Reimbursing Digital Therapeutics Companies – What’s the Right Approach?

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Every year, 125,000 premature deaths occur annually in the US because patients don’t take their medicine. It’s a shocking statistic and illustrates the lack of innovation in the healthcare sector. But at Star, we believe there’s a technological solution to any challenge, however complex. That’s why we’re convinced that DTx healthcare solutions have the potential to transform the lives of millions of people. 

Tapping into the latest technology

But before we go into that, it’s worth defining what Digital Therapeutics (DTx) are. A subset of digital health, DTx solutions use AI, machine learning (ML), natural language processing and other health innovations to prevent, manage and treat medical disorders. It’s also worth noting that unlike apps and other devices that purport to improve health outcomes, DTx products are backed by evidence and are subject to regulatory scrutiny. 

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Better outcomes 

And now, thanks to the widespread adoption of smartphones, these solutions have come of age. We’ve seen compelling evidence that DTx solutions are already shaking up the digital therapeutic landscape and are having an impact on the treatment of chronic conditions like diabetes and asthma. Take Propeller’s digital platform. It has improved medical adherence amongst its users by up to 58 percent, and reduced asthma-related visits and hospitalizations by 57 percent. 

Achieving medical buy-in

But one question remains unanswered – will DTx products gain traction within the medical profession? There’s no doubt that healthcare is becoming more personalized. Nowadays, people have no problem wearing heart rate trackers, something which would have been unthinkable ten years ago. But the medical profession as a whole remains conservative and risk-averse, which is holding back the industry. 

Finding a route for reimbursement 

If DTx is to take off, there needs to be clear pathways to reimbursement. The situation is complicated by the fact that payment models vary significantly across different regions. Europe is still a long way from becoming a single market for DTx, and even within individual EU countries, approval and reimbursement decisions are often taken separately. The situation is no better in the US. Reimbursement approaches differ widely between public and private payers, and at present, there is no guidance for the remuneration of DTx within Medicare. 

Some steps have been taken to improve the situation. In January 2022, the Digital Therapeutics Alliance (DTA) published a guide covering DTx regulatory and reimbursement pathways in eight countries. But while initiatives like this are to be welcomed, significant barriers to reimbursement remain in place. 

Promoting DTx through pull marketing 

So, what’s the solution? Some experts have suggested that DTx manufacturers should work with HR departments to offer wellness and prevention programs to employees. Others have proposed tapping into the telehealth side of medicine to encourage greater clinical takeup. We favor a different approach. Our research indicates that some healthcare professionals (HCPs) are reluctant to adopt DTx products and are cynical about their merits. We believe that the best way to address this is to start with a direct to consumer model so that patients see the value first. By turning patients into DTx advocates, there’s a greater chance that HCPs will follow suit. 

A market on the move 

Whether or not this proves to be the right strategy, there are reasons for being optimistic about the future of DTx. Every month new DTx products are receiving approval and are finding paying customers. And word is spreading amongst policy makers and payers. 

Cutting costs and facilitating change 

We welcome anything that moves the DTx market forward. It’s estimated that by 2030, there will be a global shortage of 15m healthcare workers. Against this backdrop, DTx solutions can play an important role in facilitating positive behavior change. And with 86 percent of healthcare costs in the US alone driven by diseases that can be cured or slowed down by behavior change, the benefits for budget control are clear. Star technology services worked with some of the world’s biggest providers and their healthcare consulting team knows first hand how powerful these tools can be. It’s time to embrace everything DTx has to offer. 

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