
“AMR is one of the most important issues for mankind - politicians forget that we have the tools.”
Martin Walger
POC has failed to gain traction as a policy due to the system’s financial limitations. Walger criticized the self-governing system’s apparent view that POC is merely an add-on to lab tests.
But this it is more than a missed opportunity, in Walger’s view. “Regarding POC reimbursement at GP level, we think more could be done including in monitoring for antimicrobial resistance.
“AMR is one of the most important issues for mankind. Germany has adopted an AMR strategy 2030 [DART 2030, adopted by the federal cabinet in April 2023], which will emphasize the positive role of POC testing. We are hugely disappointed that politicians have forgotten that we have the tools,” he said.
In its ongoing project to assess increased use digital tools in the community, the Fraunhofer Institute will deliver findings that will bolster the value of point of care, Walger believes. Due to end in 2025, the project should also serve to highlight new possibilities for telediagnostics as part of telemedicine.
Some Innovation Reimbursement, But Not A ‘Trend’
The reality remains that getting lab tests reimbursed is a major challenge, in spite of the fast-tracking system for reimbursing selected innovations which promises a decision on reimbursement within two years.
A small number of IVD innovations has been reimbursed in the past two to three years, mostly diagnostics for genetic testing, molecular diagnostic tests for cancer, molecular pathology tests and new disease screening tools for newborns. While welcome, this does not quite represent a trend, Walger said.
He will continue raise the issue of slow and low adoption and reimbursement on behalf of member companies.
Addressing DiGA’s Digital Apps On Prescription IVD Anomaly
VDGH is also pressing for IVDs to be accepted into Germany’s on-prescription app service, DiGA. Healthtech devices are already part of the DiGA system because the Digital Health Applications Law is based on medical devices of risk class I or IIa, according to the MDR or transitional regulation Medical Device Directive. But not the IVD Regulation (or IVD Directive).
Walger said: “We have spent a lot of time trying to convince the health ministry to amend this. We will revisit the issue under the new administration.”
He continued: “Some MPs, especially the younger ones, understand [the DiGA issue], so we think we have a good chance that IVDs will be taken up within both DiGA and the parallel DiPA system.” DiPA is for apps used in nursing care.
Walger acknowledges the challenges, however, and also the fact that the acceptance of digital health applications within the medical profession is far from universal. “We have a lot to do still to make this a staple element of healthcare,” he said.
VDGH Urges Continued Digital Push
The IVDs industry has traditionally focused on key tests for infectious diseases, immunology tests and clinical analysis. The rising popularity of continuous glucose monitoring technology has seen revenues from diabetic test strips and traditional blood glucose measuring methods fall away in the double digits annually in recent years.
This has impacted VDGH members’ revenues, but Walger is in favor of more closed screening of diabetes in Germany. There is only one diabetes exam for people between the ages of 18 and 35. With more screening comes earlier detection and more effective prevention.
He is aware that the industry must change and embrace digital opportunities. “Many of our companies are ready to focus on digital technologies and the use of artificial intelligence in lab tests to deliver combined tests – and scores – via AI lab diagnostic testing.”
Walger observes that the German government has been proactive in this field. “They have done a lot already and they are aware that digital and AI can make healthcare processes more efficient, which in turn reduces the burden on health care professionals.”
Lauterbach played a useful role a year ago in seeking to advancing plans to broaden access to healthcare data beyond academics alone, so that secondary use data could be employed in routine R&D by companies.
The minister’s “Daten Helfen Heilen” initiative originated in 2020 and had multi-ministry buy-in. It remains a work in progress, and is still not a fully-fledged concept and in routine use, but has been a “good start and is a step in the right direction,” in Walger’s view.
With fewer HCPs and increasingly limited resources, DiGA and other digital tools can support healthcare delivery. In January, after many years of discussions, another pillar of digital healthcare the “ePA” (electronic patient record) was launched and will be rolled out across Germany in March or April.
Walger said: “I cannot image a healthcare system on the level we have now without digital products.”
Equally important, however is the need for investment in digital healthcare, especially in hospitals, because the levels of investment there are not always sufficient.
As to Lauterbach’s signature initiative, the 1 January 2025 Krankenhausreform law, the VDGH cannot yet tell the extent of its impact on the diagnostics industry. Much of the content of the law, such as what hospitals in rural areas are allowed to do, will only be decided in the coming years and be implemented through legal orders, some of which might be decided by the health ministry alone.
On The Immediate Pre- And Post-Election Agenda
In January, VDGH was finalizing its 10-point position paper listing the most urgent changes and recommendations German healthcare needs to adopt, seen through the lens of in vitro diagnostics manufacturers. Walger wants the VDGH to release the list when the new coalition government is being assembled.
“You need to take a deep breath when negotiating with politicians,” the VDGH chief executive remarked. Alongside those outreach efforts, the association will focus on digital transformation, securing regulatory improvements and pursuing lab service reimbursement reform. It also plans further position papers on the role of POC testing in the healthcare sector.
“In election year, 2025, it’s all to play for,” Walger said.