Discussing DTx payor reimbursement and adoption with Mike Pace (PalmHealthCo and ex-Pear Tx)

May 9, 2023


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Mike Pace is the founder of digital health & biopharma strategic advisory firm, PalmHealthCo, where he makes health technology commercialization success feel more like a day at the beach. He previously led the Market Access and Value Evidence functions at Pear Therapeutics (2019-21), where he and his team secured the first of many US payor coverages of prescription digital therapeutic (PDT) products, and initiated the first value based agreements for PDTs with health plans, Medicaid agencies, self-insured employers and PBMs. 

Mike was kind enough to stop by our virtual fireplace and share tips on how to achieve payor reimbursement for DTx products and encourage adoption among clinicians in the most attractive international markets.

It's the start of a new year. Thinking back to when you started PalmHealthCo at the start of 2021, how has the adoption of DTx played out vs your expectations?  

Well, expectations always tend to be further ahead than reality! Part of this is being driven by a really high stakeholder bar in terms of evidence and workflow integration, but we’re also seeing lots of noise and lower quality solutions polluting the picture a bit. We’re making some good progress though, particularly in segments of the market like digital-first virtual care.


The number of DTx products listed in Germany via DiGA seems to have accelerated, with 6 new DTx products listed within the first couple months of the year. What do you think is driving this acceleration?

Germany’s DiGA approach provides a transparent framework for a path to market, reimbursement and prescription-based models. This is unique and makes it an extremely attractive way to bring DTx products to market. Germany is an increasing focus for US DTx players now, many of whom are choosing it as their second launch market. This even applies to German ‘boomerangs’ like Kaia Health, which launched in earnest first in the US, and is now returning to its home market as a DiGA.


Are you optimistic about DiGA as a reimbursement pathway for DTx products?

I am optimistic. Germany even seems to be moving towards hybrid-based models, higher risk classes and even indication based pricing. Some developers are however unhappy with the end net price points being achieved, which are lower than US price points. Then again price points in Germany are also lower than in the US for Pharma products. There are challenges, but it's important to remember that we’re still in the early days of digital therapeutics reimbursement. Most markets have no pathways whatsoever, or quite tricky ones!

How can companies defend higher pricing and achieve higher pricing post DIGA listing?

It all comes down to making the health economic case, and making it real. I really think that there are so many ways to make a health economic case that haven’t yet been explored. For instance, more could be done to show how DTx products can uniquely address access constraints, equity divides and capacity limitations. We should start to see a recognition that DTx can also address important system issues like physician burnout. These points of value go beyond traditional HTA cost/benefit assessments.

I’d urge everyone to get more creative when it comes to constructing a health economics case. I’m not seeing many sponsors adopt the kind of innovation and creativity that Lindus Health applies to trials.

Approaches like more multi-channel recruitment, decentralised designs and synthetic control arms to show benefit in a real world setting need more widespread adoption. Payors love to see duration and durability of effect. But longer endpoint trials are traditionally more costly, so platforms like Lindus’ Citrus can really help here, using technology like flexible visit scheduling, video calls and reminders to boost adherence long term.


The US and Germany are two of the most well known places to commercialise DTx products. What other countries or markets should DTx entrepreneurs focus on? 

In short, other countries with nationwide programmes, where a single point of entry gives you access to a country-sized population. France has announced they will be funding and adopting a national mechanism similar to DiGA (and already there are several DTx products reimbursed nationally in France via other channels). I’d also highlight Japan, as a great market with a single payor system and sensible regulations. Players like CureApp have navigated the system successfully. Others in the APAC region like Korea, Singapore are fast followers, as are countries in the Nordics and the Netherlands. Maybe the UK will finally get moving and introduce a national procurement route for DTx (We’re working on it – Lindus Health team).

Of course I couldn’t let you go without asking you about clinical trials! Let's say you’re an early stage digital health entrepreneur planning your first pivotal clinical trial. What design tweaks would you suggest to ensure the trial results are interesting to payors? 

 It’s enormously short sighted to not think about reimbursability and payor access when designing any protocol!

There are a few simple tweaks that will help your significant trial investment stay relevant for payors. Firstly, ensure your population is broadly representative, across age, ethnicity, regions (states in the US). Secondly, include as much data capture in a real world setting as possible. Players like Lindus make this easy. Thirdly, the nature of the control (eg sham app, vs treatment as usual) is less important. What matters is the weight of evidence across all your endpoints. You want the endpoints to tell a consistent story, think how the peer-reviewed publication will be read by payors!


One snag for DTx companies, post market access, has been clinician and physician adoption. How could DTx companies use clinical trial data to persuade ordinary clinicians to prescribe their product over say a standard therapeutic? 

Demystify technology, and show how easy it is to use and adopt! Clinicians have a huge range of attitudes towards technology, but many still associate apps as something for personal rather than medical use. Also anytime that a product uses algorithms, it’s important to try and make any black boxes at least grey. Clinicians really appreciate auditability.

Another big area is developing DTx products with an understanding of how they will fit into provider workflows. I’d encourage developers to deeply understand the workflows of care team members, but also to consider running clinical studies focused on how products will be be implemented. There are a whole slew of endpoints that haven’t been explored to help make this case. For instance, how does my product change practice patterns, satisfaction with clinicians, clinician productivity. Overall, the last few months have seen a lot of progress, and I’m excited for what the rest of 2023 brings!

Lindus Health Team: Thanks Mike! Great to catch up as always.

We’d encourage any DTx founders or developers at any stage to engage with Mike, and help short circuit their path to reimbursement.

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