- Digital Therapeutics (DTx) – software-based products with a medical effect hold significant promise in advancing healthcare outcomes
- In 2019, Germany introduced the Digital Healthcare Act (DVG), opening a regulated route to widespread reimbursement of digital therapies, a first in Europe
- With differentiation between provisional and permanent reimbursement, the DVG opens the possibility for a flexible evidence generation strategy
- Stated price points appear to support a “more is better” evidence generation strategy, based on the few early examples available
Digital Therapeutics Are Covering Ever More Therapeutic Areas.
Digital therapeutics (DTx) are software or software-based products intended to help prevent, treat, or manage a disease or medical condition through evidence-based interventions, often with regulatory review and clearance . This powerful idea has generated substantial excitement, particularly over the last two years as biopharma companies became involved and DTx got ready to address difficult-to-treat and chronic conditions [2,3]. Peer-reviewed studies show improved outcomes from digital therapeutics, either alone or in conjunction with conventional protocols, in a broad range of indications, including cancer, ADHD, asthma, schizophrenia, and insomnia . While there is some optimism in DTx circles that COVID-19 will accelerate acceptance and use of these promising treatment options, the sector as a whole is still in the early stages of development.
Only a minority of the DTx have accumulated robust clinical evidence and even fewer of these have been commercialized beyond a few initial or pilot customers. Consequently, countries have placed significant barriers to the broad reimbursement of DTx with limited evidence of their safety and efficacy . In the absence of established, repeatable and scalable paths to commercialization each DTx company is effectively on its own, leading to prominent setbacks for DTx leaders.
Germany Introduced the Digital Healthcare Act in 2019 Promising Reimbursement through the Statutory Health Insurance System for DTx
The Digital Healthcare Act (DVG) is part of Germany’s E-health reform which outlined a roadmap to build a nationwide digital infrastructure. Prior to the DVG in 2019 some of the services that have been rolled out included: video consultations, electronic prescriptions and electronic patient records. The DVG paves a clear, structured way for digital health applications into reimbursement. Under the act any doctor in Germany will be able to prescribe digital health tools to the 72 million insured citizens of the statutory healthcare system. This means that insurers will be required to pay for qualifying applications, making such digital health solutions broadly accessible. Additional European countries are also following Germany’s example. The Belgian National Institute for Health and Disability Insurance (INAMI-RIZIV) announced a new framework for DTx reimbursement, involving a three-level national quality control system .
Here we focus on the German initiative that targets digital health applications (also termed DiGAs in German) to support patients with disease diagnosis, treatment, or management of chronic conditions. Applications must meet the following requirements to be eligible for listing in the directory:
- Low-risk medical device
- The device should be CE-marked and either class I or IIa (according to the MDR or for legacy devices the MDD) 
- Used as a support to the recognition, monitoring, treatment or alleviation of disease or the recognition, treatment or alleviation or compensation of injuries or disabilities. Applications meant to promote a healthy lifestyle or simply prevent insurgence of a pathology will not be considered
- Its main function should be based on digital technologies, but not merely collect data
- It should be used autonomously by the patient or by the patient together with the healthcare professional.
Aligning with Europe’s GDPR regulations, applications must also satisfy strict data protection requirements as well as suitability for use, information security and quality obligations. Key to a successful application is however the evidence provided, which needs to fulfil several quality criteria:
- The evidence must be from quantitative comparative study. Which study or evaluation design can be chosen also depends on the type of DiGA and the targeted positive healthcare effect.
- Studies must be registered in a public study registry (primary or partner registry of World Health Organization International Clinical Trials Registry Platform or a data provider of the World Health Organization International Clinical Trials Registry Platform)
- The studies must be conducted in Germany and demonstrate real-word usability within the clinical environment that they are eventually being reimbursed.
While the last requirement may sound punitive at first, it opens up the possibility for two principal application routes and flexible evidence generation strategies.
Digital Therapeutic Manufacturers Can Apply for Provisional and Permanent Reimbursement
As the name suggests, successful applicants to a permanent reimbursement decision can expect long-term funding through the healthcare system, like established drug-therapeutics reimbursement, while provisional reimbursements are limited to one year of funding. The key difference between the two routes of reimbursement is grounded in the level of clinical evidence at the time of application. This allows the manufacturer to design its evidence generation program along two principal strategies, for which we coined the terms of Pharma-Lite and Silicon Valley Plus:
While the Pharma-light approach generally follows the rigid staged- gateway approach of biopharmaceutical development, Silicon-Valley plus blends the individual phases and is aimed at a commercialization prior to a completed evidence generation, allowing the manufacturer to monetize its innovation at an earlier timepoint. Since the program came into effect there have been a total number of 84 applications and not surprisingly most of the applications targeted provisional reimbursement. However, based on a limited dataset, success rates for both applications are similar, suggesting that the hurdles for approval are consummate with the data provided.
Evidence Generation Translates into Value, Independent of Path
Investigating the correlation between price point and evidence generation can be concluded that higher level of evidence directly translates into higher achievable prices; however, this correlation is independent if the evidence is generated through a stage-gate Pharma-Light approach of a more fluid Silicon-Valley Plus approach.
With the introduction of the Digital Healthcare Act in Germany in 2019, a pathway to widespread reimbursement of digital therapies has been established. Using this pathway provides the manufacturer of the DTx to choose between a more flexible evidence generation approach well established in the world of IT development, and a staged-gate approach more akin to biopharmaceutical development. For both approaches, evidence still rules supreme and high levels of clinical evidence directly translate to higher achievable price points. This observation differs significantly from biopharmaceutical development, where the reimbursed prices are better correlated with improvements in the unmet medical needs, which is indications specific, rather than the evidence burden generated. For developers of digital therapeutics, the German Digital Health Act offers three insights that should support the wider acceptance of digital therapeutics:
- A clear path to widespread commercial reimbursement has been established
- Investments in evidence generation pay off and translate into higher achievable prices
- Application routes for provisional and permanent routes offer flexibility in the evidence generation strategy
 Digital Therapeutics Alliance Report: Combining Technology and Evidence-based Medicine to Transform Personalized Patient Care.
 Dang, Amit et al. “Role of digital therapeutics and the changing future of healthcare.” Journal of family medicine and primary care vol. 9,5 2207-2213. 31 May. 2020.
 Happify Health Press Release, September 17, 2019.
 Barrett, Meredith, et al. “AIR Louisville: addressing asthma with technology, crowdsourcing, cross-sector collaboration, and policy.” Health Affairs 37.4 (2018): 525-534.
 Health Advances Blog: How COVID-19 Could Impact Digital Health.
 PM360: The Next Chapter for Digital Therapeutics.
 Health Advances Blog: E-Health in Germany: Rapid Progression of Digitalisation?
 MDR Rule 11: The Classification Nightmare (johner-institute.com)