Regulatory Update

Knowing what will move the medtech industry

The right to treatment with artificial intelligence and access to smart medical devices – potential challenges

In recent years, the development of artificial intelligence (AI) has made considerable progress, raising hopes of a new age of automation and optimization in medicine.

With the Digital Act (DigiG) coming into force on March 26, 2024, the German healthcare system is facing a significant change. This amendment to the law aims to improve the integration and use of digital healthcare applications and optimize their reimbursement mechanisms.

The rapid advances in the field of artificial intelligence (AI) promise a new era of automation and optimization in medicine. AI systems have the potential to analyze large and complex amounts of data and identify new patterns and correlations. This makes them particularly valuable for healthcare, from anamnesis and diagnosis to therapy.

The introduction of intelligent chatbots and apps offers patients constantly available access to medical help, for example to support psychological treatments.

The potential of AI is also evident in the field of medical aids: AI-supported exoskeletons can restore mobility to people with walking disabilities, while AI-based assistance systems can predict possible complications during surgical procedures, thereby improving surgical management and saving lives.

The analysis of medical images is another area of application in which AI systems are already outperforming humans. Doctors no longer have to spend hours examining MRI and CT images for cancerous tissue, as algorithms can now do this more efficiently and precisely. Given this potential, it is not surprising that patients are increasingly demanding treatment with AI. The legal provisions of the DigiG take this development into account by facilitating access to intelligent medical devices and expanding their eligibility for reimbursement.

Is there a right to treatment with AI?

Despite the advantages of AI in medicine, the question arises as to whether patients have a right to treatment with AI. In Germany, access to healthcare is usually via GPs or specialists, the first point of contact for potential treatment with intelligent medical devices. A key issue here is the tension between the patient’s right to self-determination and the doctor’s freedom to provide treatment.

A treatment contract between doctor and patient forms the basis for every medical intervention. While patients have the right to decide on their treatment, they cannot demand a specific treatment method. Medical freedom of therapy protects doctors from having to use methods that they consider unsuitable. There is only an obligation to use new treatment methods if they are recognized as the medical standard

The integration of intelligent medical devices into statutory health insurance (SHI) depends heavily on their costs and medical benefits. The Federal Joint Committee (G-BA) plays a decisive role in the evaluation and approval of new examination and treatment methods. So far, however, there are only a few AI-supported applications that have been officially recognized.

A special legal framework exists for digital health applications (DiGA), which allows their use under certain conditions. The question of whether limited access to AI-supported treatments is unconstitutional remains open. The Federal Constitutional Court has derived fundamental rights that could oblige the state to guarantee access to necessary resources.

However, innovative technologies are not yet recognized as absolutely necessary for basic care. An exceptional case could exist if established treatment methods are lacking and an AI treatment offers a realistic chance of recovery.

The question of whether limited access to AI-assisted treatments is unconstitutional remains open. The Federal Constitutional Court has derived fundamental rights that could oblige the state to guarantee access to necessary resources. However, innovative technologies are not yet recognized as absolutely necessary for basic care. An exceptional case could exist if established treatment methods are lacking and an AI treatment offers a realistic chance of recovery.

Conclusion

Access to smart medical devices and the right to AI treatment are complex issues that pose technical, medical and legal challenges. While AI offers considerable potential in medicine, financial, regulatory and ethical hurdles still stand in the way of its widespread application. However, technological progress and social developments will play a decisive role in how these new technologies are integrated into healthcare in the future.

New Developments in Digital Health Applications Through the Digital Health Act (DigiG)

With the enactment of the Digital Health Act (DigiG) on March 26, 2024, the German healthcare system is facing significant changes. These new regulations aim to improve the integration and utilization of digital health applications (DiGAs) and optimize their reimbursement mechanisms. This article summarizes the key changes and explores the implications for medical device manufacturers.

One of the central innovations of the DigiG is the expansion of reimbursement eligibility for DiGAs to include Class IIb medical devices. Previously, only Class I and IIa products were eligible for reimbursement. This expansion now allows for the integration of more complex and potentially riskier applications into healthcare, which is justified by the gained expertise of the Federal Institute for Drugs and Medical Devices (BfArM).

Another important point concerns pregnant women, who are now also entitled to DiGAs, provided they meet the requirements of § 33a SGB V. Additionally, specific regulations have been introduced for the treatment of diabetes in structured treatment programs. This has led to the creation of the category of digital medical applications (DimAs), which allows for greater integration of digital processes into therapy.

This applies to risk class IIb, agreements and performance measurements

For DiGAs of Class IIb, stricter proof requirements now apply. The positive healthcare effect must be demonstrated through a prospective comparative study that evidences the medical benefit of the application. This is intended to strengthen the insured’s trust in more complex DiGAs and ensure their efficacy and safety.

The DigiG prohibits DiGA manufacturers from making agreements with manufacturers of pharmaceuticals or medical aids that could restrict the choice of the insured or the freedom of therapy for physicians. This measure is intended to ensure that no DiGA is designed to be used only with specific drugs or aids, which could lead to negative cost implications for statutory health insurance.

A new feature is the introduction of accompanying success measurement. This aims to create more transparency regarding the use of DiGAs and will be used for future price determination. Manufacturers are required to submit anonymized and aggregated data that includes, among other things, the duration and frequency of use and patient satisfaction.

Turning point for the system of digital health applications

A significant portion of the reimbursement amounts for DiGAs must now be performance-based, at least 20% of the total amount. This regulation affects both new and existing reimbursement agreements and could pose a challenge for manufacturers as they will need to adjust their pricing accordingly.

The Digital Health Act marks a turning point for the system of digital health applications in Germany. While it creates new opportunities and expanded applications for DiGAs, it also brings stricter requirements and new challenges for manufacturers.

In particular, the expanded reimbursement eligibility, the introduction of success measurement, and the stricter proof requirements for higher risk classes are points that manufacturers need to strategically consider from the start. It remains to be seen how these regulations will perform in practice and what long-term effects they will have on the healthcare system

Illegal health advertising: alternative practitioner praised incense in TV shopping

In the case before the Higher Regional Court of Celle on 27.02.2024, the admissibility of advertising by a naturopath promoting the effects of frankincense and curcumin against diseases such as osteoarthritis, Alzheimer’s and long Covid in a teleshopping channel was denied. Statements such as “curcumin tends to work better than diclofenac for arthritic complaints” were made to promote the food supplements.

The natural herbs mentioned are subject to the provisions of the Health Claims Regulation and the Food Information Regulation (LMIV), to which the teleshopping channel is also subject.

The operator of the channel refused to issue a cease-and-desist declaration, as the alternative practitioner allegedly only spoke about his own experiences and made no direct reference to the products.

However, the Higher Regional Court (OLG) of Celle ruled that it was irrelevant whether the alternative practitioner only spoke about his own experiences. It was more important that the viewer’s statements conveyed the impression that the products had healing properties. This violates Art. 7 para. 3 and 4 of the FIR, according to which no healing properties may be attributed to foods.

In addition, the advertising for the detox product violated the Health Claims Regulation, as health claims were made that are not permitted. The OLG ordered the channel to cease and desist in accordance with the provisions of the Unfair Competition Act (UWG) and the LMIV.

Regulatory Updates of the past months

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EU Data Act: New requirements for the design of connected products

The Data Act represents a significant change in data regulation driven by the GDPR. The Data Act enables the sharing and utilization of personal and non-personal data (product data pursuant to Art. 2 No. 15 DA) for the benefit of users. It affects connected, smart products as defined in Art. 2 No. 5 DA, including medical devices such as laboratory devices connected to the internet via middleware and medical devices connected via Bluetooth, provided the associated companion app is internet-enabled. However, connected services according to Art. 2 No. 6 DA, such as apps or other applications, lead to delimitation difficulties and legal uncertainties, as not every connected service communicates directly with the medical device (e.g. diary apps that prepare data graphically).

The scope of the Data Act only extends to raw data and not to analysis results generated using this data. The five major regulatory acts (DSA, DMA, DGA, AI Act, DA) are intended to generate more than 270 billion euros from IoT data and save up to 120 billion euros in the healthcare sector. This creates an area of tension between data protection law and data economy law, as the scope of the personal reference of data has a large potential overlap with machine-generated data, which falls under the Data Act. According to Art. 1 para. 5 DA, however, the GDPR should take precedence over the Data Act.

Another problem is the dysfunctional triangular relationship between the data owner (manufacturer), user and third parties (e.g. repair companies). The data owner often has a data feedback loop due to the product design, which affects its de facto control over the data generated by the user. The Data Act does not give the user a data ownership right, so the data remains a non-private, public good. Third parties could have an interest in the data in order to develop their own algorithms.

Machine-generated data is not covered by the GDPR, so the user can only assert limited claims to this data. The relationship between the manufacturer and third parties is also new, as the manufacturer could cite data protection or trade secrets as a counterargument. Primary data in the area of medical devices is particularly relevant as it includes physical, biological-chemical and regulatory indicated values as well as the number of quality controls. According to Art. 3 para. 1 and Art. 4 para. 1 of the Data Act, users should have access to this data or be given direct access to it. This could be understood as an in-situ right, i.e. a processing right in the server environment of the data controller or at least a download option that also implements the rights of data subjects under the GDPR (self-service portal).

A legislative loophole currently exists for real-time data access, subject to the technical feasibility and relevance of the data. The obligation to provide data does not apply to small and micro-enterprises in accordance with Art. 7 para. 1 GDPR.

Revision of the European Packaging Ordinance

The EU is planning a new packaging regulation to increase the reusability of packaging and thus reduce greenhouse gas emissions, as required by the Climate Protection Act. A transition period of five years is intended to ensure that medical products, in-vitro diagnostics and human and veterinary medicines are also greenhouse gas-neutral by 2050.

Currently, 40% of plastics and 50% of paper in the EU are used to produce packaging made from primary raw materials. As 36% of packaging ends up as waste and around 30 million tons of plastic are incinerated every year, this results in CO2 emissions of around 80 million tons. The main aim of the new regulation is to improve the recyclability of materials and generate secondary raw materials.

The recycling rate in Germany was 46% in 2020, and even frontrunner Lithuania only reached 56%, far below the target for 2030. The new requirements cover the entire product life cycle, although special requirements, such as the Human Medicinal Products Directive, continue to apply. Compliance with the requirements is the responsibility of manufacturers and importers.

It is important to differentiate between recyclability and recycling rate. The former is assessed on the basis of the packaging components used and certified by external testing companies. The exact criteria are to be defined by delegated acts. Articles 5-10 of the regulation define the requirements that must be verified by technical documentation. As many details will only be specified later, not all details are known at the time of entry into force.

The regulation does not explicitly prohibit the use of certain materials, but sets requirements for the sorting and reuse of certain materials. According to Article 6, all packaging must be recyclable in future in order to replace primary raw materials with secondary raw materials.

Article 7 stipulates that plastics must contain a minimum amount of recycled plastics, which can be collected in the yellow garbage can, for example. Packaging for products with a medical purpose will not have to meet the requirements until 2035 and will be given a transitional period of five years as well as a special regulation on the use of post-consumer recyclates.

With this regulation, the EU is taking an important step towards a sustainable packaging industry and climate neutrality. Manufacturers and importers are now called upon to implement the new requirements and thus make a contribution to environmental protection.

In order to avoid the impact on the environment, the polluter pays principle should be implemented in the legislative process, which is one of the most important principles in EU environmental policy (Art 191 TEU).

The Packaging Regulation will be a challenge for medical device manufacturers, as some packaging (e.g. blister packs) is not yet recyclable, and since many different primary packaging types are used, it is difficult to accurately estimate recyclability. Switching to the new packaging regulations is therefore recommended as soon as possible.

However, medical devices and pharmaceuticals benefit from the longest transition period of 12 years, but it is foreseeable that ecological packaging will become a competitive criterion. For some member states, however, the regulation represents a step backwards, as they already have more advanced systems that exceed the minimum standards of the regulation.

Exploring Artificial Intelligence and Cybersecurity in the context of the MDR

The European legal framework, including the Medical Device Regulation (“MDR”) and the upcoming regulation on AI (“AI Regulation”), places strict requirements on the safety and performance of AI-based medical devices.

The relationship between the Medical Device Regulation and the AI Regulation is characterized by supplementary certification requirements: While the MDR regulates the safety and performance of physical medical devices, the AI Regulation addresses specific risks and the data integrity of AI systems. Products that fall under both sets of regulations must fulfil the requirements of both regulations in order to be certified, which offers a double safety guarantee for both physical and software-related safety.

What is the challenge?

The challenge is to find a balance between promoting technological innovation and ensuring the necessary safety standards. The regulatory framework must be constantly evolving to meet both advances in AI technology and patient safety requirements. This requires a continuous review and adaptation of regulatory provisions in order to promote and protect both innovation and patient safety.

Quick updates from various legal and regulatory areas:

Data Protection Law

Unauthorised data queries in German hospitals

On 22 April 2024, the State Commissioner for Data Protection and the Right to Inspect Files (LDA Brandenburg) published its activity report for 2023, in which cases of unauthorised data queries in various hospitals were identified in which employees had accessed a colleague’s electronic patient file without any official reason.

These breaches of data protection were categorized as employee excesses, for which fines were imposed on the employees concerned. However, it was emphasized that a possible breach of data protection must be investigated in such cases.

Possible amendment to the German Federal Data Protection Act

The German government is planning amendments to the Federal Data Protection Act (BDSG) in order to implement agreements made in the coalition agreement and to implement the results of a BDSG evaluation. The draft bill intends to institutionalize the Data Protection Conference (DSK) in the BDSG and introduce additional paragraphs to improve the enforcement and consistency of data protection.

In future, companies and research institutions with cross-border projects could be subject to only one state data protection supervisory authority, which should avoid legal uncertainties. Other provisions concern the application of the BDSG only to data processing with a domestic connection and the revision of the regulations on video surveillance of non-public areas.

Medical Law

BVMed and VDGH draw up white paper

The German Medical Technology Association (BVMed) and the Association of the Diagnostics Industry (VDGH) have drawn up a joint position paper. The paper highlights problems such as inefficient regulatory structures and bureaucratic obstacles that have arisen as a result of the regulations.

The white paper offers concrete proposals for solutions, including the introduction of fast-track procedures for innovations, efficiency gains through the implementation of good administrative practice and harmonisation through centralisation in order to make Europe a competitive MedTech location again.

Baden-Württemberg State Social Court (LSG) on digital health applications

According to a decision of the LSG Baden-Württemberg of 3 April 2024 (Ref.: L 11 KR 579/24 ER-B), digital health applications pursuant to Section 33a (1) SGB V are medical devices of a low risk class whose main function is based on digital technologies and are intended to support the detection, monitoring, treatment or alleviation of diseases in insured persons or in the care provided by service providers. The main function of the digital health application must be characterized by digital technologies in all areas of application.

These applications must not merely serve to supplement or control other medical devices. This applies in particular if the software merely reminds the patient of the procedure and provides recommendations for adjusting the therapy, as the software does not offer any independent diagnostic or therapeutic services.

Compliance

Germany shows no improvement in the CPI index

Transparency International published the Corruption Perceptions Index (CPI) 2023 at the end of January 2024, which is based on data from 12 independent institutions. Germany scored 78 points, one point less than the previous year and the same score as ten years ago.

The organisation’s points of criticism include gaps in the fight against corruption, particularly among elected officials, shortcomings in whistleblower protection and the lack of effective corporate criminal law. Denmark, Finland, New Zealand and Norway top the ranking, while South Sudan, Syria, Venezuela and Somalia are at the bottom of the list.