Five Tips for Bringing a Complex Digital Health Product to Market

Bringing a sophisticated digital health product comprised of a combination of hardware and software to market can be tricky. Meena Datta and Deeona Gaskin advise on how to do so successfully by factoring in FDA marketing and reimbursement pathways, including insurers and employer-sponsored health plans.

The more complex digital health products currently being developed are combination hardware/software products that include an AI component. They are complex because they involve the transmission of real-time patient information – such as heart monitoring – via the device to a clinician who then reviews that remote data as part of the ongoing treatment and care of the patient.

These types of complex digital health products require FDA approval, clearance, or authorization through the de novo pathway, as well as a reimbursement pathway and can therefore be among the trickiest to bring successfully to market. Tips for a successful product launch include:

1. Factor insurers and employers into your strategy at an early stage. From the moment you begin to develop your digital health device and contemplate your strategy for FDA approval, clearance, or authorization, you should also be thinking about how the insurance markets or employers in the U.S. are going to pay for your product. Be aware that combination hardware/software products (with or without breakthrough status) have a far greater likelihood of success in obtaining insurance reimbursement than SaMD, and that there are only general reimbursement codes such as A9219 available for SaMD only digital products. The lack of a federal reimbursement pathway that incentivizes distinct payment for SaMD can hamper commercial success of a SaMD only product.
2. Review insurance benefit categories as an early step in your strategy. As early as possible in the development process, it is wise to undertake a review of the various insurance benefit categories that may be available for it. This will help you to determine whether beneficiaries are underutilizing certain categories of benefits. Where there is underutilization, the payor may be more inclined to cover an innovative and effective digital product as a way to differentiate the payor in the marketplace.
3. Participating in the breakthrough designation pathway can be useful for credibility with insurers. If you have a complex and innovative digital health product comprised of a combination of hardware and software, you should consider participating in the breakthrough designation process available from FDA if your product meets the two criteria that relate to being a “more effective” treatment or diagnosis for serious diseases and conditions. This will give you earlier and more frequent feedback from the FDA and prioritized (potentially faster) review by FDA. However, be aware that only a minority of companies which seek this pathway actually receive  the designation from FDA. Those that complete this process will have a credibility and innovation advantage with insurers, who will view the breakthrough status as a differentiator for their offerings to potential enrolees.
4. Employer-sponsored health plans are a good option for SaMD as well as digital health that is not subject to FDA jurisdiction or for which FDA is exercising enforcement discretion. If your product is SaMD only, or not subject to FDA jurisdiction, or FDA is exercising regulatory discretion, your strategy might be best served in the near term by focusing on employer-sponsored health plans. These include apps as part of wellness fringe benefits available to employees such as Employee Assistance Programs (EAPs). For a SaMD process, decide whether to bypass the insurance markets by focusing on the employer benefit category.
5. Support is needed for industry lobbying efforts. To bring digital health products successfully to market, is important that digital health product developers support lobbying efforts by bodies including the Digital Therapeutics Alliance (DTA) to pass the Access to Prescription Digital Therapeutics Act. Support for other industry lobbying efforts – for example, to advance recognition for complex digital health products as a separate category for insurance payments in the U.S. – will also be important as the market matures.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.