The Dawn of Digital Medicine: Integrating Innovation into Healthcare

The healthcare landscape is on the cusp of a meaningful conversion as the government initiates steps to formally include digital therapeutics in health insurance coverage. This move signals a growing recognition of the potential of software-based treatments to address a range of medical conditions, from insomnia to ADHD.

Health Insurance Review and Assessment Service Spearheads the Initiative

According to government sources, the Health Insurance Review and Assessment Service (HIRA) is actively developing a plan to facilitate the swift integration of digital treatment devices into the existing health insurance framework. This initiative focuses on defining the scope of reimbursable products and establishing appropriate reimbursement rates.

Roadmap to Official Listing: A Phased Approach

HIRA’s strategy involves a complete research service to be conducted throughout the year. This research will serve as the foundation for determining the final list of covered items and the corresponding reimbursement standards. the evaluation process will rigorously assess the effectiveness, safety, and economic viability of these devices within a hospital setting. The anticipated timeline for official listing is projected for late 2026 or early 2027.

From Temporary Approval to Permanent Coverage

Currently, digital therapy devices that have received the designation of “innovative medical technology” are granted temporary health insurance listing and assigned a provisional code. These devices undergo a clinical verification period of two to three years, after which their eligibility for permanent registration is determined thru a new medical technology assessment. Though, the process of securing full health insurance benefits may require additional time for gathering industry feedback and reaching a consensus within the health insurance policy deliberation committee.

Digital Therapeutics: The Third Wave of Medicine

Often hailed as the “third generation of medicine,” digital therapeutics leverage software to treat various diseases. These devices commonly employ applications featuring videos and interactive elements to address conditions such as depression, insomnia, attention deficit hyperactivity disorder (ADHD), and even dementia. The global market for digital therapeutics is experiencing exponential growth, with projections estimating an increase from $2.7 billion in 2020 to a staggering $17.34 billion by 2030, according to the Samjong KPMG Economic research Institute.

The global digital treatment equipment market is expected to increase from $ 2.7 billion in 2020 to $ 17.34 billion in 2030.

Samjong KPMG Economic Research Institute

Government Support Fuels Growth and Innovation

Recognizing the increasing clinical demand and the potential of digital therapeutics as a burgeoning industry, the government is bolstering its policy support. A prime example is the “immediate entrance medical technology” policy, which allows new medical devices that have undergone international-level assessments to be deployed in clinical settings without undergoing a separate new medical technology evaluation.

Challenges and Concerns: pricing and Reimbursement

While the improved market entry rate is a positive development, concerns remain within the industry regarding reimbursement levels. Currently, several digital therapy devices are subject to health insurance, including Aimmed’s ‘Soms’, Welt’s ‘Welt-I’ and ‘Welt-IP’, and New Naps’ ‘Vivid Brain’. However, the temporary reimbursement rates for Aimmed and Welt’s solutions are reportedly low, at ₩25,390 and ₩22,660, respectively. This has led some companies to opt for non-payment and rather sell their products at a higher price point (around ₩200,000) directly to consumers.

Industry Voices: The Need for Sustainable Reimbursement Models

Industry leaders are voicing concerns about the current reimbursement structure and its impact on the long-term viability of digital therapeutics companies.

At present, we cannot cover the development cost, marketing and operating costs, as well as the development cost of the temporary listing.

Lee Jin-woo, CEO of Inner Wave

The current reimbursement rates may not adequately cover the significant development, marketing, and operational costs associated with these innovative technologies.

Digital therapy devices need to be re -evaluated from time to time after the launch to improve the functions with frequent updates. If we are recognized for innovative advancement, we need to review the flexible number of additional growth systems that can increase the number.

Kang Sung-ji, CEO of Welt

Furthermore, the need for continuous updates and improvements to these devices necessitates a flexible reimbursement system that recognizes and rewards innovation.