Navigating the Payer Landscape for Digital Therapeutics

Over the last several years, significant investments in digital health and technology solutions have resulted in a burgeoning pipeline of digital therapeutics (DTx)—clinically tested products that deliver medical interventions using evidenced-based software to prevent, manage, or treat a medical disorder or disease.

Since 2017, when the U.S. Food and Drug Administration (FDA) approved the first prescription digital therapeutic for disease treatment, the agency has approved a number of digital therapeutics intended for a variety of conditions, from mental health disorders to diabetes. And the market is showing no signs of slowing, with recent research suggesting a growth rate of 23% between 2021 and 2028.

Despite the tremendous growth, however, developers still face a number of hurdles, including payer-related coverage and reimbursement challenges that limit widespread adoption.

While payers are interested in digital therapeutics and their potential to drive value-based care, the new solutions enter a payer landscape that is poorly suited for these therapies. Traditional reimbursement strategies involve pharmacy or medical benefits for traditional treatments, which often do not apply to digital therapeutics. As such, most digital therapeutics have limited payer coverage—they are often employer-sponsored or an out-of-pocket cost for patients.

What Payment Models Work for DTx?

In order to maximize the potential of these innovative therapies, developers need to proactively communicate their clinical evidence and value proposition with payers at least six months pre-launch. DTx innovators will also need to work with experienced partners to evolve their market access strategies to get on formularies and obtain reimbursement and payment. As more digital therapeutics come to market, we’re seeing an increased use in the following payment models:

  • Pharmacy, Medical, or Split Coverage: One approach is to involve the patient’s pharmacy benefit, medical benefit, or both. The traditional payer model enables developers to add digital therapeutics to drug formularies as a pharmacy benefit (since some can be prescribed), target medical benefits when they involve providers, or leverage both models to obtain split coverage. In fact, 41% of covered therapies fell under the medical benefit, according to a recent Xcenda survey. Most frequently, however, the advisors surveyed said coverage is product dependent. In the absence of long-term clinical data—which payers cite as the top barrier for coverage and/or reauthorization—developers may also consider positioning their product to payers as a companion to traditional pharmaceutical products.
  • Direct Contracts with Physicians: For this payment model, physicians bulk purchase a digital therapeutic and then bill patients to recover their costs. This approach often works best for digital therapies that are used in-clinic, such as virtual reality, or wearables that monitor a patient and relay data back to providers to inform clinical decisions.
  • Direct Contracts with Employers: Some digital therapeutics don’t require a prescription. In those cases, developers can sell directly to employers, who in turn grant their employees free use of the platform through their employee benefits. For example, organizations may be interested in providing its workforce with access to a digital therapeutic as part of a workplace wellness initiative.

As companies continue to increase their investments in digital health and a new wave of products emerge, developers should work with commercialization partners to navigate affordability and access challenges and build a value story that documents the efficacy of the product. Digital developers who prioritize pre-launch communication and coordination will be best positioned to optimize the coverage of their products.

  • Myra Reinhardt

    Myra Reinhardt is Vice President, Product Innovation & Analytics at Lash Group (a part of AmerisourceBergen). Myra brings expertise in strategic planning, product development, and deploying large-scale technology solutions. Focused on product and analytics, she is responsible for the delivery and implementation of solutions that support the growth of the Lash Group business.

  • Tim Regan

    Tim Regan, BPharm, RPh, CPh is Vice President, Commercial Consulting at Xcenda (a part of AmerisourceBergen). Tim offers his expertise in value-based strategy, health economics, outcomes research, and quality improvement services to his clients across the pharmaceutical industry, managed care organizations, and healthcare providers. In his current role, he provides business development, oversight, and strategic support for pharmaceutical, biotechnology, medical device, and diagnostic industry clients.


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