High time for a change in Digital Therapeutics valuation

September 9, 2019
Digital Health

The European DTx conference took place in London last July. In quick succession, a range of current topics were discussed, such as the relationship with the pharmaceutical industry, outcome measures (PROMs, ICHOM) and acceptance by the healthcare sector. But the overarching theme was about finding the right business model to be able to deliver the DTx in a sustainable manner.

But even if it is possible to turn a dormant idea into a concrete product, scientifically demonstrate its effectiveness and have a market that embraces the new DTx because it meets a real need, it is still uncertain whether the initiative will succeed or not. After all, somewhere along the line capital is needed to run the organization, to conduct additional research and to continue product improvement and distribution.

Where is the reimbursement from the regular healthcare system?
All over the world, DTx companies are looking for sustainable revenue models. This is a remarkable issue, knowing that the DTx solutions offered are often focused on problems (medical and psychological) for which no solution existed previously, at relatively low costs. Or they solve a problem for which an established intervention already exists, yet at significantly lower costs than regular healthcare. Even if this is scientifically proven and in the marketplace, reimbursement from the regular healthcare system remains uncertain.

Unfortunately, there is no comprehensive solution for this issue. Healthcare is organized and funded differently in each country. The Netherlands, for example, has a strictly controlled compensation system that is not yet set up for DTx solutions. That is what we found from recent conversations with the Dutch Healthcare Authority (NZa), The National Health Care Institute (ZIN), the Ministry of Welfare, Public Health and Sport (VWS), and health insurers, among others, about possible reimbursements for our Untire app, which reduces cancer-related fatigue.

Let me first of all  note that all conversations took place in a very enjoyable, benevolent and cooperative atmosphere. Each organization recognises the potential importance of DTx and that it is necessary to think about a method of reimbursing proven interventions, which provide a  value in health and care (better outcomes for the patient, at acceptable costs).

Not a tool, but medicine

Part of the problem is that DTx are seen as medical tools, which due to current regulations, healthcare providers must purchase and support to improve their services. However, many DTx solutions, including the Untire App, are standalone self-management solutions.  Untire has a proven impact, without oversight from a (medical) professional. We consider this to be a huge advantage to be able to help many people at relatively low cost. DTx do not (yet) fit into the current reimbursement system. What needs to occur is the  approach of DTx solutions from the perspective of a medicine. These are prescribed, whereby the effect is also "standalone" (read the instructions carefully) and the results are either monitored or not.

Second challenge for DTx

Health insurers in the Netherlands have room to decide for themselves whether or not they wish to finance an innovation. This poses an additional challenge for DTx. After all, insurers have the task of keeping healthcare not only useful, but also affordable. This is certainly an important and justified objective. But what does that mean for DTx innovations that do not replace expensive care, but rather help people who have not been helped so far? Extra costs may have to be incurred for these people. This is something health insurers are reluctant to consider, if at all.

Internationally, we anticipate it will take another two to four years before DTx will be adopted into the regular reimbursement system. It will take time to change the way  DTx is perceived and reimbursed within the healthcare sector  I sincerely hope for all patients who benefit from a DTx that this period of waiting will be as short as possible.

Finally, something completely different. To be sustainable, it is also important to have good developers. After years of travelling at home and abroad, we came across the software developer Inspire three years ago. A great organization. Unfortunately, they stopped last July. For the time being, we can continue with two of their developers. In the coming months we will decide about whether to work together with a new party or to hire some in-house developers. Sometimes doing business feels like jumping from floe to floe.

About the author: Dr. Bram Kuiper is a psycho-oncologist, healthcare entrepreneur and CEO of Tired of Cancer. Until July 2017 he was the CEO of the Helen Dowling Institute, which provides professional mental health care to help people deal with cancer.