We recently discussed the challenges and opportunities for diagnostic players amidst and post- the COVID-19 chaos in the context of China’s health care system. In this issue, we will discuss another industry sector that may benefit from this global pandemic, digital health.
In this article, we reference different terminologies such as telehealth, telemedicine, digital therapeutics, and AI, which are either understood as subsets of digital health or used interchangeably with digital health as a general term. This also reflects an interesting phenomenon that digital health has many different meanings. This is the most common pitfall of industry analysis as it is often not specific to the subsets of digital health. This is something we aim to clarify in this piece. The FDA recognizes that “The broad scope of digital health includes categories such as mobile health (mHealth), health information technology (IT), wearable devices, telehealth and telemedicine, and personalized medicine.”
An obvious learning from the fight against COVID-19 is the importance of digital health. Healthcare has traditionally been very slow and conservative in adopting modern information technology into its practice for reasons we are all familiar with, such as regulatory approval, interoperability, patient privacy, and funding decision. The COVID-19 pandemic has forced the healthcare systems worldwide to significantly accelerate the transformation or wider adoption of the digitalization of health care delivery.
Online Consultation and Prescriptions
In China, a real example is that the government has finally agreed to pay for prescriptions ordered and medical consultations conducted online. This has been viewed as a strong signal that the typically conservative public sector is changing and beginning to embrace the trend of online health care delivery. While in the past a drug ordered online would have not been reimbursed, the recent challenges presented by the COVID-19 pandemic, have made payers realize that online is a preferred option.
Despite the impact that the COVID-19 pandemic has had on healthcare evaluating digital health solutions with greater urgency, do not expect that the process will be straightforward or rapid. As with most new technologies, funding will be the key challenge. In addition, there is not a clearly laid out plan that strategically or operationally will assess and reimburse new digital health technologies.
Policymakers’ are concerned that there will be a significant increase in spending due to online prescriptions and consultation. Not only are they not prepared for such a surge in health expenditure, but they also lack tools and data gathering mechanisms to ensure that true unmet needs are being addressed with limited abuse of online services. Other key considerations include accountability, data sharing/ security, the integrity of data, etc, all very common issues and challenges facing new technologies in healthcare, including digital health. And that is why the policymakers have introduced several control measurements to manage the transition. It starts with providers needing to be qualified as an “Internet Hospital” as the prerequisite to be able to offer online services.
|Internet Hospitals in Shanghai
To date, 13 hospitals in Shanghai have obtained the licenses of “Internet Hospitals” offering online consultation services, especially for chronic conditions such as dermatology, neurology, nephrology, cardiology, etc. Of the 13 Internet Hospitals, all are tier-3 (largest hospitals) public hospitals.
Despite the excitement of media and industry analysts, online consultations and prescriptions are probably the most elementary form of digital health; with minimal impact on the essence of care. However, this provides a good starting point for the government to develop a deeper understanding of the key requirements and considerations when assessing digital health solutions.
Digital Therapeutics (DTx) and AI
Our team has published two consecutive papers sharing our insights into the payment models of digital therapeutics, products that deliver “software-generated therapeutic interventions directly to patients to prevent, manage, or treat a medical disorder or disease.” Regulatory clearance is a clear indicator to differentiate between DTx and communication apps and platforms previously discussed.
With that definition and principle in mind, one could find an equivalent regulatory category for digital therapeutic products in China, software medical device, either as standalone software or in combination with a hardware device.
And in turn, a medical device that contains software is subject to the same regulations, where the manufacturers are expected to provide a comprehensive technical file/design dossier for the software.
In April 2017, the FDA permitted marketing of the Philips IntelliSite Pathology Solution (PIPS), an automated digital slide creation, viewing, and management system. The PIPS is intended for in vitro diagnostic use as an aid to the pathologist to review and interpret digital images of surgical pathology slides prepared from formalin-fixed paraffin-embedded (FFPE) tissue. Almost 3 years later in February 2020, PIPS received approval from NMPA as a Class II medical device with software.
Compared to the online consultation and prescription business, DTx is a much quieter space and largely that is because such products are still mainly purposed for use by the healthcare professionals in the hospital environment, a B2B setting in my own words.
I’ve referred to the case studies provided by DTx Alliance and see if any of those solutions are available in China. Not surprisingly, none. Take BlueStar as an example, although if you google it in Chinese, there are many diabetic care management apps available in Chinese for download, free or through subscription, none of them are CFDA approved. (Author’s note: BlueStar, a chronic care management tool linking the healthcare providers and their patients).
What instead has attracted a lot of media buzz is the AI technologies. To catch up with FDA after they approved the first artificial intelligence-based device in 2018, CFDA has decided to develop China’s technical guidance for reviewing Artificial Intelligence (AI) Enabled Medical Devices.
In January, a Beijing company announced that its imaging solution in cardiac management was approved by CFDA as the very first AI medical device in China.
|DEEPVESSEL FFR, the first AI medical device approved by CFDA
The product developed by Beijing Keya Medical, a company specialized in AI-enabled medical technologies, uses Deep Learning to perform a physiological functional assessment of the coronary arteries in minutes from coronary CT angiography scans. DEEPVESSEL FFR test non-invasively identifies ischemia in patients with suspected coronary artery disease before sending patients for further invasive coronary angiography, supporting cardiologists in making better treatment decisions, and help patients avoid discomfort and potential complications from unnecessary invasive examinations and surgical procedures.
Is there a distinction between AI and software? In several cases, we have advised our clients to pursue the traditional software regulatory route, as it is a more established regulatory category with less regulatory uncertainty.
Regulatory approval is only the first barrier innovators must overcome. The eventual challenges are not much different from traditional medical devices – is there an existing coding the new technology could fit in? Will it be reimbursed? Do users including physicians buy into the value propositions of the technology in the real-world setting? Is their support sufficient to influence hospital budget controllers? And will the COVID-19 pandemic be a milestone event for the regulators and health care providers to be more open-minded towards such technologies?
Implications for Innovators
So what are the implications for the innovators interested in exploring the digital health opportunities in China?
The first question is whether you are more of a technology player offering IT solutions that are less involved in treatment or a life science company offering software/AI-enabled solutions that would directly impact users, physicians and/or patients. The two would have very different regulatory implications.
The second important question is who is going to pay for the product? To be successful in the Chinese market one must be flexible enough to adopt a very different business model in China recognizing that the market dynamics may be different.
Veranex (formerly Boston Healthcare Associates) has experience helping DTx companies navigate the dynamic and complex regulatory environment and develop robust commercialization strategies in China. If you are interested in learning more about how we can help your business, please contact us.