3 topics that matter for startups in the European digital health ecosystem
The digital health startup ecosystem is growing at an exponential rate in Europe. With increasing amounts of groundbreaking treatment methods and investments into the industry, more and more entrepreneurs and investors are looking to expand into healthcare. Startups’ innovative solutions are reshaping practices and perspectives in healthcare.
But many startups struggle in the highly specialised and regulated healthcare sector. Startups need to go through complex clinical and regulatory processes even before entering the market, and many scientific, regulatory and financial hurdles come up in the process of bringing solutions to the users. Since regulations are implemented in different ways across EU member states, there is a large amount of fragmentation between the national markets, too.
While the regulatory environment in Europe is commonly seen as difficult to navigate in, there is also a desire to build bridges between the tech and policy spheres in Europe. According to the EU Startup Monitor 2018 Report, 88% of the startups participating in the survey were planning to further internationalise, with 85% among those planning to expand within the Eurozone. Six out of 10 stated that differences in legislation and regulation were the biggest challenges in this process. According to Atomico’s State of European Tech 2018 report, the majority of founders, investors and policymakers in Europe agreed that European regulation makes it harder to start and scale a tech business. Digging a bit deeper, respondents said that there should be stronger ties between European tech startups/scaleups and governments.
Building up on our exchanges with European health entrepreneurs, we’ve identified three topics that give room for regulatory improvement.
A European Single Market in Healthcare
-More harmonisation of regulatory requirements at the EU level can help reduce market fragmentation in healthcare, reduce costs and increase the overall healthcare quality among EU Member States. EU initiatives such as the European Reference Networks for rare disease treatment and the eHealth Digital Service Infrastructure for cross-border health data exchange, a pan-European interoperable system add value to a unified market in healthcare.
-Regulatory sandboxes can be a powerful tool where conventional methods are too costly or prove ineffective, especially for startups. In the UK, the establishment of regulatory sandboxes successfully support innovation in fintech. According to the FCA’s Regulatory Sandbox Lessons Learned Report, the tool has great potential to reduce the time, cost and uncertainty of getting innovative ideas to the market. At the same time, it allows regulators to work with innovators to ensure consumer protection for new products and services. A European framework on regulatory sandboxes could provide guidance and legal certainty for many innovators, while maintaining a high standard of quality in products and services.
-Collaborative environments are where startups grow best. Providing avenues for more collaboration between corporates, healthcare institutions, policymakers and startups from the design to the marketing stage could lower the barriers to innovation.
-The new medical device regulation is coming into effect in May 2020 and only a limited number of notified bodies ready to operate to certify devices. For this reason, strong support from policymakers to push for the smooth implementation of the new MDR is vital to avoid a backlog of certifications for medical devices, which include digital health apps. The implementation of the new regulation is very resource-demanding from a startup perspective, so there is room for a more differentiated regulatory approach that better captures the requirements.
A Common European Data Space in Healthcare
-Better access to more data, for instance by improving access to public data and fostering measures to encourage private data sharing, is extremely important in healthcare. The legislation on the secondary use of health and social data that came into effect in Finland in May 2019 is a great example of facilitating access to a larger pool of data for better research and innovation, while respecting data privacy of individuals.
-Widespread use of electronic health records (EHR) for the exchange and use of health data in the EU can facilitate cross-border interoperability and reduce the cost of healthcare significantly. This will allow better and faster innovation, while respecting citizen privacy. The electronic health record (DMP) system in France, a free service adopted on a voluntary basis through French territories since its launch in 2011, is a good example of the safe and successful application of EHRs for better healthcare. Another example is Belgian-American Andaman7, which allows patients to create a personal health record (PHR) on their smartphone. The PHR can then be combined with a Health Intermediation Platform to facilitate medical research and care, only with the patient’s consent and complying with all privacy regulations.
-Paving the way for scientific research at the EU level through a common data space in health can add to the EU’s initiatives to build a data economy. This can be achieved through boosting the development and uptake of artificial intelligence in Europe and providing more legal certainty on data sharing, especially for startups.
Artificial Intelligence in Healthcare
–According to MMC Ventures’ The State of AI 2019: Divergence report, about one out of five among Europe’s 1600 AI startups are in the health and wellbeing sector. While ethical guidelines to inform AI development is necessary, over-regulation is not the solution. A regulatory regime that allows AI development can enable more innovation and investment in AI. Regulation and legislation play an important role, as they also set a framework on how data can be used.
-Promoting new AI-driven business models is key. New technologies open new pathways of addressing old problems. Particularly during the early stages of a technological trend, it is crucial to keep an open mind and encourage new business models and uses of technology.
-More funding can make the EU an AI champion. One example is the Commission’s plan to support the development of a common database of health images (anonymised and voluntary) in 2020 to improve diagnosis and treatment of common forms of cancer. Such initiatives can boost the uptake of AI in Europe.
Navigating the policy environment can be complicated. Due to lacking resources and time, it is not always a priority for entrepreneurs. Startups need a strong voice in politics and government to be able to address problems and potential bottlenecks in innovation. The aim of Allied for Startups DTx is to be the bridge between startups, policymakers and stakeholders in the European healthcare ecosystem in order to lower regulatory barriers, enhance growth and support innovation for startups. Startups can only push for fundamental improvements in regulations through a unified voice. This will pave the way for better healthcare across the board.