DTx in 2024: Where Are We With Business and Reimbursement Models? (Andy Molnar)

[00:00:00] Dear listeners, welcome to Faces of Digital Health, a podcast about digital health and how

[00:00:05] health your systems around the world adopt technology with me Tjasa Zajc.

[00:00:14] In the last few years we've witnessed a whirlwind of development in the world of digital

[00:00:19] therapeutics. We saw FDA approval sparking optimism for the industry, we saw the establishment

[00:00:26] of regulatory frameworks in countries like Germany, France and Belgium. However, in 2023

[00:00:34] the industry faced a stark reality check marked by the fall of some of the key players

[00:00:40] and health care systems hesitancy towards embracing and financing these innovations.

[00:00:47] This turbulence has reshaped strategists and raised critical questions about the future

[00:00:52] of digital therapeutics. So in this episode with Andy Moner, CEO of the DTX Alliance you will

[00:01:00] hear more about the business models companies are testing to try to get their businesses

[00:01:08] up and running. Insights Andy has about the DTX reimbursement and approaches globally,

[00:01:17] by his still optimistic about digital therapeutics and more. Enjoy the show and if you haven't

[00:01:24] yet, make sure to check out our newsletter which you can find at faudh.substag.com that's

[00:01:31] faudh.substag.com. Now let's dive in.

[00:01:48] Andy, hi and thank you so much for joining this discussion where we are going to try to

[00:01:53] give the audience and the listeners a little bit of a background on where digital therapeutics

[00:01:59] are at the moment. There's a lot that has been happening in the last few years. I would

[00:02:06] even describe the whole situation as a huge roller coaster. We went from thinking if digital

[00:02:12] health apps are just hyped to actually feel matured to the level of bringing to the patient's

[00:02:21] solutions that are clinically validated, that have a very well proven clinical impact

[00:02:28] on patient outcomes. We saw the FDA support these solutions, we saw frameworks for regulation

[00:02:35] to support reimbursement of these solutions especially in Europe and yet many companies

[00:02:40] are going bankrupt. There's various challenges that are arising so this is what I wanted

[00:02:45] to talk about today and I actually want to start with a bit of a journey down the

[00:02:51] memory lane and I want to ask you how do you remember DTX? When did you first hear about

[00:02:57] them, when did you first start thinking about them and how would you describe the last say

[00:03:04] five years in the industry? Sure, I heard about DTX when I was working at

[00:03:09] Synopian pharmaceuticals. Some of the people in the business development group that were looking

[00:03:14] at innovative technologies heard about paratheteraputics and those around the time that par

[00:03:20] were starting to get a lot of attention. One of my close colleagues went over there and

[00:03:25] a couple months later said we have another position are you interested? He started going

[00:03:29] into all the details, all the pros and cons and these are apps that are clinically validated

[00:03:35] and I just said I'm in. He said do you have any more questions I said no this is clearly

[00:03:41] going to be a major part of the future of healthcare and I want to be part of it. That was

[00:03:47] a start for me and I feel like in digital therapeutics you do get a lot of people that see the future

[00:03:54] and see the potential and get really excited about it. I've been doing this now since 2018

[00:04:02] and sometimes you go through the tough times but you still know that in long term

[00:04:09] that there is a major place for digital within healthcare and you have to look at these hard times

[00:04:15] and say we know we're going to come out of it and really as part of this I will bring up the

[00:04:20] Gartner hype cycle because that kind of explains all new technologies and we are in the

[00:04:26] trough of disillusionment right now and I got into this when we were on the upswing of everybody

[00:04:33] seeing the potential investment was huge and we just thought this is going to be amazing but

[00:04:40] healthcare change does not come without challenges and with that we started to see okay

[00:04:45] we're not seeing the revenues fast enough so venture capital is getting frustrated

[00:04:50] we're not seeing coverage fast enough there's not enough real-world evidence

[00:04:53] so payers are saying we want to wait and see until we get there and we're going through this

[00:04:59] natural cycle anyway through these ups and downs I was at partherapetics I went to Cognowa

[00:05:04] to look at software as a medical device to diagnose children with autism I was incredibly

[00:05:09] passionate about that and then this was that was in 2019 and then I realized that I was doing

[00:05:15] things like how do you prescribe apps what's the workflow for getting these products from my

[00:05:19] pharmacists into the hands of patients what does reimbursement look like what types of things have

[00:05:24] to happen with Medicare and Medicaid from a policy perspective and a government affairs

[00:05:29] perspective and so I realized that really my place was in the association and so that's

[00:05:34] I ended up here and I've been at the digital therapeutics alliance just fighting for

[00:05:39] the future of the industry for the last three years I shouldn't say fight I think it's natural

[00:05:43] it's more like trying to ensure that the industry is guided in a way that is best for the patients

[00:05:51] and what kind of differences do you see among markets as the CEO of DTX Alliance you have

[00:05:58] a bit of a global overview and I know that some people for the US would say that there's been

[00:06:05] a bit of not exactly disillusionment but perhaps lack of enthusiasm that's currently present in

[00:06:11] the industry if we look at Europe there's at least three countries that have very clear frameworks

[00:06:17] friends build Belgium and Germany but still the actual results at least at the moment are a

[00:06:23] bit disappointing there's a lot of struggles with actually getting providers convinced that this

[00:06:28] needs to be prescribed to patients so what do you see in the US and say the APEC region how would

[00:06:35] you if you tried to look at the DTX world globally where do you see the most potential or do the

[00:06:43] challenges differ in different markets certainly a lot a lot on pack there but what I will say is

[00:06:50] what I'll start with is as humans we there's sort of two sides and we're always fighting like

[00:06:57] against each other one is we want innovation and the other side is we have to keep that innovation

[00:07:06] completely checked and you do need both but it really comes it really reminds me of like continuous

[00:07:12] glucose monitors right the first one came out in 1999 the initial feedback was these are way more

[00:07:19] expensive than test strips test strips cost pennies we don't think there's any clinical value in

[00:07:26] addition to what people are already doing so payers really looked at the health economics value

[00:07:31] so it's not there and they push back but you always knew that CGM was the right next step

[00:07:39] but there was all this pressure saying now too expensive not gonna add any value etc etc

[00:07:45] remote patient monitoring remote therapeutic monitoring are in that same place right now

[00:07:50] the the proof of demonstrating the additional value of being able to monitor a patient at home

[00:07:55] there's still a lot of work to be done but there's really no question in people's minds that there's

[00:08:01] something there that's really important and with CGMs now there's a lot of coverage just so people

[00:08:06] don't have CGMs and they're connecting to additional tools because the use cases of a CGM are so big

[00:08:13] and everybody can do that but it's been 20 years to really take a stronghold

[00:08:18] and most people are still not using CGMs when you look at that pressure

[00:08:24] to stop innovation it's frustrating but we could really get there so much faster

[00:08:32] if we looked at something said we know how to do this let's put our money in evidence generation

[00:08:37] let's in real world evidence generation not secondary evidence or secondary analysis really

[00:08:42] primary primary evidence at generation and get to a point where we can prove that these really

[00:08:48] obvious tools work and so with that we see the pressure on in the US from Medicare and Medicaid

[00:08:56] to not pay for these things Medicare costs 920 billion dollars or give or take a year and that's

[00:09:02] been going up steadily since the 1970s so something that looks like it's additive in cost there's

[00:09:09] going to be pressure not to cover it on the flip side in Medicare and Medicaid you have populations

[00:09:14] that don't have access to these types of tools and so what's happening is like usual the wealthy get

[00:09:20] access to tools that they need and the poor have to wait and that's not what digital therapeutics

[00:09:26] exists for so we're you guys we're fighting that same battle right now that all of health care

[00:09:32] innovation has gone through over the years and but what we see is Germany great example right

[00:09:38] they have the Diga program they have many products that are covered and we're starting to see some

[00:09:44] stability in that program okay there there's always going to be positives and negatives in any

[00:09:50] government program that comes out it's never going to be perfect from the start but we're really

[00:09:55] starting to see companies like Hello Better that has six products on the Diga really demonstrate

[00:10:01] uptake in the patient population in Germany and physician physician adoption

[00:10:07] and it's happening because the products are available and it's that's really not the case

[00:10:13] in in some other developing countries and even in the United States and so with that Germany is a

[00:10:20] really clear example France is right behind them but the difference is that because France modeled

[00:10:26] Pekhan after Diga a lot of the companies know what to expect and they know how to repeat what

[00:10:34] they've already done and so I suspect that now that I think in a couple weeks we're going to see

[00:10:40] an update on Pekhan coverage and what initial products they're going to have we're going to see

[00:10:44] that move a lot faster in South Korea we saw coverage of AMED which is their an insomnia product

[00:10:51] I talked to the Korean FDA in December of last year I asked them if there was anything we can do

[00:10:57] to help and they laughed and they said we're actually helping you guys and just recently some people

[00:11:03] from the FDA actually went over to South Korea to talk to them about they're looking at digital

[00:11:07] therapeutics and so they're ready to go what they said to me was we really wanted to look at South

[00:11:12] Korean companies first and figure this out now we're ready for people to come to South Korea

[00:11:18] from other countries and launch their digital therapeutics here so I think we're going to see a very

[00:11:23] quick uptake in companies in countries like South Korea and then obviously Japan and Singapore

[00:11:29] also moving things forward yeah you reminded me when you were talking about this I guess disappointment

[00:11:36] that I'm talking about at the moment like this feeling that we're not really getting anywhere with

[00:11:41] the digital therapeutics you kind of reminded me of the uptake of patient portals on national levels

[00:11:47] which also usually take quite a few years and come countries do the mistake of trying to get people

[00:11:57] in the opt-in models which doesn't work so then they turn that into opt-out and gradually over

[00:12:03] the years you actually have the penetration of providers pushing the data in the national portal

[00:12:09] so from that perspective I guess I can share your potential hope that this is still going to

[00:12:14] develop nicely so what approaches do you see at the DTX Alliance among your members in terms of

[00:12:22] the business models because many companies fight for bankruptcy gave up because it just didn't

[00:12:27] work fast enough and so companies need to get very creative in terms of how to survive what do you

[00:12:34] see in that sense yes obviously Achilles went over with the over account or the over the counselor

[00:12:41] approach which I like to think makes a lot of sense for them a lot of other companies are offering

[00:12:47] their products through employers through their HR systems much like you would have other services

[00:12:55] like weight loss, noom and things like that but we're also seeing a lot of partnerships with

[00:13:01] pharma and that that allows for very unique applications of digital therapeutics that

[00:13:08] and and Peters with the FDA which is products that are used alongside alongside drugs because

[00:13:16] you can see this potential clinical value of having these products alongside of the therapies alongside

[00:13:22] remote patient monitoring or alongside therapeutic monitoring and that leads to different

[00:13:31] a different value prompt and simply this is a point solution that is a prescription

[00:13:36] and what I also want to point out is that model the pair model that that didn't work

[00:13:41] it is not a wrong model in many cases they were just too early and and Medicare isn't ready for it

[00:13:51] yet and Medicare unfortunately drives a lot of reimbursement from commercial payers so I don't

[00:13:57] actually want to discount that model yet but I think because there's still so many barriers people

[00:14:03] have moved away from it and that's actually the prescription model is what drives Diga in Germany

[00:14:10] and is showing a lot of success so with that you have to think about every different way that you

[00:14:17] would take medicine every different way that you would interact with a provider and think that all

[00:14:23] those models are open and exist right and I think it's hard because the categorization of digital

[00:14:30] therapeutics is already complex and people would like to say okay this is a DTX and this is how

[00:14:37] I get it but that's not true sometimes you're going to get the digital therapeutic and it's

[00:14:43] going to be a remote therapeutic monitoring connection to your provider as the first step

[00:14:48] and then it's going to start providing interventions. You could get cognitive behavioral therapy

[00:14:53] delivered through your employer based on a product like sleepio right and then you can have over

[00:14:59] the counter potential which are still obviously regulated or FDA regulated in the United States

[00:15:05] and I think that all of these are great models depending on the therapeutic category

[00:15:08] depending on the patient population and depending on the oversight that you need from providers.

[00:15:13] What are some of the key discussions that you currently have inside the DTX Alliance

[00:15:18] where do you want to focus your efforts most to have the greatest impact on the industry?

[00:15:25] So what are the priorities for the industry to actually get to easy reimbursement better results

[00:15:33] and lack of yeah I'm going to say disappointment again because you know it's like very frustrating

[00:15:38] for patients also to know that there's potentially solutions there that could be useful

[00:15:43] but are unavailable or just go off the market because yeah the actual business models don't work.

[00:15:50] Yeah absolutely our number one focus for this year is reimbursement and then under that is

[00:15:59] education. There's still a lot to be done with awareness and you talk about that you talked

[00:16:04] about that with like patient uptake right there's a big difference between somebody that doesn't use

[00:16:11] their phone for any health care right or and those that use new and use calm and use these

[00:16:18] very decent mobile health apps where if you said to that person hey I'm going to prescribe

[00:16:24] your product that's on your phone to help you manage your diabetes they would be open to it

[00:16:29] and then there's another group that would say I don't understand why you're doing this because

[00:16:33] it's still so new. On the reimbursement side it's focused on policy it's focused on state level

[00:16:39] reimbursement and it's focused on commercial payers so there's still a lot of work that needs

[00:16:45] to be done with CPT coding so that providers can get paid for the use of these products.

[00:16:49] If you imagine when Pear started they said hey use this new technology give this to your patients

[00:16:54] it's going to show them better outcomes. You're going to have to help them understand this technology

[00:16:59] but and but also on top of that you're not going to get paid. That is not like an easy way for doctors

[00:17:05] to say I'm going to try something new okay we have to work on that we have to work on the physician

[00:17:10] fee schedule and ensuring that there's coverage there's coverage through for software

[00:17:15] we still have to work on our prescription digital therapeutics bill we're revamping that now

[00:17:23] after a lot of conversations last year in congress the bill needs to be more more specific

[00:17:31] on pricing so that the government can understand what this will cost Medicare and so we're

[00:17:37] going to do a lot of work there and we're doing a lot in Medicaid as well so that involves a

[00:17:41] federal Medicaid connection working on the ideas that we put in our legislation from 2022

[00:17:48] and also working on the state level because we've seen states cover digital therapeutics

[00:17:53] they can already they don't need federal CMS to approve that but we need some standardization

[00:17:58] there they need to understand what it means to cover digital therapeutics what the outcomes

[00:18:02] are going to look like and what their interaction with management of Medicaid plans will be in

[00:18:06] the federal government those two areas are really are how we feel we're going to drive the

[00:18:13] industry forward best this year and for the long term perhaps just one a very brief comment what

[00:18:20] do you expect in terms of the reimbursement fees because in europe we see two approaches so

[00:18:27] germany took the approach of companies proposing the the prices which were adjusted after a year when

[00:18:32] the diggers were approved and were more or less slashed a lot by the insurance companies that

[00:18:39] kind of assessed what the willing to pay and France went a step further in the sense that basically

[00:18:47] they determined in advance what the price ranges might be so that innovators can at least have

[00:18:54] a bit of a feeling what they can expect what are your expectations in terms of how the market is

[00:19:01] going to be regulated in the pricing sense maybe in the US where you work most of the time yeah

[00:19:08] and so this is the weighing the pros and cons of having a national health care system like

[00:19:17] many countries have in europe versus not and I love to see his value based contracting we're seeing

[00:19:24] different companies do that it's an administrative burden but that's where your price is really connected

[00:19:31] to the value that you're bringing each patient and so I would love a world where we see a lot more

[00:19:37] value based contracting and that's across drugs medical device digital therapeutics services

[00:19:44] because that's where you truly see savings and you'd only be paying for what's impactful and

[00:19:48] when we we're in this world of precision medicine where I think we need to be thinking of people as

[00:19:53] individuals and not as such as part of a group so there there is that but there's also on the drug

[00:20:00] side there's mandatory rebates so we see that on the on the formulary side so with organizations

[00:20:08] like express groups and and cvs and hop them you also see rebate structures where you're going to

[00:20:14] negotiate a price directly with these commercial entities but as far as Medicare is concerned

[00:20:21] from a government perspective it still looks like it's going to be more fee for service

[00:20:27] and and an actual price associated with each product in many ways that in my mind it makes it harder

[00:20:36] because I'd like to see if you associate more with the value that you're providing education.

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