Introduction to Digital Therapeutics and Potential Payer Management

The digital health market has grown consistently over the past decade. Digital health companies aim to use technology to help make the healthcare system more focused on the patient and better equipped to deliver patient access and outcomes.

Many chronic conditions require lifelong treatment and clinicians recognize that patient adherence to these medications can be challenging. Digital tools can provide insight into patient adherence and help patients overcome these challenges. This has led to growing interest in digital health technologies, one type of which is digital therapeutics.

Even though digital therapeutics is a growing market, one of the barriers to future growth may be slow adoption by physicians, payers, and patients.

What are digital therapeutics?

Digital therapeutics refers to a type of digital health products that utilize software programs to deliver evidence-based therapeutic interventions to prevent, manage, or treat a medical disorder or disease. Prescription digital therapeutics are digital therapeutics products that require a prescription and must undergo an FDA clearance process.

Digital therapeutics can work through various mechanisms. Many of the currently available digital therapeutics products work by administering cognitive behavioral therapy via software applications on mobile devices for conditions such as addiction, depression, anxiety, and even physical symptoms.

Cognitive behavioral therapy can be provided via several modes of delivery:

• Face-to-face delivery involves in-person meetings in a controlled environment such as an office or healthcare facility.

• Telehealth delivery involves two-way communication (usually via video-enabled communication) between the patient and therapist over an electronic device such as a computer or mobile phone.

• Online delivery involves internet-based therapy offering one-way communication with delivery of content through writing and video. Online cognitive behavioral therapy is usually self-guided and may include occasional contact with a therapist via online messaging or text. Alternatively, it may not include any therapist contact.

• Digital therapeutics delivery of cognitive behavioral therapy is similar to online delivery in that communication is one-way, with content provided through writing and video, and it includes limited contact with a therapist. However, digital therapeutics is typically delivered via a software application compatible with a mobile device.

Other types of digital therapeutics products are used to help patients manage a specific condition, alongside a prescribed drug or recommended lifestyle changes.

The pros and cons of digital therapeutics for payers

In previous publications, IPD Analytics highlighted several noteworthy coverage decisions that were made by large payer organizations regarding prescription digital therapeutics. For example, in 2021, two large payers, Premera and Aetna, decided not to cover prescription digital therapeutics based on insufficient clinical evidence to support coverage. However, this is a rapidly evolving space.

Few payers offer widespread coverage for prescription digital therapeutics, and without coverage, doctors will not be able to write many prescriptions for these therapies, to avoid patients having to pay for them out of pocket. As a result, few patients will be able to access these prescription digital therapeutics until payers offer coverage.

One of the main considerations for payers rests on FDA clearance and scientific evidence that the digital therapeutics works and provides benefits to patients. The FDA has cleared several digital therapeutics that require a prescription, including BlueStar, which helps patients manage type 2 diabetes, and Freespira, which treats panic disorder. Even though these digital therapeutics require a prescription, the different type of FDA authorization and the level of scientific research required for approval of digital therapeutics products seem to be a barrier to wider acceptance among payers.

The 510(k) and De Novo pathways do not require the same scientific rigor for device clearance that the FDA requires for novel drug approvals, to which payers are more accustomed. Therefore, many payers do not consider the evidence associated with digital therapeutics products to be as robust as the evidence associated with novel pharmaceutical drugs.

The lack of standardization across the digital therapeutics industry also makes it difficult for payers to adopt digital therapeutics products. For example, there is no consensus among regulatory bodies on the exact definition of a digital therapeutic. Similarly, there is no single cohesive reimbursement method  among payers for digital therapeutics products. Each product works differently, and treatment, intervention, and monitoring are administered by different methods and at different frequencies, making it more difficult to evaluate and compare products. Individual digital therapeutics manufacturers must find disparate solutions for obtaining reimbursement from payers for these products. Despite the current barriers facing digital therapeutics products, including the limited amount of payer coverage, some advocates of digital therapeutics believe that payers will eventually implement more widespread coverage of these products.

Every payer is working to provide digital health access to members in some manner, and payers’ growing interest in digital health technology is demonstrated by the significant interest that major payers have made in digital health. 

Payers can find many benefits to adoption of digital therapeutics treatments, including cost-effectiveness; easy access to direct treatment, which appeals to many patients; and the potential to improve network adequacy standards, such as addressing the lack of trained therapists or access to medical treatment monitoring in rural areas.

In the case of cognitive behavioral therapy, the delivery method with digital therapeutics allows for fewer in-office visits, which can lower the overall costs of treatment. However, costs associated with behavioral healthcare are significant for both payers and patients, and limited access to licensed therapists may preclude broad accessibility of behavioral health services. Although cognitive behavioral therapy provided through a mobile application is not always a replacement for face-to-face treatment, it may provide a cost-effective alternative to frequent face-to-face therapy sessions for some patients as well as broader availability of cognitive behavioral therapy in geographic areas with limited availability of behavioral health services.

What changes in the landscape might cause payers to cover more digital therapeutics products in the future?

One of the major changes that could increase payer adoption of digital therapeutics would be in the regulatory process. A more rigorous clearance process with clinical research that demonstrates the effectiveness of digital therapeutics solutions will help increase payer coverage and enable doctors to write more prescriptions for digital therapeutics products.

By providing scientific evidence showing the effectiveness of digital therapeutics products, developers of digital therapeutics can also shift the perception that digital health solutions are not as effective as in-person alternatives and demonstrate that digital therapeutics products offer more benefits aside from increased convenience for providers and patients. 

Physicians’ growing support for digital therapeutics products can also play a role in persuading payers to increase coverage. In 2022, the American Medical Association (AMA) conducted a study (previously conducted in 2016 and 2019) to ascertain physicians’ motivations and requirements for the adoption of digital clinical tools, including telehealth/virtual visits, remote monitoring for management, clinical decision support, patient engagement, workflow enhancements, and consumer access to clinical data.

The 2022 AMA report shows an increase in the percentage of physicians who perceive advantages in leveraging digital tools for patient care. Both primary care physicians and specialists believe that digital health solutions provide advantages in their ability to care for patients. Improved clinical outcomes and improved work efficiency are the top motivators for physicians to use digital health tools, and physicians’ top requirements for these tools include clinical evidence that the product is as effective or better than traditional care and coverage of the tool’s use by their malpractice insurance.

Increased demand for digital therapeutics products from patients and large corporate organizations could also help to shift the market dynamics and increase payer coverage of these products in the future.

Although payers naturally focus on traditional medical care to treat patients, this is only one determinant of overall health. According to the World Health Organization (WHO), about 20% of the social determinants of health relate to medical care, including access to healthcare practitioners, laboratory tests, and approved drugs.

Another significant determinant of patients’ health outcomes is behavioral change, which can potentially be achieved through cognitive behavioral therapy based digital therapeutics. Understanding the importance of behavioral change when added to traditional medical care is an important factor in assessing the benefits of digital therapeutics as a complementary form of treatment. For payers, greater coverage of digital therapeutics could result in more cost-effective healthcare solutions and lower rates of medical claims overall.

Conclusion

Digital therapeutics is a new and evolving space that can potentially offer many benefits to patients and help provide more equitable access to care. The digital therapeutics market has the potential for continued growth over the next decade if providers, payers, and regulators can work to overcome the current barriers to widespread adoption and coverage of digital therapeutics products.

Understanding Digital Therapeutics

In the complex world of healthcare, understanding new treatments, technologies, and management opportunities is essential to payers’ development of management strategies.

An understanding of the competitive prescription digital therapeutics market requires new insights, an awareness of current trends, market intelligence, and accurate predictions..

Learn more about how IPD Analytics helps payers, providers, and manufacturers in gathering insights and understanding these trends with our Payer and Provider Insights platform.