Prescribing a path for PDTs
Determining approval pathways with regulators as well as methods to prove the value of prescription digital therapeutics will be essential in making sure that payers accept these very new treatments.
Something big happened during 2021. According to the consultancy Rock Health Advisory, venture capital funding for digital health companies grew to an all-time high of $39.9 million, compared with $30.8 million in 2020. And this amount was twice that of the $19.9 million invested in 2019.
So what is driving this? Rock Health’s experts say, “… beneath the chart-topping numbers are signals of something deeper. 2021’s funding frenzy was, at points, both the cause and effect of bigger shifts within healthcare. Specifically, the sector experienced major changes to its infrastructure, business models, and talent pool that will make downstream effects in 2022 inevitable.”
Of the amount invested, while the highest investment was in tech that catalyzes drug development, at $5.8 billion, prescription digital health applications for the treatment of disease received $4.5 billion, making them the third-highest areas of VC investment, above general health and wellness apps.
What are PDTs?
To the casual eye they may seem similar, but prescription digital therapeutics, or PDTs, are not wellness apps. According to a May 2020 article in the Journal of Family Medicine and Primary Care, “Role of digital therapeutics and the changing nature of healthcare,” unlike wellness apps, prescription digital therapeutics must have clinical evidence as well as data on real-world outcomes, and be reviewed and cleared or certified by a regulatory body to support product claims, efficacy, risks, and intended usage.
PDTs help treat diseases through changes in patient behavior and remote monitoring to yield enhanced and long-term health outcomes. The primary difference between PDTs and wellness applications is that PDTs are developed to target specific disease conditions such as diabetes, hypertension, and pulmonary diseases like COPD.
PDTs fall into three general types: Those that treat a disease; those that manage a disease; and those that improve a health function, according to the Digital Therapeutics Alliance.
Experts at Markets and Markets believe that the market for digital therapeutics will grow from $3.4 billion in 2021 to $13.1 billion in 2026, a compound annual growth rate of 31.4 percent. Driving this growth is the increasing incidences of preventable chronic disease, the need to control healthcare costs, growing focus on preventative healthcare, and rising investment in digital therapeutics.
What might slow down the adoption and growth of prescription digital therapeutics, according to Data Bridge Marketing, is their expense – particularly for middle-income countries with constrained healthcare budgets.
Kaia Health and cost savings
Pear Therapeutics became the first company to have digital therapies approved by FDA, and at present has three on the market: reSET for the treatment of substance abuse disorder, reSET-O for the treatment of opioid abuse disorder, and Somryst for the treatment of chronic insomnia. Other PDTs that have received approval are Oleena, the Voluntis mobile app for oncology patients, and the Biovitals Analytics Engine. While Pear may be the best-known company when it comes to digital therapeutics, another firm, Kaia Health, made headlines in December when it announced the results of the largest randomized control trial in the digital MSK (musculoskeletal) industry.
The multicenter trial results involved an examination of claims data from 1,237 patients with low back pain followed over a 12-month period. Investigators reported that medical claims costs for the patients using the Kaia Health solution as part of a therapy program for patients with non-specific low back pain were 80 percent lower, compared with claims costs in the control group receiving standard-of-care therapy typically prescribed by physicians.
“The primary way that we saw cost being reduced was a reduction in inpatient hospitalization, and that was no surprise there,” says Nigel Ohrenstein, president of Kaia Health. “That is one of the largest cost areas, and in every disease state, particularly in the U.S.”
Another area with reduced costs were outpatient services, and there was also a significant reduction in indirect costs such as absenteeism. Ohrenstein also notes that while not tied to cost, the study also noted users reporting pain reduction.
“Not only did we see pain reduction, initially on when [patients were] utilizing Kaia, but it continued for one year after using Kaia, which is phenomenal from my perspective,” Ohrenstein told Med Ad News.
Kaia Health’s solution acts as a physical therapist. The technology has a unique and accurate motion capture program that can be used by cameras in cell phones or cameras. As patients do the prescribed lists of exercises, the app takes note of alignment and posture, and makes suggestions and corrections.
One advantage that Kaia Health’s app has over in-person physical therapy is convenience, which then can lead to greater adherence. “I spoke to a patient just before Christmas, and she told me that previously, it took her two hours to go to physical therapy and back. And the reality is she went a couple of times, and then she stopped,” Ohrenstein says. “She’s now been utilizing Kaia six months-plus without a break, because it’s so easy to access, she can access it anytime, anywhere. She’s not tied to a physician’s schedule, or to a work schedule, or to anything else – she can do it when she has time.”
While PDTs can offer convenience and cost savings, Ohrenstein says they will not be the only treatment modality and will not entirely take the place of in-person healthcare.
This belief is part Kaia Health’s strategy, as in November 2021 the company announced an industry-first partnership with Luna On-Demand Physical Therapy. The partnership extends access to high-quality care for MSK patients by delivering physical therapy to a patient’s doorstep.
Company executives say this online-offline partnership expands access to care for more people, including high-risk patients and those with recent orthopedic trauma. Patients will be able to schedule at-home or at-work physical therapy sessions, making care safe, convenient, and faster than scheduling in-clinic care.
According to Ohrenstein, Kaia Health’s mission is to democratize access to health care. “We want digital therapies – our digital therapies, other digital therapies, but obviously, we’re passionate about what Kaia can achieve – to be available to millions, if not billions, of people.”
Besides the MSK solution, which is approved in Europe as a Class 1 medical device and is registered with FDA as a Class 1 medical device, Kaia Health is looking to bring its COPD solution from Germany to the United States. The company is also researching other disease states where it may be appropriate to receive care through PDTs.
“But fundamentally, our mission is how do we break down these barriers to care that have been such an inhibitor to people receiving excellent care in the U.S. and around the world,” Ohrenstein says. “And so that’s our mission. And we’re passionate about how we make these therapies available anytime, anywhere.”
Because Kaia Health’s therapies do not distinguish between individuals’ ethnicity or wealth, “the quality of care that you receive is exactly the same, irrespective of what you look like or how wealthy you are,” Ohrenstein says. “And from an a health equity perspective, that’s phenomenal.”
With these factors, he believes Kaia Health will be a transformative company. “When people write the history of the evolution of the U.S. healthcare system in the 2020s, I’m confident that when they come to talk about digital therapies that they’ll talk about Kaia, and we’ll talk about what a transformation we’ve had on the U.S. healthcare system and hopefully around the world as well,” Ohrenstein says.
A whole new world
Ohrenstein believes that as PDTs become more well known, physicians will start prescribing them more. “As physicians become more comfortable with them, they will continue to suggest them. With digital therapies, it’s like anything in life, when we become more comfortable with something, we’re more aware, we’re more at ease, to recommend it to other people. And that will also push digital therapies to be more widely adopted.”
This newness is one of the major barriers to the adoption of PDTs. Beth Beck, who leads Fingerpaint’s Saratoga Springs, N.Y., office says PDTs represent “a whole new world. We’re really kind of still in the infancy [of PDTs] even though there are many now that have been approved, but they represent a whole new way of thinking about something that’s never been done before.”
For agencies that get PDT manufacturers as clients, they cannot think about them like traditional drugs or medical devices when it comes to marketing. “We really only talk about the adoption and use pathways – the typical, how do we actually raise awareness and understand the patient profile, the use cases, and then get a certain segment of both patient and prescriber to adopt these products,” says Andrew Bast, chief strategy officer, Concentric HCX.
Beck agrees that the promotional strategy for PDTs will not be the same as that for a prescription drug. “It’s definitely different than traditional format,” she told Med Ad News. “I think the balance that has to be we have to strike is there are still ‘traditional pharma’ things that we have to learn and take a page from. You need to educate regarding how the product was even developed, how it was clinically tested, what the studies have shown. And then, on top of that, you actually have to provide evidence of utility and the financial value over time. Which is just different than what has been done previously.”
And when it comes to shaping the thinking inside an agency about PDT marketing and promotion, “One of the biggest things that you need to start with is these are not health and wellness apps,” which means avoiding these vernacular terms when discussing PDTs, Beck says.
Agencies will also have to help their clients educate consumers about PDTs, similarly to how they normally would with traditional pharma products. “You have to have them understand this is something that’s evidence based, and has been studied and actually approved by the FDA, but where it’s different than your traditional type product where traditionally, you might still have to activate and onboard patients,” Beck says.
For physicians, there is the question of how a PDT fits in the workflow. “There’s the clinical workflows of how you do this, there’s the electronic workflows, when you think about e-prescribing versus how you prescribe [PDTs]? Beck says.
Beck adds that this means manufacturers should help address how PDT prescribing impacts the workflow efficiency for a physician’s office.
Additionally, PDT manufacturers should never underestimate the importance of user interface and human-centered design, according to Bast. “If it is too complex, and too complicated for the end user to use it? They won’t, they simply won’t,” he says. “So you need to make sure that human-centered design is there, because if it’s not there, [patients] will not see it as valuable, they will not see it as offering anything of interest. And if it’s too complicated, it’s just human nature, we just don’t use it. So don’t make it overly complicated. Don’t make it too difficult to use, and make sure that the value to the end user is so clearly established, that it becomes perpetual in their adoption of it.”
One of barriers to the approval of PDTs is that the regulatory pathways are still very new, Bast says. “How do you make sure that the science, the data generation, the evidence, and of course, the outcomes are done in such a way that can pass regulatory hurdles, particularly when those regulatory pathways are so embryonic? They’re not really well structured.”
FDA issued a draft guidance in November 2021, “Content of Premarket Submissions for Device Software Functions,” with comments due by Feb. 2, 2022. The guidance covers two areas, software in a medical device (SiMD), and software as a medical device (SaMD) – or PDTs. Ultimately the guidance should help FDA’s premarket review of PDTs. “The documentation recommended in this guidance is based on FDA’s experience evaluating the safety and effectiveness of device software. However, sponsors may use alternative approaches and provide different documentation so long as their approach and documentation satisfies premarket submission requirements in applicable statutory provisions and regulations,” the guidance states.
For now, manufacturers – and their agencies – will have to feel their way along for approval. But Bast is certain the number of PDTs will grow, and what will help is if these developing regulatory pathways are endorsed by professional clinical organizations, payers, or policymakers.
“I think it’s the endorsement that will really drive it,” he says. “We had the same situation with biologics and biosimilars. We also see it happening with cannabis, although that one’s more of a regulatory legal pathway, but we’re beginning to see that come to life in those areas as well. So the more that actually gets defined, it’s the endorsement, whether it’s from the professional societies, or from some leading health experts, whether they be in the policymaking arena, or in the payer arena, or the market access arena, the more we see an endorsement of some of these pathways and recognition that the products that are within them are going to be valuable, that becomes self sustaining.”
As Concentric HCX brings on new clients in the PDT arena, “We advise on not just following the pathway, as defined today, but actually to secure endorsement from a number of key players along the way,” Bast told Med Ad News.
According to Beck, the beauty of PDTs is that as a technology, they will evolve. And that means going back to the prescribers, payers, and the patients and educating them about the updates. That way, PDTs will become more comfortable and familiar.
Like Bast, Beck believes that PDTs will be successful, “But I do think it’s going to take some time for them to work through all the all of the different challenges that have come up.”
Ultimately, regulators will respond to the PDT manufacturers, Bast says. “And so if industry can actually get its act together, and if industry can align, then it helps with some of these public policymaking bodies, to endorse it and accept [PDTs].”
Value to payers
As with any new pharmaceutical product, the question for PDTs that is inevitably raised is, “Who will pay for it?”
One current hindrance to the adoption of PDTs is that most private payers are unfamiliar with them. A survey in October 2021 by Avalere and Pear Therapeutics determined that of the 180 payers and large employer self-insured groups contacted, 140 potential respondents (78 percent) had little to no familiarity with PDTs.
Of the payers who were familiar with PDTs, 90 percent of these respondents stated that they expect manufacturers to educate payers and providers about the value of PDTs. Avalere says this marks a need for evolving education as new PDTs enter the market.
Payers who are familiar with PDTs told Avalere that some of the top value propositions of PDTs are 24/7 access to care; cost-effectiveness compared to other treatments; and providing clinicians with patient-reported outcomes.
At the time the survey was taken, 40 percent of the payers surveyed cover PDTs, while 50 percent anticipate coverage within the next 18 months. However, 5 percent were unsure and 5 percent do not anticipate coverage within the next 18 months. On a positive note, 66 percent of respondents stated that they have developed coverage criteria for PDT coverage, with an evidentiary threshold resembling that for drugs.
As far as covering PDTs, payers said the most significant drivers include the evidentiary value of randomized controlled trials (RCTs); FDA authorization (through de novo and 510(k) pathways); published real-world evidence as a supplement to RCTs; and cost offsets.
Half of the respondents told Avalere that coding and reimbursement education are the greatest need in promoting PDT adoption and coverage and that manufacturers can best alleviate cost impact uncertainties among payers and employer self-insured groups by showing cost offsets; engaging in value-based contracting to mitigate risks; and clearly identifying the population appropriate for treatment.
In fact, 53 percent of the payers who had knowledge of PDTs say value-based contracts (VBC) are the most appropriate mechanism for PDT payment.
Ohrenstein notes that one of the primary payers for Kaia Health MSK in the United States is employer groups. The cost savings study and the clinical benefits studies done for the app are aimed at private payers. (According to an April 2021 article in TechCrunch, Kaia Health has also been working with German authorities on getting a reimbursement code for its apps to allow doctors to prescribe them).
To support providers, respondents in the Avalere/Pear Therapeutics survey stated that manufacturers can provide materials for payers to give to their network of providers; engage providers in webinars led by thought leaders; and work with provider offices to better understand their needs.
Roshawn Blunt, managing director of 1798, a Fingerpaint Company, says the value question of PDTs has been coming up more frequently with clients.
“I was on a payer advisory board meeting that we helped to host with some payers asking that precise question – what is the level of evidence that you’re looking for?” Blunt says. Payers were asked about what they would need to see to cover PDTs.
“If you look at some of them, whether it’s products that are just in the United States, or those that have been commercialized in the EU and they’re coming to the United States, there are products that have some very strong clinical information attached to them,” Blunt says. “And one of the payers basically said, this reminded them of the days when they were starting to have to make coverage determinations for specialty products such as PDL1 [immunotherapies] and others. It feels as if you’re starting from the beginning, a whole new category.”
What does not help coverage decisions, at least in the United States, is that the Centers for Medicare and Medicaid Services (CMS) in November 2021 repealed its final rule on digital therapeutics, “Medicare Coverage of Innovative Technology and Definition of Reasonable and Necessary.”
According to an analysis in HealthLeaders, “The action leaves multiple unanswered questions for digital therapeutic reimbursement, with payers using a patchwork of existing coverage, benefit, coding, and billing options.”
Blunt says without this “North Star” from CMS, there will be hesitancy about coverage, as some employers may be relying on pharmacy benefit managers (PBMs) to provide some sort of guidance, yet some of the PBMs and the commercial payers are waiting for guidance from CMS to come up with what are the appropriate structure and approach.
Ultimately, the question persists, “Are we all going to take the same path?” Blunt says. “Once we agree to the path, then the rules become clearer.”
Even if FDA comes up with an approval pathway for PDTs, that does not mean payers will cover them. “In the world of medical benefit, drugs and infused therapies, there is a presumption of coverage – so long as you can demonstrate that medical necessity,” Blunt says. “We know that for prescription drugs, it’s not always the case that the therapy is going to make it onto the formulary. It may be available for use, but it’s not always as easily available.”
The question for clients wanting to get their PDTs covered by payers remains, “What’s the level of evidence needed?”
“For those of us who live in this [market access] world, we attach different rubrics and frameworks when going to a payer,” Blunt says, adding that the framework of requirements will be different for each payer. “The framework that I’ll use with Medicaid may look different than the framework I will use with a commercial payer, and so on and so forth.”
The regulatory approval pathway for a PDT may also play a role in its marketing, according to Blunt. While drugs are approved, medical devices are cleared. “If you think about the world of medical marketing, can you say to someone that the product is approved when it really only went through clearance?”
The best way a manufacturer of a PDT can work out coverage questions with a payer is by doing a pilot, Blunt told Med Ad News. That way, a payer can determine how a product works with its own patient population.
Although every payer will still have differences in what they require as evidence, “The pilots may be one of the best pathways that organizations have to getting that utilization put in place, building up the clinical evidence, building up the trust, so that they can go more broadly, once all the rules become more defined.,” Blunt says.
One thing that PDTs could have to their advantage in proving value with payers and regulators is their collection of data, whether actively while the user is engaging with the app, or passively through such things as location monitoring, the orientation of the phone, or when the phone is being used. But there are some caveats to that.
“The ability to collect data, aggregate data and keep privacy protected, is going to be paramount,” Bast says. “A lot of our clients don’t want to collect PII [personal identifiable information]. It’s going to be difficult to not do it. But the reality is, data collection and aggregation and analysis is where the value is going to be. So make sure you have the data infrastructure in place to be able to manage it and do not take patient privacy for granted. It can come back and land you in the worst possible way.”
Sixty-nine percent of respondents in the Avalere/Pear Therapeutics survey said they did not have concerns about data management and privacy. They cited precedence and compliance among other things. In fact, the Academy of Managed Care Pharmacy, a leader in formulating industry policy around PDTs, has expressed an “understanding that digital therapeutic innovators collect and process users’ data in a safe, fair, and lawful way.”