Understanding Regulatory Pathways for Prescription Digital Therapeutics From a PBM, Payer Perspective

Russell Spjut, PharmD, director, formulary management, Magellan Rx Management, shares insight on the regulatory pathways for emerging prescription digital therapeutics (PDTs), and discusses some of the work of the Digital Therapeutic Alliance.

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Welcome back to PopHealth Perspectives, a conversation with the Population Health Learning Network where we combine expert commentary and exclusive insight into key issues in population health management and more.

Dr Spjut returns to us today to share some insight on the regulatory pathways for emerging PDTs and the work he's doing with the Digital Therapeutics Alliance. Do you want to start off by telling us a little bit about yourself?

My name is Russell Spjut. I am a pharmacist who completed a residency in managed care within a PBM, and I've worked in the PBM space ever since. 

I currently am the director of formulary management at MagellanRx. We're a PBM, we were recently acquired by Prime Therapeutics, so we will be one big family here within the next year as we integrate. My current oversight is on our commercial and managed Medicaid lines of business, and I oversee a lot of our operations and strategy as well as data analytics for our formulary team. 

I also sit on the Payor Accelerator Board for the Digital Therapeutics Alliance. We recognize that the landscape of digital therapeutics is an interesting, growing area. I've wanted to be on the forefront of the conversation, making sure we drive this into an area that's good for everyone—the patient, payers, prescribers—everyone that's going to be involved in the digital therapeutics landscape.

Great. Thank you for joining today. Can you please describe the current digital therapeutics landscape? What are some of the challenges relating to regulation and approval for PDTs?

Yeah, that is a very interesting question. Many know there are pathways for digital therapeutic products to be approved by the FDA, although the FDA is still working through some of the details and what the long-term definitions will be. There is still some uncertainty in the market about what FDA approval will mean, what the different levels of approval might mean, and if there's going to be difference in how we evaluate and cover those approvals. 

I think a lot of that distinction probably will play a bigger role in government-funded programs: Medicare, Medicaid, those sorts of things. They typically have to follow pretty closely what FDA approval means. Medicare Part D doesn't allow coverage of non-FDA approved products. So some of those things will impact those lines of business more.

I think on the commercial side, people feel it's going to be up to each individual plan or PBM to make the decision of what's right for their population. That’s how things are done in commercial anyway. We make decisions, within legal bounds of course, but there's a lot more leeway for commercial plans to make decisions on what coverage is right and what's not right. 

We will be watching very closely to see what the FDA does going forward, and I think this will play a role in how we evaluate digital therapeutic products. In general, though, I think everyone in the PBM space is excited for what's to come with digital therapeutics.

We all recognize that pharmacy distribution is a really sensible option for getting digital therapeutics into the hands of patients who need it, and it fits with the PBM history and legacy, where we've wanted to be on the forefront of technology. We've had electronic billing for more than 30 years in the pharmacy space. We've tried to drive technology and technological innovation in health care, and I think PDTs fit into that legacy. 

In pharmacy, we've done medical device distribution for years and years. Even though a lot of these digital therapeutics don't have a physical component to them, most of them are going to be app-related things. So that's one difference that we're going to have. You're not going to have a physical device to hand to a patient in a pharmacy setting, but you’ll be giving them an access code or login information and be able to bill that through the pharmacy distribution points. I think that makes a lot of sense.

It makes reimbursement a lot clearer. It makes it so the prescriber knows, "Hey, I have to send this prescription just like I do any other prescription to this pharmacy." Patients are really familiar with the process of working with the pharmacy to get something filled. So I think it fits in nicely there, and there's a lot of interest in pharmacy distribution being one of the solutions in health care and in digital therapeutics. 

It's interesting, though, as we consider how are we going to evaluate digital therapeutics. Many PBMs are publishing that they have digital therapeutics as part of their formulary offerings today, anywhere from a couple of products up to 25 or 30 products, from what I've seen advertised by the PBM industry. But we know there are hundreds in the pipeline and many of those are planned for some sort of FDA approval pathway. This is going to be an area where the evaluation of these products will become more and more of a time burden on those of us who work in the PBM and health plan space.

How do we evaluate the clinical and value information that's coming out about these products? And how do we make sure we're spending our time on the products that are going to offer value to the members within our populations? In a perfect world, everything that gets approved would be a great product and offer great value, but I don't anticipate that necessarily being the case for every population out there, especially as we're getting used to what the FDA approval pathways mean and the FDA's still tinkering around with some of their language and definitions.

One thing that Digital Therapeutic Alliance has done—everyone on the Payor Accelerator Board including myself have given input to create a guidebook that helps payers evaluate evidence. It gives some templates on what you may want to consider and how you could incorporate this into your review workflow. Not that it's a prescriptive, “you must do this step and this step and this step,” but it gives a good idea of some of the things to start looking for. A really interesting area within the PBM, payer space is just evaluating, and how we create the coverage for these drugs.

I think within the PBM space, another issue that we are going to have to tackle sooner than later is, how do we talk to our clients about coverage of these PDT products? It's one thing for us as a PBM to say, "We've evaluated these products, we've made them available on our formularies." It's another to get clients to buy into that and want to cover them. 

My understanding of the PBMs I'm aware of and the PBM I work for, is that we are going to allow PDTs as an optional coverage category, much like some of the other optional coverage categories out there, like weight loss coverage, where at a benefit level, most clients are picking whether they cover this category of treatment or not.

At least for the foreseeable future, PDTs are going to be one of those areas where clients are going to either opt in or out of coverage. So we're going to need ways of talking to our clients—whether it's a health plan client, a government program client, a self-funded employer client, clients coming through TPAs, whatever it might be—about why they might want to cover PDTs. It's going to be new for a lot of these people, especially for clients who don't have clinicians at their disposal.

Many employer clients, for example, don’t have a pharmacist or physician on staff that can help them evaluate the necessity of something like a digital therapeutic. But in a PBM, we recognize those areas and we've got pharmacists, account managers, and other clinicians that can play those kinds of roles and help clients understand what a digital therapeutic is, why a PDT that's been FDA approved is different than apps you can just download on the store on your phone, and what the value is of covering these products. I'm hopeful that we will see more and more adoption over the next couple of years as we have those conversations with clients, but that is going to be a hurdle we'll probably experience less than a government program.

Anything that falls under the Centers for Medicare & Medicaid Services (CMS) umbrella is going to follow what CMS does, and CMS is signaling that they want to be in this space. They've created some HCPCS codes for coverage, and it looks like CMS is gearing up to be a player in the digital therapeutic space. 

But outside of those government programs, there's going to be a need to evaluate underwriting and those sorts of things, and it's going to be some interesting conversations over the next few years. So it's definitely a landscape that's still quite green. There are a lot of us still trying to figure out what everything means. Stakeholders are still getting together to talk about what's going on.

Recently, the Digital Therapeutic Alliance and NCPDP hosted an event where they brought interested stakeholders together to a roundtable to discuss the nuts and bolts of, how do we make sure we have coverage for these products? How do we make sure we can bill these products? How do we make sure they're in our drug databases and drug compendiums so there's information available that can feed into systems? 

There's a lot of work going on behind the scenes to make this a viable industry and path, and I'm really optimistic for what's to come. It's going to be a fun area. I think anyone that has interest in digital therapeutics is going to find there's a lot to do over the next 5 to 10 years, and it's going to be a fun and interesting landscape.

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This transcript has been edited for clarity.