The intersection of prescription drugs and medical devices: the evaluation and funding challenges of two categories of emerging health technologies

Abstract

Health technology assessments (HTAs) are policy analysis frameworks contributing to the approval, reimbursement, and rollout of biotechnology and pharmaceuticals. New innovations in health technologies expose gaps in reimbursement and implementation guidelines. We defined two types of emerging health technologies: (1) therapeutic innovations, such as drug-device combination products or nondrug alternatives to prescription drugs and (2) disruptive health innovations such as novel surgeries and gene replacement therapies. We aimed to determine delineated definitions for these categories through a comprehensive review of HTA guidelines across 20 nations. Utilizing databases such as International Network of Agencies for HTA, International Society for Pharmacoeconomics and Outcomes Research, and European Medical Agency, we identified products falling within these categories. Real-world case studies highlighted the inadequacies stemming from the absence of clear definitions and proposed solutions to enhance current HTA guidelines. These shortcomings apply at the state or provincial level in addition to national jurisdictions as existing funding structures and silos fail to accommodate the unique attributes of these technologies.

Introduction

Health technology assessments (HTAs) are multidisciplinary policy analyses of drugs, diagnostic tests and medical devices contributing to approval, reimbursement, and rollout of biotechnology and pharmaceutical products (1). For the purposes of this article, we defined health technologies following the Institute for Clinical and Economic Review’s definition, which encompasses healthcare interventions used to improve health or prevent disease (2). HTAs are widely adopted; however, different countries’ assessments display varying level of detail exposing gaps as new health technologies emerge (3).

Recent innovations warrant revisions to existing evaluative frameworks and implementation guidelines. Many national HTA guidelines, including Canada’s Drug Agency guidelines, do not include evaluative methods for products crossing traditionally defined boundaries underscoring a significant shortcoming (4;5). To the best of our knowledge, it is unclear if national and regional HTA agencies have addressed these revisions, and if so, how.

In this article, we build on the work of, Jiu et al. published in IJTAHC, which advocated for adoption of their innovation of HTA methods framework (6). We reviewed the status and challenges of evaluating, remunerating, and implementing emerging health innovations that cannot be placed into currently defined categories. In such cases, emerging health technologies to include health innovations (e.g., novel surgery and gene therapies) as well as what has traditionally been thought of as novel health technologies. The solutions we propose assume the financing structure of a predominantly single-payer public healthcare system that has elements of private financing supplementing its core (e.g., Canada). These emerging health technologies can be reimbursed out of a variety of different possible budget silos both inside and outside the single-payer core leading to the problems suggested by this article. Addressing these repercussions requires a concerted effort to streamline reimbursement processes, enhance coordination among budget silos, and improve the evaluation of emerging health technologies.

Evaluation strategy

Two types of health technologies formed the basis of this article: (1) therapeutic innovations, such as drug-device combination products or nondrug alternatives to prescription drugs (or vice versa) and (2) disruptive health innovations, such as novel surgeries and gene replacement therapies. These categories of interventions were chosen based on our previous work and owing to ambiguities about how to assess them within current HTA frameworks (7).

In a two-step analysis, we first performed a scan of national HTA guidelines, along with databases from organizations such as the International Network of Agencies for HTA, the International Society for Pharmacoeconomics and Outcomes Research (ISPOR), and the European Medical Agency (EMA). We used keywords of “digital technology,” “gene replacement therapy,” “digital pill,” “hybrid technology,” “digital prescription,” “software as a medical device” to identify how different HTA agencies define and assess these products. We identified six sources to develop a list of gaps in the current evaluation, reimbursement, and implementation of these health innovations.

We then sought out case examples of products that fit into one of the two defined categories. We used national HTA guidelines and databases previously reviewed to locate specific interventions flagged as cases. We then reviewed products that have been submitted under the FDA’s De Novo pathway (8), Ontario Health Technology Advisory Committee (OHTAC) (9), and examined products available for view on the top 50 pharmaceutical companies with the largest revenues incurred in fiscal year 2022 (10). For included products, we extracted jurisdiction(s) of adoption, market entry/reimbursement status, and HTA evidence (if any) that supports reimbursement decisions. We then identified current problems in evaluating, reimbursing for, and implementing these interventions and propose some actionable solutions.

The current HTA landscape

We examined 20 HTA guidelines (see Table 1), most of which (16/20, 80 percent) did not have information on economic evaluation or reimbursement relevant to at least one of the two products of interest. Instead, these guidelines focused on general approaches to pharmacoeconomic evaluation and considered drugs and medical devices separate entities. Conversely, a small number (4/20, 20 percent) provided evaluative information to varying degrees with the Australia and EU-EMA guidelines providing definitions related to at least one product of interest.

Table 1.

Summary of national and international health technology assessment guidelines

Jurisdiction/agency	Document title	Definitions for health innovations	Evaluation guidelines
Canada	Policy on Drug/Medical Device Combination Products – Decisions (Government of Canada), effective March 2006	Combination product is a therapeutic product that combines a drug component and a device component (which by themselves would be classified as a drug or a device), such that the distinctive nature of the drug component and device component is integrated in a singular product.	…where the principal mechanism of action by which the claimed effect or purpose is achieved by pharmacological, immunological, or metabolic means, the combination product will be subject to the Food and Drug Regulations, unless that action occurs in vitro, without reintroducing a modified cellular substance to the patient, in which case the product will be subject to the Medical Devices Regulations.
Australia	Guidelines for preparing a submission to the Pharmaceutical Benefits Advisory Committee, version 5.0 September 2016	Health technologies are codependent where the patient health outcomes related to the use of one health technology (e.g., a medicine) are improved by the use of another health technology (e.g., a pathology test or an imaging technology).	Provided definitions of codependent technologies and outlined when submissions are required. Moreover, the HTA guideline outlines information requested in codependent submissions including economic evaluation and current reimbursement arrangements
EU-EMA	Guidelines on quality documentation for medicinal products when used with a medical device	Medical device that falls under the second subparagraph of Article 1(8) or the second subparagraph of Article 1(9) of Regulation (EU) 2017/745, where the action of the medicinal product is principal: Devices that when placed on the market incorporate, as an integral part, a substance that, if used separately, would be considered as a medicinal product and has an action that is principal and not ancillary to the action of the device (second subparagraph of Article 1(8)). Examples include medicinal products with an embedded sensor where the sensor is a medical device and its action is ancillary to the medicinal product. Devices intended to administer a medicinal product, where the device and the medicinal product are placed on the market in such a way that they form a single integral product intended exclusively for use in the given combination and which is not reusable (second subparagraph of Article 1(9)). Typically, these devices have measuring or delivery functions. Co-packaged: A medicinal product and a medical device are packed together into a single pack (e.g., carton), which is placed on the market by the MAH	None
INHTA	Evaluation of digital medical technologies	Germany: Digital Medical Technologies (DMT) (3.2.9; p. 56), subject to the Digital Health Applications (DiGA) fast-track procedure, are: low-risk medical device: CE marked as Classes 1 and 2a low-risk medical device; not for the prevention of a disease; its main function should be based on digital technologies; its main function should not merely consist in the collection of data; it should be used autonomously by the patient or by the patient together with the healthcare professional; it is essential that the patient interacts with the DMT. A DMT used exclusively by the healthcare professional (physician or psychotherapist) is not considered as a DiGA. DMTs that are only used by the physician to treat patients are considered as practice equipment and not as DiGAs. England: Tier A-C DMT classification system (3.3.3; p. 59) Dutch: Digital care is care offered in a digital form (3.6.5.1; p. 98)	Outlines suggested reimbursement mechanisms and economic evaluation measures.
ISPOR	Expected Cost of an FDA-Authorized Prescription Digital Therapy for Children with ADHD	Digital therapeutics which are primarily used to prevent, manage, and treat disease, offer new ways to deliver and receive health care and represent a growing range of potential products.	None
ISPOR	Value Assessment of Prescription Digital Therapeutics	Digital therapeutics (DTx) represent a division of health interventions that are approved by the FDA and are utilized independently or in cohesion with other medical devices or therapies to improve health outcomes … DTx products are recognized as SaMDs (software as a medical device) and are regulated by FDA’s Center for Devices and Radiological Health	None
ISPOR	Review of Global Differences in the Regulatory Framework for Software as a Medical Device	Software as a medical device (SaMD) is one type of digital health technologies, which refers to a program designed for use as a medical device	None
ISPOR	Are We Ready for Reimbursement of Software as a Medical Device (SaMD) in Asia-Pacific (APAC) Region?	Software as medical device (SaMD)…Software intended to be used for one or more medical purposes that perform these purposes without being part of a hardware medical device	None

UK, United Kingdom; EU, European Union; EMA, European Medicines Agency; INHTA, the International Network of Agencies for Health Technology Assessment; ISPOR, the Professional Society for Health Economics and Outcomes Research.

For drug-device combination products, Australian and European Union guidelines reference “codependent technologies” and “integral medical devices,” respectively (11;12). Moreover, the Government of Canada, reference drug-device products as “combination products” (5). These definitions are similar, referring to products that have health technology and drug components, where both are integral to product action. Notably, this definition was not included in the Canadian HTA guidelines, but rather, found in Government of Canada publications. As for health technologies replacing a drug, we found a subset from two ISPOR articles (13;14). This subset comprised “Software as a Medical Device” where software is intended to be used for medical purposes without being part of a hardware medical device. Of the four HTA guidelines that provided information related to the products of interest, those of Australia, The Netherlands, and Norway provided specific economic evaluation or reimbursement guidance (12;15–17).

Case studies

Ten health technologies at varying stages of market entry were identified. Half were emerging therapeutic innovations and half were disruptive health innovations (see Table 2). We located available HTA reports for all products. Seven health innovations were found to be cost-effective compared to standard of care using an upper willingness-to-pay threshold of $150,000 USD per QALY (18). As for the remaining three products with less favorable cost-effectiveness profiles, the OHTAC recommendation against the funding of minimally invasive glaucoma surgery was due to potentially high budget impact (19). Zolgensma® (Onasemnogene abeparvovec), a one-time gene therapy intended to cure spinal muscular atrophy, gained market entry in the United States, EU, and Japan; however, an economic evaluation from The Netherlands found the product to be unlikely cost-effective over the current standard of care Spinraza® (nusinersen) combined with best supportive care practices (20). By explicitly modeling potential patient relapses, this study found the Incremental Cost-Effectiveness Ratio (ICER) for Zolgensma® to increase by up to sixfold if relapse occurs within 10 years (20). Finally, the Canadian Agency for Drugs HTA findings for MiniMed®, a hybrid closed-loop insulin delivery system were inconclusive due to insufficient long-term data on clinical relevance and patient outcomes (21).

Table 2.

Case studies of health innovations

Class	Name of product	Description	Status	HTA conclusion	Author identified limitations
I	VR for pain (23)	Inpatient adjuvant VR therapy for pain among hospitalized patients	Trial ongoing at a single center	Dominate over usual pain care: ↓hospital costs ↓LOS ↑patient satisfaction	Did not consider hospital downstream effects of adopting VR; selection bias for VR users; VR pricing is constantly changing
II	Minimally invasive glaucoma surgery (MIGS) (19)	Surgical procedures for reducing eye pressure and slowing the progression of glaucoma	Regulatory approval in Canada; OHTAC recommends against public funding	ICER of MIGS: $14,120/QALY vs. med ICER of MIGS + cataract surg: $65,873/QALY vs. surg alone. Very high budget impact in 5 yr	Unclear comparator for MIGS; MIGS devices have variable effects/costs; lack of high-quality cost/outcome trial data
I	Abilify Mycite (22)	Aripiprazole tablets with ingestible sensor	US FDA approved	Dominate over drugs alone for schizophrenia for society and US payer for 12 months	No real-world effectiveness data; durability is uncertain; adverse effects on severe patients are unknown
I	TAXUS™ Liberte™ (25)	Paclitaxel-eluting coronary stent system	US FDA approved, EU approved	Dominate or cost-effective over TAXUS Express for US payer and hospital	Long-term patient outcome data unavailable from trial; underestimation of clinical event costs
II	Zolgensma (20)	Gene therapy	US FDA approved, EU approved	(ICER) for AVXS-101 vs. BSC is €138 875/QALY.	Limited information of the clinical efficacy of Zolgensma leading to assumptions regarding survival and long-term effect. No direct data comparing product of standard of care.
I	Mini Med 770G System (21)	Closed loop continuous glucose monitoring system	US FDA approved, Health Canada Approved	Insufficient long-term clinical data to make conclusions on cost effectiveness.	Differences in public funding for diabetes management devices across jurisdictions added uncertainty to analysis.
II	Inspire Upper Airway Stimulation (26)	Implantable device to treat sleep apnea	US FDA approved	Addition of 1.09 QALYs over the patient’s lifetime. Estimated cost increase of $42,953, resulting in a lifetime ICER of $39,471/QALY. Product was compared to no treatment.	Limited information on long-term cost/clinical effectiveness leading to assumptions being made from short-term clinical data.
I	ReSET (27)	Digitizing cognitive behavioral therapy	US FDA approved	Considered reset in conjunction with treatment as usual. The probability that this was considered cost-effective was 92% for willingness to pay threshold of $6000+. The ICER vs. treatment as usual only was $18.01 per 1% increase in treatment retention rate.	The cost-effectiveness and budget impact modeling findings are limited by certain assumptions such as the definition of treatment assumption and treatment retention rate in trials would apply to real-world analysis of this study.
II	Hemgenix (28)	Adeno-associated virus vector-based gene therapy to treat adults with Hemophilia B	US FDA approved, EU approved	Large cost savings associated with treatment across all models tested. Cost-savings are sensitive to the cost of comparators. Health benefit price benchmark is $2.93–2.96 million.	Studies used in evaluation are subject to selection bias and confounding. In addition, sample size remains small. Finally, long-term impact cannot be commented on.
II	Roctavian (28,29)	Adeno-associated virus vector-based gene therapy to treat adults with Hemophilia A	US FDA approved, EU approved	Large cost savings associated with treatment across all models tested. Cost-savings are sensitive to the cost of comparators. Health benefit price benchmark is $1.96 million	Long-term benefits cannot be commented on, and data availability remains a concern. Finally, the model used in the CE analysis uses a placeholder price.

I = Therapeutic Innovations; II = Disruptive Health Innovations.

Gaps and potential solutions

The urgency for novel HTA methods grows as emerging health technologies become increasingly complex. This is underscored by Jiu et al.’s perspective paper that developed an evaluative framework to address the need for innovative methods to ensure good evaluative practices within HTA (6). This framework serves as a structured approach for assessing the value, efficacy, safety, and cost-effectiveness of emerging health technologies, providing a systematic way to navigate the complexities of healthcare decision making.

The identified HTA limitations in Table 2 provides a list of shortcomings related to funding models, reimbursement mechanisms, and evaluative procedures unique to emerging therapeutic innovations and novel health technologies. Examination of these limitations helped to identify the following gaps and potential solutions.

Lack of definitions for two product categories

The absence of standardized definitions may cause inconsistent evaluation of products. HTA should function as a structured and systematic approach to evaluation.

Potential solution

Define combination products and health technology replacing drugs within the HTA along with establishing jurisdictional guidelines specific to these products including how to calculate alternative Incremental Cost-Effectiveness Ratios (ICERs). Simulate a proxy health technology that embodies all the components of the hybrid technology under evaluation for comparison purposes.

Potentially inappropriate comparators chosen for cost-effectiveness analyses

Using prescription drug alone as the comparator for health technologies intended as drug alternatives may overlook costs such as training and device failure. As such, this approach may not capture the full cost-effectiveness profile of these novel technologies. An example of such technology is Abilify MyCite®, a combination of Aripiprazole with an ingestible tracker for treating certain mental health disorders (22). One ICER is not sufficient to understand the cost-effectiveness of a device with both drug and device components.

Potential solution

Design a costing framework encompassing both drug and nondrug technologies that provides practical advice to measure costs for combination products. For example, require manufacturers to submit costs separately for the drug and medical device components to make possible calculation of an alternative ICER that examines the incremental costs of the added medical device/drug component – separately from the overall cost of the innovation – combined with the full incremental effects of the innovation. The inclusion of these two ICERS could be informative for decision makers.

Lack of reliable trial or field data resulting in highly sensitive economic evaluation findings

Long-term durability of many innovative treatments cannot be observed due to limited patient follow-up (22;23). This is especially concerning for gene therapies with adenovirus delivery mechanisms such as Roctavian® (Valoctocogene roxaparvovec). Real-world data on treatments are scarce due to small patient populations. Moreover, real-world users of certain innovations often do not mirror the original trial population. For example, trial participants may not be tech-savvy or open to using such products outside of trials (23). Field data may be needed to supplement the analysis but often these data are not readily available. This shortcoming leads to miss-estimation of costs associated with the rollout of such innovative health products and potential omission of important patient outcomes (19).

Potential solution

When data are limited, one can conduct comprehensive sensitivity or scenario analysis to gauge long-term treatment durability of treatment effects. This is especially important in scenarios that involve rare disease or products that represent revolutionary treatment for health conditions previously deemed incurable (24). Qualitative input from individuals with lived experiences through interviews or surveys can provide invaluable insights for reimbursement decisions (7). Alternatively, artificial intelligence/machine learning algorithms can be employed to simulate missing data if other methods are not feasible.

The changing price and features of health innovation products lead to complexity in a one-time-only evaluation

Health innovations that involve medical devices are continuously updated to reflect the changing marketplace. For instance, the manufacturers of Virtual Reality for Pain Relief® revealed that their product and pricing strategy is expected to change as market share grows (23).

Potential solution

Guidelines should specify the recommended period of time that HTA bodies should conduct a supplementary economic evaluation for review. Moreover, HTA guideline documents should be updated more frequently (i.e., every 2–3 years) as the health technology landscape changes at an increasing rate.

Varying reimbursement mechanisms and funding silos

In Canada, the evaluation of prescription drugs is governed centrally through Canada’s Drug Agency (CDA) with funding decisions reserved for each Province individually; however, that of medical devices is conducted at the provincial level (see MiniMed® in Table 2). This results in interprovincial variations in evaluation and funding, impacting patient affordability from increasing out-of-pocket costs. When emerging health technologies are reimbursed from differing budget silos, it can lead to disjointed decision-making and inefficient resource utilization.

Potential solution

We suggest outlining flexible reimbursement criteria that accommodate boundary-crossing products or outline exceptions to common rules. HTA processes should incorporate measures of patient affordability to help foresee access impediments as the level of out-of-pocket expenditures rise or fall as the budget silo and corresponding cost-share rate for new advancements shift (6).

Future considerations and recommendations

This article overviews existing HTA guidelines and policy analysis on the limitations of current evaluative frameworks for emerging health innovations. Implementing standardized assessment criteria and evidence-based frameworks for evaluating the cost-effectiveness and clinical efficacy of emerging health technologies can help mitigate reimbursement policies that appear inconsistent as these innovations emerge. Moreover, leveraging HTA agencies to provide genre-specific evaluations of such novel products could enhance transparency and credibility in reimbursement processes. Future work should consider devising practical solutions to ensure an informative HTA process.

Funding statement

The authors have not declared a specific grant for this article from any funding agency in the public, commercial, or not-for-profit sectors.

Competing interest

The authors have no competing interests to disclose.