Prescription Digital Therapies: The Big Disconnect Between Manufacturers and Payers

by | Jun 11, 2024 | Uncategorized

Prescription digital therapies (PDTs) are apps that persons with disorders can only download to their smartphone with a doctor’s prescription. They are generally meant to be used as an adjunct to drug therapy and/or live counseling, depending on the indication. For example, for behavioral health problems like opioid-use disorder or substance-abuse disorder, they are prescribed by the behavioral health provider and used in conjunction with counseling sessions. In addition to addiction-related disorders, PDTs have been introduced for sleep dysfunction, post-traumatic stress disorder, attention deficit disorder, and a range of other mental health issues.

Unlike other digital health apps, PDTs can only be used by prescription, and they are considered an active form of treatment rather than a wellness app. They must be cleared by the Food and Drug Administration for use (like a medical device, not “approved” like a medication) They rely on cognitive behavioral therapy and often gamification, to engage the patient who has cravings, for example, between live sessions, and help them stay on medical treatment.

The American Psychological Association reported in 2018 that PDTs could potentially replace, in some cases, medication-based treatment. One might have thought the COVID pandemic, which made provider visits much more difficult and restrictive, might give a boost to PDTs as a powerful extension of active treatment. However, their potential value has not yet been matched by actual utilization, and manufacturers of PDTs have had a rough go of it.

First introduced in 2017 by Pear Therapeutics, PDTs and their manufacturers have had an uphill struggle gaining uptake by providers and coverage by health plans and insurers. Pear, a leading proponent and pioneer of PDTs, went bankrupt in April 2023. Akili Interactive, another early player, laid off nearly 50% of its workforce this year, and Better Therapeutics, which had developed a PDT for patients with type 2 diabetes, closed their doors this year.

Based on my past work with Pear and other PDT makers, part of this problem is self-inflicted, in terms of how PDTs are tested. Another issue relates to the lack of adequate coding for reimbursement. I’m not sure if their focus on mental health disorders is a contributing factor, but it doesn’t help (mental health disorder treatment is not always considered with the same priority by payers as other medical conditions).

Payers may be less-than-enthused about covering PDTs, because they wonder whether a manufacturer will still be operating in the near future. More often though, they express that their lack of coverage of PDTs is related to dissatisfaction with the clinical efficacy evidence provided by the manufacturers. The evidence is often related in terms like maintaining abstinence or adherence to medical therapy. Obviously, maintaining abstinence in a person with a substance abuse disorder is a key desired outcome, but the payers are concerned on two fronts: (1) the improvement is typically incremental and (2) the studies are almost never conducted over a sufficient term to determine whether a PDT has an adequate duration of response.

The key differentiating feature of a PDT over another digital app is that it is available only by prescription. The inference is that it is a more “serious” or “effective” approach. That same marketing characteristic, which should have been a benefit for manufacturers, also inherently limited its utility. As a prescription, payers would also have to ascribe some duration of approval before covering a refill. In a PDT’s case, 13 weeks, the duration of a clinical trial, is too short. Even if the manufacturer could prove that a significant population was helped by its PDT over that course, how many additional people would continue using the app or no longer receive significant benefit for a chronic condition like substance-use disorder? Thus, pricing the prescription could be a dicey prospect. Without long-term evidence that would convince payers, they would resist coverage, unless the PDT was priced very low.

The Digital Therapeutics Alliance, a trade association of PDT manufacturers and other interested parties, recently announced its own accreditation program to address the efficacy standards of PDT makers as well the security of the apps. Administered by a separate nonprofit, the accreditation program may add additional rigor and confidence to the evidence presented to payers in the future.

Right now, payers are skeptical that the existing evidence justify the prices on individual PDTs. Without supportive cost-effectiveness studies, health plans and insurers will not likely change their views.

From Wellness Apps to Prescription Digital Therapeutics

by | Mar 30, 2023 | home2, Uncategorized

Throughout its development, the US healthcare system has been attracted to new and shiny technologies like bees to honey. This is a significant reason why the cost of healthcare rises over time. It is also one reason why value-based care initiatives show smaller savings than hoped—the downward pressure they exert on the cost curve is overcome by the upward pressure maintained by a steady stream of new and more expensive technologies.

Prescription Digital Therapeutics, the Next Frontier

Digital health applications have had a rockier road to acceptance than traditional pharmaceuticals, and that is mainly for two reasons: (1) lack of data on their effectiveness and (2) lack of reimbursement. The reason for the former is simple—evidence for their efficacy is not generally required for FDA authorization (if they are authorized at all). The reason for the latter is also straightforward: Are they covered under the medical benefit, pharmacy benefit, something else, or not at all? Responses to the question are rather vague, ambiguous, and disparate.

When manufacturer activity picks up in specific area of medicine, so does funding for awareness campaigns, drug advertising, and funding for additional research. Examples of this well-worn paradigm include the migraine arena with the approval of the triptans in the 1990s, rheumatoid arthritis and the approval of anti-TNF inhibitors in the 2000s, and Crohn’s disease and interleukin inhibitors in the 2010s. General and specific digital health applications can be expected to follow this trajectory, especially noting the involvement of Google, Apple, Amazon, and other extremely deep pockets.

That is not necessarily the case with PDTs. Manufacturers of digital health applications that are aimed at treating a disease, like substance-abuse disorder, opioid-abuse disorder, depression, insomnia, post-traumatic stress disorder, and more, are not large pharma companies, but smaller entities with more experience in the coding world than in reimbursement and coverage.

Approximately 20 manufacturers have either brought their PDTs to market or are currently developing them. These manufacturers are smaller concerns with more limited resources than conventional pharma companies. For the next few years, a good portion of their resources will be spent expanding awareness of these new treatment options.  

First, PDT manufacturers need to focus their efforts on differentiating themselves from other digital health applications, including unregulated wellness apps. Second, they must emphasize their use of cognitive behavioral therapy, an accepted method for treating behavioral health disorders. Third, they are approved by the FDA as “software as a medical device,” and it will take a bit of explaining to attain recognition by payers and plan sponsors about what this term means for reimbursement and coverage. Finally, they need to spotlight the prescription-only feature for access (and adjunctive nature of their treatment). This is no small task for an industry that saw its first FDA authorization the second half of 2017.

Added Value to Adjunctive Therapy?

There may be a value-based aspect to PDTs. Consider that PDTs are not very expensive (although generally out of the range of uninsured patients or those paying out of pocket—probably up to $1,000 per prescription). They are not meant to be used as exclusive treatment; patients should be under the active care of a health professional and receiving live counseling, pharmaceutical therapy, or both. They are intended to improve the effectiveness of overall care and patient engagement. For example, a PDT for substance-abuse disorder seeks to improve abstinence rates and avoid recidivism. For the employer, that may translate into greater productivity, less disability, and less absenteeism.

The evidence for several of these PDTs is promising. Employers are only now awakening to the potential of PDTs to address important, stigmatizing conditions, with on-demand education and treatment modules.

Technical coverage and reimbursement questions will have to be resolved; for instance, can utilization of a PDT be tracked through pharmacy management, especially without a national drug code? They do carry unique device identification codes, but PDTs are not devices like glucose monitors. Will patients’ PDT data be reviewed and not simply relayed to the healthcare team? Will patients only be able to get a prescription through certain providers (e.g., will a nurse or pharmacist be able to prescribe it)?

This is a burgeoning treatment modality and worth tracking, with the introduction of PDTs for several new indications in the near future.