December 2019

According to the Digital Therapeutics Alliance (DTA), digital therapeutics (DTx) are products that deliver “software-generated therapeutic interventions directly to patients to prevent, manage, or treat a medical disorder or disease.”1 DTx products have the potential to not only expand patient access to therapies but also promote patient engagement and involvement in their own therapeutic journey.1 The field of DTx has gained traction over the last couple of years, with FDA approvals/clearances,2,3 the founding of a DTx specialty society,4 large-scale acquisitions of DTx firms,5 pharma investments in DTx,6 and pharma co-development deals,7 amongst other key developments.

Recent Key DTx Developments Infographic - small

However, innovators have found the commercialization of DTx products challenging due to the lack of payer reimbursement pathways that align with the value of DTx. Traditional approaches to payer reimbursement (i.e., the pharmacy and medical benefits) may not capture the full value of DTx, forcing DTx companies to fit the mold of traditional pharmaceutical drugs, medical devices, and diagnostics that do not rely on software to administer a therapeutic intervention. Given this dilemma, should DTx companies follow traditional payment models available for therapeutics or pursue direct-to-consumer (DTC) approaches? Or, are there innovative payment models (e.g., value-based health care and risk-sharing) that can be tailored to the value proposition of DTx?

Potential Payment Models for DTx Infographic

To date, payment models supporting adoption of DTx remain fragmented. As more DTx companies reach maturity, the industry may gravitate towards one payment model to support widespread patient access to DTx; however, given the wide variability in DTx applications, multiple durable payment models may arise. While the marketplace remains nascent, DTx companies should keep an open mind when identifying viable payment models, as the optimal model can not only differ by customer but also change as the DTx product evolves. A crucial first step that DTx companies should take to determine the optimal payment model for their product is working with key stakeholders to answer the key questions below.

Key Questions for Determining Optimal Payment for DTx

Key Takeaways

  • Traditional approaches to payer reimbursement (i.e., the pharmacy and medical benefits) may not capture the full value of DTx
  • Currently, there is no consensus on the optimal payment model to support widespread patient access to DTx
  • The optimal payment model for DTx products can vary by product, product version, and customer

Stay tuned for DTx Part II: Building Robust Value Propositions for Digital Therapeutics.

Boston Healthcare has experience helping DTx companies navigate the dynamic and complex payment environment and develop robust commercialization strategies. If you are interested in learning more about how we can help your business, please contact us at info@bostonhealthcare.com.