What Developers Need to Know to Break into the Digital Therapeutics Market
U.S. digital health investment had a standout year in 2021, topping $21.9B. As reported by Rock Health, top-funded value propositions included research and development, on-demand healthcare, and treatment of disease. Clinical areas of mental health, diabetes, and cardiovascular topped the list for digital health startup offerings. Market movement doubled from the prior year.
Under the broad banner of digital health are digital therapeutics (DTx), evidence-based software applications designed to prevent, manage, or treat disease. These tools are regulated by the Food and Drug Administration (FDA) as medical devices, usually but not always, as software-as-a-medical-device (SaMD).
The COVID-19 pandemic influenced the rollout of DTx used in mental health treatments under temporarily relaxed measures. Still, challenges remain before these digital interventions join other treatments as standards of clinical care.
Commercializing digital therapeutic solutions
The investments noted above are positive indications of a ready market for digital health, telemedicine, and virtual care delivery options. But uptake in DTx prescriptions by providers remains modest while clinicians ascertain how to effectively integrate DTx into patient care plans.
Similarly, the assimilation of DTx into payer reimbursement models is also slow going, largely because they are still under evaluation for treatment efficacy and cost-effectiveness. It’s also difficult to capture the value of devices used as well as the clinician time attributed to monitoring patients and reviewing health data generated by the applications. Current DTx evaluation decisions among payers are primarily ad-hoc.
Given these complexities, digital health software development companies that seek to reach wide audiences through commercialization of these products should enlist skilled partners to guide them through the complexities of provider, payer, and patient interests.
It’s not enough to design a great digital therapeutic solution
Software development companies are often unfamiliar with the nuances involved in navigating the healthcare landscape with the sure-footedness necessary to bring DTx products to the payer or provider markets. Digital delivery pathways raise questions stakeholders are only beginning to understand, let alone solve at scale.
This is because most digital health developers don’t know how to obtain federal regulatory approval, demonstrate clinical effectiveness, master pricing and payer reimbursement thresholds, or communicate plausible superior value of the DTx to providers who may then evaluate solutions for use by their patients.
To gain advantage in a rapidly evolving market, developers must meet the evidence generation requirements necessary to achieve Federal Drug Administration (FDA) approval or clearance, and/or payer reimbursement. Further, to succeed, developers need assistance communicating scientific evidence to regulators, providers, and payers.
For market access, it’s incumbent upon digital therapeutics developers to:
- Generate data and communicate it to stakeholders involved in prescribing solutions
- Ensure the solutions are attractively priced and fairly reimbursed by payers
There must be a better reimbursement solution for commercial penetration in the digital health category
Market access and reimbursement strategies for DTx are being adapted from those used for pharmaceuticals and medical devices. This is problematic because most reimbursement models are largely dictated by the site of care.
For instance, the Centers of Medicare & Medicaid Services (CMS) doesn’t yet have guidance for DTx reimbursement. A solution tailored for digital must be created.
Discerning value in digital therapeutics
In a digital health supply and demand scenario, patients and providers form the demand side of the equation. Health tech developers represent the source of supply. Payers influence both sides.
- Absent comprehensive reimbursement policies from payers for DTx, patients are unlikely to use them. And providers are unlikely to prescribe digital therapies that aren’t financially accessible to their patient populations.
- Absent real-world evidence demonstrating the clinical efficacy and return on investment of DTx, payers will exclude DTx reimbursement coverage from policies, effectively discouraging use. Low uptake by patients means market penetration delays due to lack of documented results and value story.
Questions abound with patients, payers, and providers about digital therapeutics
When considering a digital therapeutic, patients may ask, Can I afford it? Is it easy to use? Is it safe? Is my data protected?
Payers interested in the potential presented by DTx evaluate evidentiary points like, Which outcomes of use matter most? Which product yields the best results? What is the ROI?
Providers devising treatment plans for patients wonder, what is the best possible treatment? Will my patients have better outcomes at lower cost with a digital therapeutic?
To address these and other stakeholder questions, digital therapeutics developers must work through these steps to identify a clear path to market:
Evidence of Effectiveness
What data do we need to justify market access and reimbursement for our product?
Do we need regulatory clearance?
How is our product better than the standard of care?
How do outcomes and costs impact pricing potential for our product?
What kind of studies do we need to invest in?
How rigorously do payers manage the disease?
How do payers handle alternative treatment reimbursement?
Do we have the right pricing strategy?
Do we need additional studies to improve outcomes from product use and coverage?
Payers and providers need evidence that the cost savings and outcomes are real which means investing in the research with objective third parties to produce rigorous and bias-free evidence for digital health solutions.
Ethical concerns with digital health technologies
The nature of a device in continuous use generating a steady stream of personal health data surfaces risk concerns in the areas of cybersecurity, patient privacy, data sharing, and interoperability with medical record systems. The sheer volume of data generated and stored, personal geographic location meta data, and vulnerabilities related to app updates all raise serious questions that health app developers must address when entering the new frontier of passive data collection.
The American Medical Association released a guide on data governance that helps establish roles and responsibilities protecting patient privacy and security.
Rely on RTI Health Advance market access experts to launch your digital therapeutic
RTI Health Advance offers developers strategic counseling and guidance to prepare digital health software developers for getting their products into the healthcare market. We help you navigate evidence assessment, payment and regulatory pathways, and form communication strategies for selling into payers and/or providers.
Use the contact form today to initiate a discussion with our team.