The Digital Therapeutics Alliance's annual conference kicked off Wednesday in Washington, D.C. The conference aims to bring together providers, payers, companies and regulatory agencies to discuss the state of the digital therapeutics industry.
The conference follows a rocky year for the industry, while investments majorly slowed and big-name companies Pear Therapeutics and Better Therapeutics filing for bankruptcy.
The conference began with two advocacy days on Capitol Hill where DTA member companies spoke with lawmakers and staff about the regulatory issues facing digital therapeutics, like the lack of reimbursement from the Centers for Medicare & Medicaid Services (CMS). The group pushed DTA's bill, the Access to Prescription Digital Therapeutics Act, which would create a new benefit category in the Medicare program for digital therapeutics. CMS currently says it is not able to cover the products because they fall outside its existing benefit categories.
Other panels throughout day one of the conference discussed provider adoption, business strategy, reimbursement, and investment in digital therapeutics. While several speakers at the conference acknowledged the current obstacles the digital therapeutics industry is facing—a panel rated the industry as a “B-”—investors and providers touted the potential of the therapies.
Provider advocate Daniel Emina, associate medical director at Amen Clinics, stressed that digital therapeutics are still in their early days. And like the Apple app store from its first rollout to today, DTx will mature.
Investor Sizi Chen at FoundersX predicted that, one day, a DTx company could be one of the most profitable companies in healthcare.
Remote monitoring code changes
Two CPT coding experts discussed recent developments in the American Medical Association’s Current Procedural Terminology Editorial Panel process. The Panel receives applications on CPT code additions, changes and deletions to allow for medical services and medical devices to be billed to payers.
Zachary Hochstetler, vice president of coding and payment at the American Medical Association, and Robert Jarrin, managing member and consultant at The Omega Concern, LLC, discussed the CPT Editorial Panel’s May 2024 meeting, in which new codes for remote physiologic and remote therapeutic monitoring were considered.
Currently, many digital therapeutics companies use remote therapeutic monitoring codes, specifically, an RTM code for cognitive behavioral therapy, to get paid for the therapies.
While no major RPM or RTM code changes have been approved by the Panel in recent years, Jarrin noted a small wording change that was accepted in the Panel’s September 2023 meeting that added the word “intervention” to the guidelines for RTM. The move could have big implications for DTx companies seeking reimbursement through that code.
“We’re likely to see more activity in this area,” Hochstetler said.
Jarrin urged DTx companies to get involved in the CPT Editorial Panel process, which is open to the public and stakeholder feedback. The next meeting will happen in September.
Investor insights
Sizi Chen, product partner at early-stage investing company FoundersX, said that digital therapeutics companies should look to ride on the coattails of artificial intelligence hype in medicine and push the boundaries of outdated medical software. She also recommends DTx companies hold themselves to the same or higher clinical standards in trials as do pharmaceutical companies.
Marko Kuisma, partner at Innovestor Life Science Fund Investor Group, said that investors are generally concerned about the lack of established business and revenue models for DTx companies. Kuisma supports the decision to use remote monitoring codes to bring in revenue, even though the codes are not exactly paying for provider monitoring time rather than software therapy. However, he urges companies to continue innovating on the business side with alternative reimbursement pathways and alternative business models to find high-growth opportunities for DTx.
Arnold Lee, venture partner at Sugati Ventures, said he’s optimistic that the new generation of physicians will be more willing to take up novel therapies like digital therapeutics, compared to more established doctors who can be hesitant about the new approach. He said Sugati Ventures looks hard at the founding team to determine whether it will make an investment, noting that having a clinician on the founding team can make a startup a more attractive investment opportunity.
Business and regulatory strategy
A panel of consultants and lawyers discussed how digital therapeutics companies should navigate decisions about their business model with the regulatory implications of running a DTx company.
Panelists shared different views on whether companies should first start by considering the regulatory constraints of the DTx market, like the Food and Drug Administration (FDA) approval process and pathways. Others said companies should merely be aware of the regulatory pathways available, but said it’s not necessary to pick a regulatory strategy before building a business model. Yet others say reimbursement should be the core consideration.
Aubrey Shick, senior digital health advisor at the FDA’s Digital Health Center of Excellence, said companies should be thinking about what level of FDA oversight they intend to go for when collecting evidence for a DTx product. Even if a company plans to start at the enforcement discretion level, it should gather solid evidence during trials that can withstand a full FDA device approval.
“Ideally align your regulatory strategy and your product strategy so you are ready for the level of oversight at any given time,” Schick said.
Daniel Cody, member of Mintz, advised DTx companies to recognize that there are regulatory pathways that are easier to achieve and ones that are more complicated.
The moderator of the panel, Jeffrey Abraham, a partner at Digital Health Consulting Practice LeadHealth Advances, asked the panelists to give the digital therapeutics industry a grade for its current state.
Carrie Nixon, managing partner at Nixon Gwilt Law, gave the industry a “C,” as it is operating in a very difficult regulatory and reimbursement landscape. She said it’s currently tough to bring a digital therapeutic to market.
Acacia Parks, lead consultant at Liquid Amber Consulting, gave the industry a B-. She said she admires the pivoting digital therapeutics companies have done to achieve reimbursement, such as adding remote monitoring capabilities. But she hopes the reimbursement landscape can change so that companies don’t have to get paid through a back door.
Cody gave the industry a "B-". Current macroeconomic factors make it tough to get investment for DTx right now, and it’s hard to do proof of concept. He noted the current market is very different than it was a few years ago when the investment landscape was more robust.
Marty Culjat, senior vice president and global head of digital medicine and regulatory innovation at EVERSANA, graded the industry at a "B" for having to pivot on a dime based on the landscape and chase investor dollars.
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Increasing provider uptake
A provider panel discussed how digital therapeutics can give patients more access to healthcare between visits. Executives also stressed the need to get providers on board with digital therapeutics products to increase adoption.
Some providers, like Daniel Emina, may take up digital therapeutics on their own, out of curiosity about the therapy. “I’m hoping these conferences will start to include more physicians in the room,” Emina said.
Emina also said there needs to be an ongoing conversation between providers and developers. He encourages developers to think of engagement with providers in the same way as the old pharma model where company representatives were often visiting provider offices and keeping the product top of mind. Or, companies could have a physician champion within a clinic whom they support to introduce the product to others.
Educating providers and centering ease of use for providers and patients will also help with provider uptake and adoption, and make it more likely providers will recommend the therapy, Emina continued.
Dennis Truong, regional medical director of virtual urgent care at Mid-Atlantic Permanente Medical Group, said DTx companies need to get clinicians to understand what the digital therapeutic tools actually do and how they can benefit their practice. He said Kaiser Permanente providers have rapidly adopted remote patient monitoring because it keeps patients out of the office while maintaining “dense and intense” patient data.
Truong said digital therapeutics can complement almost every part of the healthcare delivery organization. It can complement how care is delivered and improve access, he noted, but added that primary care is one of the hardest groups to penetrate.