The last 12 months have shone a spotlight on digital transformation in Europe’s healthcare systems, with all the signs pointing to digital therapeutics (DTx) moving ever more into the healthcare mainstream.
Germany is spearheading these advances, particularly with its 2019 changes on national digital health reimbursement. The country will provide further momentum during its presidency of the Council of the European Union (EU), which runs from July until December 2020 and will see it work closely with the succeeding presidencies of Portugal and Slovenia. The countries have agreed a ‘trio programme’ to identify issues that would benefit from a fluid transition from one EU member state’s presidency to the next to form an 18-month agenda, with progress in digital health one of the highlights of their plans.
While we would not expect digital therapeutics to replace pharmaceuticals themselves, they could bring huge complementary benefits to patients and prescribers and, in doing so, could bring pharmaceutical companies perhaps as much value as the medicines they traditionally produce.
There’s also considerable interest in digital therapeutics from payers, thanks to the way that these digital interventions can provide more data and evidence for treatments as they work to improve the health or quality of life of patients. The approaches and requirements for reimbursement and pricing of this new type of intervention are currently being developed on a country-by-country basis, leading to a non-uniform landscape. For pharmaceutical companies this all adds up to a stimulating market access challenge.
Implemented by the German Ministry of Health in December 2019, the Digital Healthcare Act (DGV) has captured a lot of people’s imagination as a signpost to the future of health technology. It stipulates that digital health applications should now be considered to be medical products and, as such, can be prescribed by doctors as well as reimbursed by the country’s statutory health insurance funds.
The Act means that Germany is the first country to enable the reimbursement and prescription of digital therapeutics on a national level. Before the legal changes, digital therapeutics were reimbursed on a case-by-case basis in Germany; now, the country’s new legislation puts a framework into place for evaluating the evidence and pricing negotiations for the whole statutory health insurance system.
In addition to the important implications that these changes have for those in the pharma industry involved in market access and health economics outcomes research (HEOR), the changes demonstrate a clear intent on the part of the German authorities to make the country a frontrunner in innovation and to allow patients access to these novel interventions. Certainly, taken as a whole, the legislation is a big step forward for creating a new market and stimulating innovation in the entire healthcare market.
However, although the groundwork for change in Germany has been laid, there’s still some uncertainty about the detailed implications of the legislation and how it is actually put into practice. It was a very lean legislation process with the intent to learn as the system matures and, where needed, update the DGV, the associated Digital Health Applications Ordinance (DiGAV) developed by the Federal Ministry of Health, and/or the Guide for Manufacturers developed by the Federal Institute for Drugs and Medical Devices.
Nevertheless, these changes have drawn huge interest, as seen by the strong international attendance at the recent Digital International Health Summit, which drew some 1,500 attendees from more than 20 countries. So, there’s this huge interest from across the marketplace in what is happening in Germany and the indications are that it’s going to have quite a wide geographic influence, as other countries try to learn from the German approach.
They may have different healthcare systems and alternative approaches to pricing and reimbursement, but we would certainly expect other countries to look to the approach Germany is taking and see how they might adapt and implement it within their own markets.
Furthermore, as noted in our recent Digital Therapeutics Landscape in Europe white paper, Germany isn’t the only European country pushing forwards the digital health agenda – the UK is also on the front line of digital transformation in healthcare. Recently formed bodies like NHS Digital and innovation body NHSX are helping to accelerate the digital transformation of healthcare in the UK and integrated within these efforts is the country’s framework for digital therapeutics.
However, there are important differences that pharma should note between the drivers behind efforts in the UK and Germany to advance the digitalisation of their healthcare systems. In Germany there appears to be a strong political desire to stimulate innovation and bring novel healthcare solutions to the patient, while in the UK it seems to be more about efficiency drivers leading the process on a more ‘administrative’ level.
Even before COVID-19 upended societies and healthcare, and thrust technology even further into the spotlight as people adapted to social distancing measures, the use of digital health was following an upward trajectory. Countries across Europe were looking to learn from the experiences of their neighbours and the pandemic has necessarily heightened interest in digital health.
Amid the tremendous pressures that healthcare systems have faced during 2020 there is a real sense of urgency about using digital health technologies like digital therapeutics in the most effective way.
One of the effects of the COVID-19 pandemic, and there will be many for historians to choose from, is the way that it has finally streamlined thinking and processes that have been discussed for years. In this way we would note the huge progress made in areas like telemedicine or the drive to implement effective new approaches in many different disease areas. COVID-19 has shown how fragile healthcare systems’ primary and secondary prevention is, and boosting the digitalisation of health will be one way to strengthen our existing structures.
Within pharma we also see various companies starting to collaborate with the tech start-ups developing digital therapeutics and as awareness of this area grows so too will the industry’s willingness to invest in these new types of products and the companies that work on them.
COVID-19 has also brought additional attention to public investments from different countries and from an EU perspective. The EU’s existing digitalisation agenda has been reinforced with a stronger focus on health and healthcare, with EU4Health set to provide €9.4 billion of funding to EU countries, health organisations and NGOs to bolster efforts in areas such as digital transformation. The proposed programme is the EU’s response to COVID-19 and is set, in funding terms, to be the bloc’s largest ever set of health activities as the union seeks to strengthen health systems so that they can face future epidemics and the long-term challenges they could bring.
Many of the efforts in digital transformation were already in progress before COVID-19 hit, but the sense of momentum that the pandemic has given them cannot be overstated.
At the moment the European marketplace for digital therapeutics remains very fragmented, and even in Germany there are some questions over what evidence will be required as the framework evolves and matures.
Many aspects of Germany’s 2019 Digital Healthcare Act remain unclear, and we would highlight areas such as how it will treat structured integration across healthcare practices, exclusivity issues and patent/intellectual property rights as areas to watch for further development. Moreover, as the first wave of reimbursement submissions for digital therapeutics have now resulted in the listing of the first DTx in the DiGA directory, the next important milestone to watch will be the outcome of the first price negotiations.
Once those first negotiations are finished we can start to build an understanding of what sort of prices one can expect from digital therapeutics. However, what is valid now might no longer be valid in six months, and what is valid then, might no longer be valid in 18 months as it concerns a learning system or iterative framework. There will continue to be new developments and the processes and requirements will evolve, which is something that pharma really needs to stay up-to-date on. As part of that, market access and HEOR executives should expect, plan for, and raise awareness internally about changes in the market – both in Germany and, as they begin to catch up, other European countries.
To start to anticipate change companies will need to understand the marketplace and its stakeholders, including patients, healthcare professionals and payers. In Germany, there are two or three large insurance companies who are very much pushing digitalisation, while some of the country’s other healthcare insurers are proving to be somewhat slower when it comes to digital health adoption. The same holds true for physicians, where some physicians are interested in understanding the benefits of DTx and providing novel treatments to patients, whereas others are more cautious about the effectiveness, safety and data security of DTx. Finally, patients generally are keen to adopt new technologies to improve their health and care, in particular if they have been involved in the development, either directly or indirectly through patient associations.
There may be some in the industry who view these developments with a certain amount of suspicion, perhaps fearing that digital interventions could replace pharmaceutical treatments, but we would not see them as a threat to the industry.
After all, pharmaceutical companies know the markets, have the connections and know the patients, prescribers and payers far better than any start-up – they also have the resources to invest in new innovative products. If the Googles, Apples and IBMs of this world can move from the tech space to healthcare, why shouldn’t a pharmaceutical company, at least partially, be able to transform itself into a tech company?
We already see data science and life science becoming ever more intertwined. As many new drugs enter the market with very specific, and usually very small, patient populations, the evidence available at market entry can often be very small. One of the consequences of this has been a rise in the demand for risk-sharing agreements, and these can only be successful for the industry in the long-term if companies are able to generate sufficient data to prove the case for their products to payers.
Ultimately, digital therapeutics offer an important opportunity to add value in addition to pharmaceuticals and (non-digital) medical devices, given the difference in treatment modality, but also through direct outcomes data collection.
To learn more about how digital health is changing in Europe, and the market access and HEOR implications of these advances, download the Digital Therapeutics Landscape in Europe white paper
Olaf is a director and head of German operations in Pharmerit’s Berlin, Germany office. He also leads a variety of projects across Pharmerit’s Centres of Excellence. His projects have covered a wide range of disease areas, including oncology, cardiovascular disease, respiratory disease, infectious disease and various orphan indications. Before joining Pharmerit, Olaf worked as a project leader global HEOR at Bayer Healthcare for almost five years.
Emanuele is a senior research analyst in the Strategic Market Access Centre of Excellence at Pharmerit. His expertise includes conducting systematic literature reviews to inform network meta-analyses, economic models, global value dossiers and reimbursement dossiers. His background is in health economics and health policy with a particular focus on European public health. Besides working on literature reviews in epidemiology and disease burden in EU countries, Emanuele specialises in EU functioning and policymaking in healthcare. He has been involved in several healthcare system and stakeholder analysis projects and publications.
OPEN Health is a family of expert practices working in partnership to drive positive change in healthcare communications and market access globally. It all started with a vision for improving the lives of patients, worldwide. The OPEN Health vision has manifested with the integration of experts from Pharmerit and Peloton Advantage to create a new unique entity equipped to be a global leader in HEOR, market access, medical and patient brand communications and digital services.
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