Digital Therapeutics Business Models - 90 Seconds to Read Series
There have been a few newsworthy developments in Digital Therapeutics sector over the last two months. Of note:
Voluntis, a company specialized in digital therapeutics, and Monarch Medical Technologies, the leader in precision insulin dosing for optimized inpatient glucose management, today announced a new strategic partnership aimed at improving the coordination of glycemic management for patients with insulin dosing recommendations in both the inpatient and outpatient setting. 2
Both of these events underscore the fact that Digital Therapeutics are gaining significant attention and represent a rapidly growing segment in the healthcare market.
This is the first in a series of posts that discuss the various business models available to digital Therapeutics developers.
There are several business models that digital Therapeutics companies can employ depending on multiple factors. For example, if the digital Therapeutic requires a prescription for patient use, the company could pursue a strategy centered on managed care/payer reimbursement as a revenue generator. This approach however comes with its challenges, such as how will the payer handle reimbursement? Will it be covered under the pharmacy benefit, medical benefit or durable medical equipment (DME) benefit? Generally Digital Therapeutic product do not fit neatly into any of these establish reimbursement channels, which raises the question, should payers develop a reimbursement “channel” specifically for digital Therapeutics?
What typically happens now is payers struggle with this issue each time a new digital therapeutic is evaluated for coverage. In some instances, the evaluation bounces from pharmacy P&T committee to the medical side only to be deemed experimental and denied coverage. Other times coverage decisions are delayed or strict utilization management criteria is put in place as a condition of coverage.
There are other factors to consider if an organization is seeking managed care reimbursement:
Establishment of WAC pricing
Obtaining an NDC number for claims adjudication
Securing placement in the various listing service (e.g. First Databank)
Driving demand at the provider level
Schooner Consulting, LLC Provides Digital Therapeutics business strategy development and market access and reimbursement consulting services.