Digital Therapeutics (DTx) is among the most promising avenues for digital health at present: in fact, just last month, Reuters quoted Rock Health figures showing US investment in digital therapeutics products increased 260% between 2020 and 2021.
We’ve made significant steps forward since 2020, when our last DTx recap reflected on the general trend of definition and consolidation of DTx technologies, outlining the scope of their impact. This progress is no doubt partly due to patients’ increased exposure to digital health solutions during the COVID pandemic. Telehealth and virtual consultations have made DTx seem far more ‘normal’ to patients previously only accustomed to traditional, in-person care settings.
But while DTx investment continues to rise, the growth and adoption of these solutions is not evenly distributed across all markets: there are clear signs that those markets with clear reimbursement pathways are leading the way. At the same time, there’s a broader opportunity to further educate patients on the value of DTx, as well as the clinicians who, ultimately, serve as the gatekeepers to prescriptible DTx solutions in many regions.
So what’s needed to broaden DTx distribution across all markets and further convince clinicians as to the efficacy of DTx? And what else does 2022 have in store for digital therapeutics?
More digital therapeutics, more interested parties
DTx distinguishes itself from other digital tools through its use of evidence-based, clinically evaluated software to actively treat, manage, and prevent a broad spectrum of diseases. Until now, the focus has been on developing and testing solutions to ensure they are valid and guarantee a real impact on patients.
This past year we’ve seen many more DTx solutions come to market. A recent IQVIA report notes that 250 digital DTx tools are now identified, including 150 products that are commercially available. The areas targeted by those DTx tools are also broadening, including addiction treatment, insomnia, multiple sclerosis, ADHD, and weight loss.
To match the growth in number and scope of DTx tools, we’ve also seen pharma companies engage in a slate of new commercial agreements aimed at evolving their DTx capabilities. This has taken the form of conventional acquisitions but also, more strikingly, new partnerships between Big Pharma (like Pfizer) and much smaller digital start-ups that are experts in the field.
What that means for 2022 is more solutions implemented on the ground, and more competition between leading companies developing their own capabilities, be it through partnerships, acquisitions, or, more rarely, internal development. Ultimately, it’s this push for competitive advantage that is likely to drive more widespread adoption of DTx solutions across the board.
More widespread reimbursement boosts the viability of digital therapeutics
Of course, we can’t discuss DTx without considering the financial aspects. Strict regulation and a lack of standardization of reimbursement pathways has been a persistent barrier to further growth in DTx, as lengthy sales cycles restricted reimbursement to individual agreements between health insurers and patients.
This situation is now changing rapidly. Recent developments in Europe, in particular, are a key example: Germany’s launch of DiGA back in 2019 – a fast-track process for rapid approval, testing, and reimbursement for digital apps – has seen significant success, with 28 applications having completed the process. That success has since spurred on similar initiatives across the globe, including France, which is now creating its own immediate-access procedure for digital therapeutics; Belgium, which has created a new framework to reimburse digital health tools; as well as China, the UK, South Korea, Japan, Singapore, and Australia. The Digital Therapeutics Alliance (DTA) has recently compiled a useful list of regulatory and reimbursement pathways filtered by country.
Over in the US, the CMS recently established an HCPCS code for prescription digital behavioral therapy, which should enable the reimbursement of prescription digital behavioral therapies through either pharmacy or medical benefits. Essentially, the code facilitates options for payors to cover, clinicians to deliver, and patients to access these kinds of treatments.
All this shows that reimbursement opportunities will improve drastically in Europe over the next few years, creating an environment where it’s quicker and easier to secure payment for DTx solutions. This prospect of a more reliable payment pathway will no doubt encourage further digital health providers to enter the market.
Growing opportunities in combination DTx solutions
Most notable DTx to date have been software-only products, with early pioneers mostly focused on the mental health space. But one of the greatest changes we can expect to see in the near future is the growing opportunity for medical device vendors to create DTx that combine a software element with a physical device and/or medication.
These ‘combination’ DTx solutions offer traditional device-based companies the chance to further their capabilities in digital health and provide a more appealing, competitive product while retaining value around their core devices. Even some of the biggest players in the medical device space are getting in on the action, as demonstrated by Philips’ recent joining of the DTA. Recent research from HealthXL also identified that 67% of Pharma-DTx partnerships focused on digital companions over the past four years, with 29% focused on standalone DTx.
For pharma, these combination products can effectively reinvigorate older drug lines, creating more competitive offerings that have a better impact on patient outcomes and wellbeing. Essentially, it’s a clear path to more personalized, holistic care.
Not only can these combination DTx solutions boost competitiveness, but the increased clinical validation means they may also further improve reimbursement possibilities. Meanwhile, augmenting traditional device specialism with more complex digital expertise opens the doors to further innovation and diversification in the future.
In a field developing as rapidly as this, there are sometimes just as many questions as answers. To that end, we’ve put together guides to help both pharma and medtech navigate the field of digital therapeutics and digital health more widely.
For more information on DTx, visit our dedicated page here, and to find out how your business could get the most out of digital therapeutics, read our blog: ‘Digital therapeutics partnership models: how pharma can find the right balance’.