Estonia has a knack for surprising us with fresh approaches to innovation. At first glance, “Making illegal things legal” is an unexpected motto for a government body, but at Accelerate Estonia it is the job description. The agency was set up in 2019 under the Ministry of Economic Affairs and Communications to work with companies whose products run into existing law.
It helps them by working with ministries to change the rules, so the companies don’t have to change the product.
Its best-known health case is due on Estonian streets next spring: automated self-service pharmacies that can dispense prescription medicines without a pharmacist on site, a first for Europe.
It took two and a half years, changes to seven separate regulatory provisions and long negotiations with pharmacy owners, regulators and patient groups to get there.
NXTin.Health in conversation with Olari Püvi, Head of Accelerate Estonia, examines Estonia’s innovation mindset.
Accelerate Estonia’s slogan is “making illegal things legal”. What does that mean day to day?
It is exactly what we do. We were founded under the Ministry of Economic Affairs and Communications as a government entity, with the backing of our ministers. That matters, because it means we have a formal mandate to see an initiative through to the end, which a lobbyist hoping for an outcome does not have.
We look for companies that have hit a regulatory obstacle. Then we work out how the regulation could change to give them access to the market, so they can keep their idea, product or service as it is. Self-service pharmacies are just one example.
We are largely sector-agnostic. We work with water reuse companies, drones and other unmanned aerial vehicles, a range of health technologies and artificial intelligence. There is a lot of regulatory uncertainty in all of these areas. And we look for companies globally, not only in Estonia. In larger countries with several layers of government, such as the United States, Germany, the United Kingdom or Spain, resolving this kind of issue can take up to ten years.
How is that different from a typical government innovation lab?
We work in reverse. A standard government lab identifies a problem in the public sector and then looks for a private-sector solution. We start with an innovative private company that has run into a regulatory barrier. Then we sit down with the relevant ministries and the Prime Minister’s office, work out whether a change is feasible and make it happen.
We collaborate a lot with the Ministry of Finance on fintech, for instance, and with the Ministry of Social Affairs on self-service pharmacies and genome data. Our role inside government is to find innovative ideas that strengthen the economy and to give entrepreneurs a route forward.
In that sense we act as a fast track. We test an initiative in Estonia, update the regulations locally and then communicate those changes to influence EU directives. Opening a market in Estonia alone does not create a big market. Founders need access to a substantial market, or at least the ability to scale.
Let’s look at the self-service pharmacies. What stood in the way when you started?
Nearly three years ago, a number of regulations kept self-service pharmacies off the market. The most obvious one was the legal requirement for a pharmacist to be physically present. That in turn required dedicated facilities on site, such as sinks and toilets. In the end we had to change seven different regulatory provisions.
There was also a real chicken-and-egg problem. The Minister of Social Affairs at the time wanted operational data before amending the regulations. But you can only gather data with an active business, a machine actually operating, and the existing law did not allow that.
Solving it took almost two and a half years before it reached government level. We coordinated with the Ministry of Social Affairs, the pharmacy associations and disability advocacy groups, to make sure the product would be accessible to everyone. We also had long negotiations with the established pharmaceutical distribution companies, which were worried about disruption to the market.
The medicines agency, regulators, industry and trade associations all had their own concerns. How did you get them to agree?
It took a lot of time and direct negotiation, and it meant specific compromises. Originally we wanted the machines to operate without a fixed physical address. To protect market stability, the existing pharmacy operators insisted on fixed addresses so they could keep oversight.
We also agreed a rule that any one pharmacy chain can own a maximum of four automated machines. That stops a foreign entrant from opening a single small pharmacy and immediately putting out hundreds of machines. These were logical compromises, and they brought the industry on board.
Pharmacy is one of the most traditional markets in healthcare. Did that make the work harder?
The whole health tech sector combines innovation with a lot of market protection and scepticism, so progress is slower than in many other verticals. We had to show the public benefit, both to the Ministry of Social Affairs and to the general population. When something delivers a better public service and wider benefits for society, established businesses ultimately have to adapt.
Where does the project stand now?
The legislative changes have been approved, and the remaining government steps should be completed within a few months. We expect the first machines to be on the streets in March.
We are currently working with Grab2Go. One principle is important to us: we partner with a pioneer in a given field, but the market stays open to any other company building similar technology.
The March timeline gives time to both sides. Grab2Go needs it as the manufacturer, and so do the pharmacists, who are setting up the digital data links and connecting their systems to the central medical data registries.
How many automated pharmacies do you expect to see in the first year?
The pharmacy chains have already identified around ten locations, mostly outside the larger cities. Today Estonia has only three pharmacies open around the clock in the entire country, two in Tallinn and one in Tartu. Towns with more than 10,000 residents have no round-the-clock access to medicines.
The municipalities actually asked for these machines, because residents who need medication urgently would otherwise end up relying on the ambulance service. Putting automated units in place is far more cost-efficient.
How do the units work in practice, and how often will they be restocked?
The units are the size of a standard shipping container. They have internal cold storage and special compartments for medicines that need protection. Restocking will depend on local demand, anywhere from every three days to once a week. The current Grab2Go model can hold up to around 1,000 different medicinal products.
Do you have figures for the savings, for example from not having to staff a physical pharmacy?
The financial analysis on the operating side is done by the companies themselves. Our analysis looked at savings for the healthcare system. It showed about 7-10 million euros saved per year by reducing non-emergency ambulance call-outs.
Why is Estonia in a position to do this first? How much depends on the e-prescription and digital ID infrastructure already in place?
The underlying infrastructure is essential, because the machines dispense prescription medicines as well as over-the-counter products.
We have identified 17 countries that are following the Estonian rollout. Once the units have been operating on the open market for six to twelve months, I expect foreign interest to focus on two things: the machines themselves and the regulatory framework that goes with them. For that, Accelerate Estonia prepares policy transfer packages. They set out exactly which legislative changes were made and how the negotiations were handled, so other countries can adapt the framework to their own legal systems.
Which countries are most likely to follow?
Canada is a strong candidate because of its geography, with many isolated settlements of a few thousand people far from central infrastructure. Sweden, Norway and Austria are also in active contact with us about the framework.
What is next for Accelerate Estonia in healthcare?
Apart from the regulatory questions that come in directly from businesses, our major focus is the national genome bank. Estonia holds samples from more than 200,000 citizens. At the moment access is limited to academic research, so private companies developing products and services cannot use the data.
Together with the Ministry of Social Affairs, we have set up a transparent framework that allows private companies to access genomic data for product development, subject to approval by an ethics committee. We have companies in our pipeline preparing to pilot the process, so that the industry ends up with a standard route in.
We also get requests from medical device companies hoping to speed up licensing under the Medical Device Regulation. We do not fast-track statutory safety assessments. What we do is work towards clear, predictable administrative timelines. A defined regulatory pathway over several years gives private investors the certainty they need to fund deep-tech and science-based companies beyond the first public research grants.
These projects run for years, and ministers and officials change. How do you keep the ministries aligned?
Changes in personnel can push a project down the priority list. To prevent that, we set up formal inter-ministerial working groups under our mandate, with legal counsel and representatives of the relevant ministries and if necessary the Prime Minister’s office. That keeps continuity and makes sure every institution knows what is happening.
Negotiating with established industry players is still the most time-consuming part. But because Estonia’s economic strategy focuses on innovation and digitalisation, ministries generally support initiatives that give the country a leading position in a new sector.
Would you encourage innovators from other countries who are stuck on regulation at home to test their solutions in Estonia?
Yes, that is the core purpose of Accelerate Estonia. Around 60 per cent of the companies in our pipeline are now foreign, and historically there has been particular interest from the United Kingdom since Brexit. When a foreign company comes to us, we also try talking to the regulators in its home country and use the Estonian testing data to make the case for its model.
Through Estonia’s e-Residency programme, a foreign company can set up an Estonian legal entity to run regulatory trials, apply for grants and process data, without relocating its entire workforce.
I should also mention that we are finalising an experimentation framework law. It will create a formal regulatory sandbox, so companies can test innovations that conflict with current rules and gather the evidence needed for a permanent change in the law.
Photos: Accelerate Estonia
