Pharma 2022

Oct 11, 2022 - Oct 13, 2022, Nice Acropolis, Nice, France

The world’s gathering for pharma pioneers and health innovators

Paving the payment path for DTx 

The digital therapeutics reimbursement process is maturing but complexity and risk remain to be managed

The case for Digital therapeutics (DTx) has never been stronger. Each month new DTx are securing approval, some are finding paying customers, and a handful have even become the standard of care. 

Their role within the rapidly growing digital-first healthcare paradigm became clear during lockdowns. And in the aftermath, many DTx products stand ready to help overburdened healthcare systems manage the strain in areas including chronic disease and mental health.

Key to realising such potential are clear paths to reimbursement and there are some promising signs that reimbursement pathways are becoming less experimental and more established.

In the US, both payers and PBMs are establishing digital formularies, laying the ground for broad claims-based reimbursement. In Europe meanwhile, Germany’s Digital Health Apps program (DiGA) is the often cited model for other countries to emulate in the way it fast-tracks reimbursement following certification. Belgium’s mHealthBELGIUM and a comparable scheme under development in France are both following in DiGA’s footsteps.

But despite all this progress, the market remains small and is growing at a frustratingly slow pace. Significant barriers to reimbursement remain. Payment models and payment levels vary widely with differing levels of maturity in different regions and between public and private provision.

One of the chief barriers to broader DTx adoption is the patchwork of requirements, approaches and frameworks at local national and regional levels that makes up so much of the time, cost and complexity burden of commercialization.

Europe vs the US
While Europe’s public payers are in certain respects more advanced in their reimbursement approaches compared with the US, the lack of a coherent common EU approach to reimbursement remains a barrier to scaling DTx reimbursement. 

Europe is very far from having a single market for DTx and even within countries, approval and reimbursement decisions are still usually made separately, leaving DTx makers to negotiate and prove their value with every payer. 

“Every country is unique and the reimbursement framework will have to fit in with existing systems,” says Megan Coder, chief policy officer at the Digital Therapeutics Alliance (DTA). “What works in Germany may not work anywhere else. That’s a big issue. The notion that a product would have to have different requirements to go live in various European countries really limits scalability.”

Clearly further work is needed to develop more common agreement between countries on the clinical evidence or real-world outcomes required for reimbursement, via deeper European harmonization, closer work between industry coalitions and within groups including EUnetHTA
- the European HTA network, says Coder. 

In the US, meanwhile, reimbursement approaches for DTx differ greatly between public and private payers. Private pay adoption of DTx is far ahead of public pay. Broad guidance on approaches to, and remuneration for, DTx within Medicare is lacking. This absence is limiting broader uptake and as a result, US commercial payers still evaluate DTx largely on an ad-hoc basis.

Multiple reimbursement pathways further complicate the picture, says Vignesh Ramesh, a digital health expert at PA Consulting. “Because the market is nascent, the avenues of reimbursement for DTx are non standard and evolve based on the solution.”

There are three different potential reimbursement pathways for a DTx in the US given that payers are largely free to contract and pay as they please. These are: 

•    Out-of-pocket patient payments

•    As a medical device where an app is sold to a hospital and claimed as a medical health benefit

•    Via Health Savings Account (HSA) claims via medical benefit exemptions or via national drug codes from a digital formulary

Still in learning mode
US payers are very much still in learning mode when it comes to DTx. From a new survey of 16 payers conducted by Managed Markets Insights & Technology (MMIT), 12 reported facing challenges in adopting digital therapeutics due mainly to the lack of evidence and regulatory guidance. 

According to the survey only a minority of payer plans cover current prescription DTx, while many have never even heard of them. And it found that fewer than 40% of payers have a structured process in place to assess them.

But there is good news. Progress has been made in setting regulatory and reimbursement frameworks in the last 18 months.

A common language
In January the DTA launched its country-by-country guide to DTx Regulatory and Reimbursement Pathways and in May released its DTx Value Assessment & Integration Guide, prepared after a two-year consultation with digital health players, including payers, clinicians, and manufacturers. 

The guide seeks to create a common language and process for healthcare decision makers and DTx developers that can help with product access and contracting discussions. This includes addressing the economic assessments DTx developers will need to satisfy to secure reimbursement, says Coder.

Another relevant scheme is the IMPACT virtual first care (V1C) initiative, co-developed by the Digital Medicine Society (DiMe) and the American Telemedicine Association, which offers a suite of resources, including guides to Contracting, Payment Models and a V1C Coding Library of reimbursable codes.

But despite the work to foster more common approaches to adoption and payment, a number of deeper structural problems remain for developers seeking sustainable reimbursement for DTx at scale.

Disincentives, disconnected data and low pricing
Misaligned incentives are a particularly thorny challenge to broader reimbursement. If adopting a DTx means lower billing and lower profits for a provider, the incentive may not be there to prescribe a cheaper DTx that may be as effective as, for example, multiple in-person sessions with a commercial psychologist that is technically also covered by insurance.

Incentives in principle are more aligned in Europe’s health systems, but other problems are holding up adoption there.

Highly episodic primary care that is often a feature of the top five EU healthcare systems, results in a disconnected health record data trail between primary and in-home care settings, says Ramesh. This makes tracking how a DTx has worked over time hard or even impossible to do, discouraging clinical teams from taking a risk on an intervention whose efficacy they can’t track or measure over time.

Pricing is another issue holding back progress in Europe, he adds. Many DTx business models are based on remuneration commensurate with 50-60% of the pricing of a comparable pharmaceutical treatment but European health systems often pay far less. Combined with Europe’s relatively small markets, this means a DTx may not be viable without very high local market adoption, says Ramesh.

The numbers from Germany, seen as blazing the trail with its DiGA scheme, are sobering here. Up to May 2022, of 130 applications made, only 31 were added to DiGA and prescription numbers were low - estimated to be around 50,000 last year. With only a 4% physician uptake - just 7,000 of 180,000 doctors had issued a DiGA prescription, most of these highly concentrated in the Berlin area.

It’s a reminder of the task facing developers. As Meaghan Schedel, Digital Health Consultant at health technology company HealthXL, notes: “While reimbursement is an important component of success for digital health companies, DiGA has illustrated that it is not the only factor. 

“For a solution to be successful, the hurdles of physician knowledge and acceptance need to be overcome as well as the question of who will provide app training and tech support to patients where needed.”

The way ahead
As we have outlined above, despite some progress in harmonizing approaches to getting DTx into patients’ hands, as well as progress in developing payment pathways, developers still need to navigate a still nascent and highly complex reimbursement landscape. 

There are three chief ways to manage the risks here. 

The first is to focus on the therapeutic areas with the greatest promise. The therapy area will be decisive here in the next two to three years, with capacity constrained ones that have too few providers offering the most promising DTx markets, says Ramesh. “Look at one or two indications that can drive change to an ecosystem and ease the burden being carried by health systems.

“Where there is a high cost and capacity constraint, we are seeing a significant amount of openness from regulatory agencies and from payers to go-ahead and negotiate a contract that is commercially viable,” says Ramesh.

Big Health’s Sleepio app, along with Pear’s reSET and reSET-O substance addiction apps, are good recent examples that have earned reimbursement at scale from both commercial and government payers.

Prepare the ground
Early discussions with regulators and payers about realistic pricing levels and evidence requirements for reimbursement will help developers decide if further development of a DTx is viable or not. This can help manage the risk of committing to costly new studies.

Being strategic about where to focus efforts geographically is another approach that can help optimize reimbursement. The US can be the most profitable focus for commercialization efforts given higher remuneration rates, while Europe may be the best place to validate a DTX.

Even a smaller market share in the US can work given that pricing is more realistic, says Ramesh. “Most manufacturers will use the EU as a way to get data to support evidence but for the large part, the US is going to be the largest game in town in the next three to five years.

“France, Italy and the UK will be breeding grounds to collect the data but unless the frameworks there evolve to give a large percentage of the pricing benchmark, it will be an afterthought in most companies’ minds in terms of getting significant market share or revenue.”


Pharma 2022

Oct 11, 2022 - Oct 13, 2022, Nice Acropolis, Nice, France

The world’s gathering for pharma pioneers and health innovators