Evaluating The Economic Impact Of Digital Therapeutics

Digital therapeutics (DTx), including prescription digital therapeutics, have demonstrated clinical efficacy, but economic evaluation is critical to payer reimbursement and provider adoption. Assessing and showing the cost-effectiveness and value of DTx requires a broader approach beyond the standard model used for pharmaceuticals and medical devices. Let's look at the challenges to evaluating economic impact and techniques that have been used and published to date along with our guidance on choosing the best data and assessment models to demonstrate value.

Pharma and medtech evaluation isn't adequate for DTx

Most economic evaluations of DTx rely on standard methodological approaches for drugs and medical devices. The typical approach to assessing medicines and medical devices does not fully and appropriately evaluate DTx economic impact. Evaluation is usually from the health system or payer perspective only, looking at health and clinical results only, using solely cost-utility analysis (CUA). This pharma-medtech approach doesn't align with the distinct nature of DTx, which entail more complex interventions with multiple interacting aspects or features.

Conducting a comprehensive and reflective economic evaluation of DTx requires a broader assessment of costs and outcomes that include non-health benefits as well as opportunity costs and gains. Additionally, time horizons for DTx pilots and scale-up necessitate a more extended evaluation than the typical 1 year view. Lastly, DTx tools evolve over time. Any assessment must follow technology changes, usage dynamics, and attrition. DTx features are distinct and affect evaluation design, measurement, analysis, and reporting for randomized and non-randomized studies.

Analysis models typically used for healthcare economic evaluation

There are several models available for evaluating the economic impact of DTx. Table 1 lists and defines each model. Of these, CEA, BCA, and CUA are used most often to evaluate healthcare interventions and programs. Related to DTx, a literature review of published DTx economic research found that CEA was used in all studies. CUA was added in only 22.9% of studies. These methods can demonstrate whether the desired economic impact is worth the costs and investment when used together.

However, these methodologies do not go far enough to measure the full economic impact of DTx value.

Table 1: Analysis models for DTx economic evaluation

Demonstrating DTx value requires a broader approach with new data types and sources

A tailored approach to DTx economic evaluation would include broader data types and sources, additional outcomes and value points, non-health and clinical benefits, as well as rely upon a wider range of methodological considerations and areas to assess.

Research conducted in 2022 and published in Pharmaeconomics, Economic Evaluation of Digital Health Interventions, recommends an evaluation methodology that fits the unique value and nature of DTx. The authors highlight 6 aspects that affect DTx economic impact. Their analysis shows the differences between DTx (which they term as digital health interventions), pharmaceuticals, and medical devices.

The 6 aspects that should be considered when evaluating economic impact include:

1. Comparator types
2. Product evolution
3. User involvement
4. Intervention cost
5. Benefit assessment
6. Non-healthcare impacts

Table 2: Critical differences among modalities compared to DTx and their economic evaluation implications

What stands out from their work are the aspects unique to DTx that should be included in any economic impact evaluation. When considered as part of a full economic analysis, user involvement, non-health benefits, and non-healthcare impacts provide a richer and more relevant view of the value DTx can deliver.

Recommendations for improving DTx economic evaluation

Here are 4 suggestions for tailoring or widening the economic evaluation of DTx to uncover and demonstrate a fuller investment impact.

1. Create an impact inventory that considers broader health and non-health impacts

An impact inventory considers a broader view of the impacts and sectors that should be evaluated through an economic assessment. While economic evaluations of pharma and medical devices typically focus on patient health benefits, DTx offers broader impacts, including how a new modality improves care delivery and access. What other operational or business impacts should be assessed? These could include patient requests and issues solved versus appointments made or the number of patients managed under 1 physician due to DTx support.

Benefits could also include improvements in care quality, patient satisfaction scores, reductions in grievances or complaints, as well as improvements in brand sentiment and community perception. Therefore, an impact inventory collects and catalogs all relevant health and non-health costs and benefits to be assessed inside and outside the healthcare organization.

2. Assess DTx from a broader economic perspective

Most DTx economic impacts take a payer or provider perspective. A systematic review found that 68.7% of economic evaluations for DTx took a payer, program, or provider perspective. In that same study, a societal costing perspective was used in 54.3% of studies. Taking a societal perspective is preferred as it accounts for all gains and expenses that are direct or indirect and support not only the healthcare organization but the wider neighborhood, community, and market the organization serves.

3. Go beyond cost-effectiveness analysis (CEA) and benefit-cost analysis (BCA)

While CEA is used most often to assess the economic impact of healthcare decisions, cost-consequence, and cost-utility analysis can highlight more of the tangible benefits of DTx. Both models encourage a comprehensive, transparent description and comparison of the costs and effects among relevant interventions.

A cost-utility analysis can complement other methods by providing a cost-per-QALY (quality-adjusted life years) assessment. This approach combines the health effects in quantity in life years and health-related quality of life into a single measure called QALYs. It's important to note that assessing QALY may not be suitable for evaluating digital therapeutics when used without context. DTx benefits can be diffused and include highly valuable non-health benefits that QALY may not adequately capture.

4. Consider a longer time horizon and the efficiencies of scaling

DTx technologies experience a falling average cost as it achieves scale. A longer time horizon for analysis and comparisons between cohorts over time can demonstrate increasing overall value at scale. While most provider and payer pilots last a single year or less, a longer horizon offers the opportunity to adapt the technology over time, improve on attrition issues, and achieve cost efficiencies with more participation.

RTI Health Advance supports healthcare on its journey into digital therapeutics

Our team of experts spans digital health, data science, healthcare economics, population health, as well as other disciplines. When brought together, our team helps answer the most pressing questions payers, providers, and digital health developers have about DTx:  Will this tool change the cost of care? What kind of impact is it making on patient health and care delivery? How do costs and ROI compare to direct and indirect health and non-health benefits? Contact us, and let's discuss.