[Exclusive] Digital Therapeutic Devices to Receive 10% Support from Health Insurance... Health Insurance Coverage Plan Taking Shape

'DTx Health Insurance Coverage Guidelines'
Expected to be Submitted to the Health Insurance Policy Committee

Non-covered and Selective Coverage Options Granted to Companies
App Usage Fees Calculated Based on Cost

The guideline for applying national health insurance coverage to digital therapeutics (DTx) has finally taken shape. With the insurance coverage effectively passing the critical point, the commercialization has taken its first significant step about five months after the first domestic DTx approval in February.

According to the industry on the 21st, the 'Draft Guideline for DTx Health Insurance Coverage' passed the subcommittee of the Health Insurance Policy Deliberation Committee held on the 19th. The agenda is scheduled for the full committee meeting later this month, and if it passes there, DTx will be covered by health insurance. However, since it was already presented to the subcommittee last month but failed to reach an agreement, if consensus is not reached again during the full committee discussion, the matter may be deferred to the next committee meeting.

Starting with Aimmed's 'Somz,' the first domestic DTx, in February, and followed by Welt's 'Welt-I,' two insomnia DTx products received approval from the Ministry of Food and Drug Safety, marking the beginning of the DTx era in Korea. However, unlike the approval-related regulations, which the Ministry of Food and Drug Safety actively supports and are becoming international standards, commercialization-related regulations have not yet been established, raising concerns that the DTx industry’s growth may lag behind.

However, with the release of the guideline, these concerns are expected to be resolved for now. The core of the guideline is to incorporate DTx into the reimbursement system in the form of 'temporary listing' to generate evidence based on real-world data (RWD) after approval, and to give companies the option to choose between non-reimbursement or selective reimbursement (10%). Cost compensation will include not only the cost price but also product development expenses.

The key issue of reimbursement method proposes that under health insurance coverage, selective reimbursement will apply, where patients bear 90% of the cost and insurance pays 10%, while under non-reimbursement, patients pay 100% out-of-pocket plus additional fees charged by medical institutions. This system allows developers to choose autonomously. The industry tends to prefer selective reimbursement, seeing the need for public insurance inclusion to gain trust in this early stage of the DTx industry. An industry insider said, "Since it is recognized by the state, it can have credibility, and patients can reduce their financial burden by receiving even 10% support. However, medical institutions may prefer non-reimbursement, so the debate is ongoing."

The fees are composed of medical service fees such as prescription and education (prescription fee), post-use evaluation (effectiveness evaluation fee), and DTx usage fees. The service fees are likely to be set at a level similar to overseas prices, which are around 10,000 KRW to mid-teen thousands. The application (app) usage fee is expected to be determined considering costs such as product development expenses. Since it is a temporary listing, the basic direction is to provide minimal compensation at cost level.

The industry welcomed the guideline’s release, albeit somewhat late, but also voiced the need for improvements. Kang Sung-ji, CEO of Welt, said, "Since a progressive fee review has been conducted, we expect a positive impact on the market stabilization," but also pointed out, "DTx is an area that continuously evolves through updates, but the current cost calculation method is unlikely to include update costs, and even if included, prices may need to be reassessed each time."

CEO Kang proposed a 'fixed-amount reimbursement system' as an alternative. Instead of paying reimbursement based on a fixed rate (10%) of usage fees, this system sets a fixed reimbursement amount for each disease group DTx. He explained, "If the costs of updates are not recovered, companies may lose motivation. Through such a system, companies can autonomously price their products based on product quality, compete, and grow."