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Digital Therapeutics at the CrossroadsPayer perspectives on reimbursement hurdles can help DTx companies map the journey to real-world utilization and market success

DIGITAL THERAPEUTICS AT THE CROSSROADS2

What payers thinkTo better understand how U.S. payers look at the hurdles facing DTx, Syneos Health surveyed 35 pharmacy and medical directors at national and regional managed care organizations, pharmacy benefit managers (PBMs) and payer functions at hospital systems and integrated delivery networks (IDNs). Our research documented a groundswell of payer interest in DTx—but with many asterisks.

In the survey, nearly one-quarter of respondents said they already provide DTx coverage in some form, and an impressive three-quarters said they would do so within the next five years. Only 3 percent said they are unlikely to cover DTx in the foreseeable future.

However, the majority also admitted to considerable confusion regarding DTx. Barely one-half of respondents agreed or strongly agreed that they had a consistent understanding of the term, and just 28 percent agreed or strongly agreed that their organization had a consistent framework for reviewing DTx and making coverage decisions. Is lack of coverage—or uncertainty around reimbursement—limiting DTx utilization? More than half (57 percent) agreed or strongly agreed that it is.

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In 2020, the promising field of digital therapeutics (DTx) has run up against a classic chicken-and-egg puzzle. Payers who hold the keys to commercial success wish to see real-world outcomes data and evidence of potential cost savings from the use of these new treatments. Yet as long as patients and physicians remain uncertain about reimbursement for DTx, companies will struggle to attract users at a scale that would produce the evidence payers seek.

DTx innovators have begun to deliver unique therapeutic tools to patients, which may also bring relief to resource-strapped health systems. Programs from Akili Interactive Labs, Voluntis, AppliedVR, SilverCloud Health and others have demonstrated an ability to prevent or help manage a variety of medical disorders.

Persuaded by data from randomized controlled trials (RCTs), regulators in the U.S. and Europe have approved some of these products to augment or replace more traditional therapies. Investors, including biopharmaceutical companies, have funneled billions of dollars into DTx. And payers themselves have warmed to the new category. Express Scripts, for example, has launched the industry’s first formulary for digital and mobile health apps and devices (see sidebar on page 5).

Nonetheless, the user base for DTx is not growing as quickly as experts once anticipated. And, in recent months, several closely watched DTx companies have encountered pushback from regulators, investors and large pharmaceutical partners— a reminder that the sector is still experiencing birth pains.

Many market observers say physicians won’t recommend DTx to their patients until there is greater clarity around coverage and reimbursement. In fact, DTx are unlike any other medical products. With most prescription drugs, there’s a clear sales chain from manufacturer to wholesaler to retail pharmacy. The doctor then writes a prescription, the patient fills it at the pharmacy and the health plan pays.

But with DTx, who verifies that the patient has downloaded the therapeutic program, and what party adjudicates the claim? How does the payer learn if iterative software updates are having an effect on medical outcomes? What is the process for ongoing collection and assessment of data? Should there be a “digital benefit,” separate from the pharmacy and medical benefits? Early experiments in digital formularies may begin to shine a light on these matters, but many perplexities remain.

Organizational understanding of DTx

We have a consistent understanding of DTx

We have a consistent framework

for reviewing DTx

Lack of coverage or uncertainty about

coverage is limiting utilization of DTx

Strongly agree Agree Somewhat agree

Disagree Strongly disagreeSomewhat disagree

Neither agree nor disagree

9%40%26%11%11%

3%

3%

20%37%26%9%6%

11%17%34%17%17%

3%

Expected time to coverage

23%Already providing coverage 

46%Near-term (<2 years)

29%Mid-term (2-5 years)

0%Long-term (>10 years)

3%Not covering at present, and unlikely to do so

Outcomes in the real worldFor many payers, real-world utilization is the crux of the matter. If asked to review the case for coverage of DTx, 94 percent said real world evidence (RWE) would be an important evaluation criterion, and 43 percent of that cohort deemed it “extremely important.”

Organizations and professional societies that payers rely on for price-related insights have arrived at this same conclusion. In January, the Institute for Clinical and Economic Research (ICER) updated its influential Value Assessment Framework for 2020-2023, with a spotlight on RWE. The document formally recognizes that RWE gathered through digital mechanisms “can be particularly helpful under certain circumstances, such as when long-term safety of a treatment or durability of a medication’s effect is unclear.”

While payers consider utilization to be paramount for all classes of DTx, it presents a particularly tricky barrier for central nervous system (CNS) conditions and behavioral health, where much of the early DTx strategy and capital formation has concentrated. People struggling with bipolar disorder, major depressive disorder, schizophrenia or substance abuse issues are often protective of their privacy—sometimes in the extreme.

A number of behavioral health DTx companies with business-to-consumer commercial models, such as SilverCloud Health in the U.K., have built real-world user bases of more than 100,000. But others—especially those pursuing a prescription-driven, business-to-business model—have encountered headwinds.

They have found that individuals with serious behavioral health conditions may agree to download programs to their phones and submit to monitoring in a supervised clinical trial setting. But they will react differently in unstructured, real-world settings. Many will balk at texting with an unknown organization, downloading unfamiliar software to a personal device or punching in codes. If such patients don’t activate the programs, there’s no outcomes data for payers to scrutinize.

One possible solution is for DTx developers with a B2B or B2B2C model is to integrate their products in the care pathway. A CNS digital therapeutic that’s designed into the health plan’s existing benefit structure might be “administered” by a trusted clinician or pharmacist. The winning model might even be “buy-and-bill,” as with many medicines infused by the physician on site—only in this case, point-and-click replaces ports and IVs.

Regulators, by and large, are doing what they can to help DTx gain traction. The U.S. Food and Drug Administration created a precertification pathway that simplifies go-to-market strategies for qualified vendors. Similarly, in an effort to increase the user base and expand the pool of real world evidence, Germany’s new Digital Supply Law mandates reimbursement of qualified DTx for a period of one year.

What matters to payers Potential barriers to coverage

INTEGRATING DTX INTO THE FLOWAsked about roadblocks in the adoption of DTx, 88 percent of payers in the Syneos Health survey pointed to workflow integration, and nearly half of those respondents described it as “very important” or “extremely important.” A key issue: DTx products are too new and too diverse for stakeholders to reach consensus on how to capture and analyze health data from the different treatments. And, as yet, there are no guidelines on how providers should act on insights from DTx data streams, or how much outcomes-related evidence they’ll require. Professional societies that might develop guidelines in neurology or other fields targeted by DTx companies still have only limited awareness of DTx’s unique capabilities, according to recent physician surveys (see sidebar on page 6 ). “Establishing clinical guidelines will be a high priority in positioning DTx for the future,” says Susan Cantrell, Chief Executive Officer of the Academy of Managed Care Pharmacy (AMCP). Ultimately, payers’ decisions whether to review DTx under medical or pharmacy benefits, or novel channels such as digital formularies, will influence workflow integration. “They don’t fit neatly into the box,” says Cantrell. “There’s a huge learning curve and a tremendous amount of education left to be done.”

EXPRESS SCRIPTS’ DIGITAL FORMULARYDigital therapeutics are not emerging in a vacuum, says Glen Stettin, MD, Vice President and Chief Innovation Officer at Express Scripts (ES). They are one feature of a healthcare landscape that’s being radically reshaped by electronic medical records, telehealth capabilities, AI software and other tech advances. In this fertile soil more than 300,000 digital health products have taken root, Stettin estimates in a January blog post. Unfortunately, he says, most are “unsupported by evidence of safety, effectiveness or value.” To cut through the confusion and jump-start patient access to DTx, ES launched the industry’s first digital health formulary last December, reviewing 70 digital health products and choosing 15 that can help patients manage neurologic conditions such as depression, anxiety, and insomnia, as well as diabetes, hypertension, and asthma. For DTx products on the list, from innovators such as Livongo, Omada Health, Propeller, and SilverCloud, plan members will get varying levels of coverage support depending on formulary status. But this is just a start, says Stettin. ES will “continue evaluating digital solutions to help patients with serious illnesses to take better control of their health…and lower their total costs,” he says.

Clinical performance

measured against

disease scales

Support from literature in

peer-reviewed publications

Impact on medical resource

utilization

Duration of response

Real world evidence

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%Pricing Inadequate

peer-reviewed literature

Payment models

Coding Workflow integration

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Extremely important Very important Moderately important Slightly important Not at all important Extremely important Very important Moderately important Slightly important Not at all important Extremely important Very important Moderately important Slightly important Not at all important Extremely important Very important Moderately important Slightly important Not at all important Extremely important Very important Moderately important Slightly important Not at all important

The innovator viewpointThe task of evolving regulatory frameworks to create simpler, more standardized pathways to market will test the persistence and long-term commitment of DTx innovators. And it’s just one of many challenges. An even higher priority, perhaps, is coming to some kind of consensus around pricing.

A common payer viewpoint—articulated in the Syneos survey— is that DTx products should be priced hypercompetitively, like iPhone apps and other consumer software products, as opposed to specialty pharmaceutical products that command much higher prices.

DTx innovators universally agree that this view is shortsighted. “We may have incredible clinical evidence and very good health economic data, but because the product is an app, or a virtual-reality program, people immediately talk about discounts,” says Everett Crosland, Senior Vice President of Commercial at AppliedVR, a DTx start-up pioneering virtual reality–based approaches to pain management and the treatment of mental health conditions such as anxiety. “This is unfortunate,” he says.

Maybe payers default to a discount mindset because they know many consumers will download a software app, open it once, and never touch it again. That paradigm doesn’t conjure up a successful healthcare model, and it has tainted perceptions of how consumers will interact with DTx.

We may have incredible clinical evidence and very good health economic data, but because the product is an app, or a virtual-reality program, people immediately talk about discounts.

—Everett CroslandSenior Vice President of Commercial at AppliedVR

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Criteria for coverage . . . and roadblocksAs the DTx field expands, high-quality RWE will be indispensable. But right now, payers say the sine qua non is hitting the bar in RCTs and peer-reviewed literature. “DTx must show improvement in the disease state that is as robust as clinical trials in other therapies,” said one survey respondent at a leading PBM. However, he added, “There is a lack of well-designed studies demonstrating both short- and long-term benefits vs. existing standards of care.”

Virtually all payers said they expected to see clinical performance measured against disease scales and they highly valued evidence on duration of response, and all wanted to hear about the impact DTx would have on resource utilization.

Asked what would constitute the greatest hurdles to coverage of DTx, 88 percent said product pricing was very or extremely important. “It seems that everyone wants the health plan to

subsidize DTx like drugs,” the medical director of a regional managed care organization (MCO) told us, expressing a common concern. “But these are not drugs—they are apps or devices. They should be priced accordingly.”

Syneos Health’s interviews with payers highlight the confusion around how payments for DTx will be made, to whom and for how much. And having heterogeneous regulatory and reimbursement frameworks in different regions magnifies the challenges

Jessica Shull, European Lead for the Digital Therapeutics Alliance (DTA), points out that all DTx are classified as medical devices in Europe, which means each therapeutic must carry a CE mark indicating it complies with EU regulations in upward of 30 countries. Limiting as this may be, it’s a consistent approach that has no counterpart across the Atlantic.

Three-quarters of respondents in Syneos Health’s payer survey said they believed clinical evidence supporting the use of DTx is still insufficient. An equal-sized cohort said the lack of clear payment models was a significant barrier. Looking just at responses in the PBM cohort, which represented a total of 195 million covered lives, those who said concerns about payment models were “extremely important” came to 80 percent.

WILL DOCTORS EMBRACE DTX?Leaders in DTx solutions are the first to acknowledge that liftoff, for the whole industry, hinges on what physicians tell their patients. “I can’t tell you how often I have heard people say, ‘Yeah, but doctors aren’t asking for this,’ ” says Jeffrey Abraham, Head of Commercial, Market Access and Trade at Akili Interactive. But that doesn’t mean they won’t, he adds, once they understand the benefits. Of 235 doctors polled in a recent survey by Sermo, the leading global social platform for physicians, 90 percent said DTx had the potential to help patients take greater control of their health. And nearly three-quarters said the technology could help ease physician workloads.

How familiar are you with digital therapeutics? (n=686)

Do you recommend digital therapeutics to your patients? (n=422)

Do you think digital therapeutics have the potential to ease physician workload? (n=336)

Do your patients discuss digital therapeutics they use with you? (n=262)

Do you think digital therapeutics have the potential to help patients take greater control over their health? (n=235)

“Solved on Sermo: How Digital Therapeutics Plays Into Real-World Medicine” | January 23, 2020 | Sermo

said SOMEWHAT

said YES

said YES

said YES

said YES

said NO

said NO

said NO

said NO

said NOT AT ALL

said VERY

You can put 100 percent of the risk on us, but I think you will lose some of the benefits of DTx if that happens.

—Jeffrey AbrahamHead of Commercial, Market Access and Trade at Akili Interactive

Addressing urgent needsWhile coverage complexities may seem daunting, one can also see the climate shifting toward optimism, according to Susan Cantrell, Chief Executive Officer of the Academy of Managed Care Pharmacy (AMCP). A professional society with more than 8,000 individual members, many of whom manage pharmacy benefits for employer-based and public programs, AMCP documented a groundswell of DTx interest at a Partnership Forum it organized last year, bringing physicians and pharmacists together with digital-therapeutic developers and patient groups.

“Employers could be very important partners in bringing DTx to patients, especially if you have the right value proposition and economic data to back it up,” Cantrell says. No constituency better grasps the enormity of unmet needs that DTx might address than employers, who may be particularly attuned to chronic conditions and disorders that affect productivity, such as diabetes or substance abuse.

In chronic illness, numbers show both the urgency of unmet needs and the scale of business opportunities. Consider clinical depression. Upward of 25 million adults in the U.S. have been on antidepressants for two years or more with little hope of transitioning off the meds. DTx advocates point to data showing that most, with the exception of severely depressed patients, would do just as well on a placebo. DTx solutions that are emerging from pipelines today may finally offer something more meaningful.

On top of human suffering, there are system-wide costs to consider. In the U.S., mental health conditions are responsible for an estimated $89 billion in annual non-institutionalized spending. As much as $48 billion goes to managing severely depressed individuals classified as “treatment-resistant.” Include conditions such as Alzheimer’s and the annual tally soars to hundreds of billions of dollars.

This is one of the reasons many healthcare stakeholders are counting on DTx innovators to grapple with market access challenges in the most effective, forward-looking manner. The imperative—especially for innovators with prescription-based models—is to master the idiosyncrasies of reimbursement, anticipate the questions and concerns of payers, and never default to an attitude that says “If we build it, they will come.”

Our payer survey has shed light on some of these concerns. Measured against the massive demand for fresh thinking, the birth pains of DTx seem at once inevitable and manageable. The industry has arrived at a crossroad, no doubt. But on each path, the arrows are pointing forward.

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The important point is, the potentially life-altering benefits of validated digital therapies are unlike anything consumers get from conventional phone apps—or, indeed, from high-priced medicines. DTx provide a real-time window onto how consumers interact with the product.

“We can tell who is using the treatment, or who is using it tangentially,” says Jeffrey Abraham, Head of Commercial, Market Access and Trade at Akili Interactive. “Is it fair to say we can be reimbursed for that? I think it is.” Akili’s lead ADHD treatment recently showed measurable benefits in children with the disorder, whether they use it alone or alongside treatment with stimulants.

Reimbursement, Abraham concedes, may have to be negotiated within a risk-based or outcomes-based contract, as happens with growing frequency for expensive biopharmaceutical products. But allocation of risk must be carefully considered, he warns. “You can put 100 percent of the risk on us, but I think you will lose some of the benefits of DTx if that happens.”

Just as DTx call into question conventional calculations about risk sharing, they may also reshuffle the tiers of evidentiary value. Payers in the Syneos survey strongly favor RCT data in peer-reviewed studies over all other forms of evidence, but they will likely revisit this point of view, predicts Pierre Leurent, Chief Executive Officer of Voluntis and a founding member of the DTA. Last summer, Voluntis won FDA clearance for Oleena™, the first software program cleared for managing and monitoring oncology-related symptoms.

From the perspective of both the innovator and the patient, “It’s widely understood that three to seven years of RCTs is too long a time frame,” Leurent says. Moreover, the DTx product you begin testing in an RCT is not the same product five years later, in version 5.0. With regard to products that constantly evolve, “more and more coverage decisions will necessarily be driven by real-world evaluation,” he contends.

The RWE-related enhancements ICER embedded in the latest update to its Value Assessment Framework add weight to Leurent’s prediction. In the new framework, ICER says it has “emphasized how RWE can be helpful in supporting consideration of a treatment’s ‘potential other benefits’ that lie outside traditional clinical trials.”

Employers could be very important partners in bringing DTx to patients, especially if you have the right value proposition and economic data to back it up.

—Susan Cantrell

Chief Executive Officer of AMCP

56% 28%

44%

73%

47%

90%

56%

27%

53%

10%

16%

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