Amid growing social acceptance of digital transformation in healthcare, digital therapeutics (DTx) have become the hottest topic in the global healthcare industry. 

DTx delivers therapeutic interventions via software to manage, treat and prevent diseases.

Korea is slightly lagging behind several advanced DTx powerhouses in terms of regulations and approval but the nation is expected to achieve rapid DTx industrial growth, according to a report by KPMG Samjong Accounting Corp.’s healthcare team.

The report, released earlier this month, mainly covered DTx investment trends and strategies.

The DTx industry first became popular when the FDA granted the permit for Pear Therapeutics’ reSET-O device in September 2017 to treat substance use disorders and for Voluntis’ Insulia type 2 diabetes insulin dose administration app in November in the same year. 

Later, DTx technologies for insomnia and PTSD including Akili Therapeutics’ video game to treat children with ADHD, all joined the list of FDA-approved DTx devices.

Korean companies have been a little bit later at joining the game and have yet to obtain FDA approval.

However, Nunaps and Emocog were among the five Korean DTx firms to receive local approval from the Ministry of Food and Drug and Safety (MFDS) for clinical trials in visual disorders caused by brain damage, and mild cognitive impairment, respectively. 

Nunaps was also the first to receive domestic approval for its VR-based platform to treat visual field defects in July 2019, followed by LifeSemantics’ DTx for treating lung cancer and chronic obstructive pulmonary disease (COPD) the following year.

Other investigational DTx devices being developed by Korean companies target insomnia, breast cancer, stroke, and generalized anxiety disorder.

Mobile applications were the most used platform to deliver DTx solutions sometimes coupled with the PC. However, due to the unique nature of DTx solutions, government officials are trying to set clear guidelines to regulate these next-generation devices.

The KPMG report compared five countries that have made the most advances in this field so far. This includes the U.S., Germany, Japan, China, and South Korea. Among them, Germany stood out as the only country with an integrated system for DTx licensing and insurance benefits, better known as Digital Health Applications (DiGA).

Japan and the U.S. have developed separate licensing and insurance systems for DTx technologies. 

In the U.S., DTx regulations fall under the software as a medical device (SAMD) category and are evaluated according to its risk level just like medical devices. Similarly, Japan also evaluates DTx based on medical device software regulations.

Korea appears to be the newcomer in this game but the local DTx market growth is expected to climb by 27.2 percent to 528.8 billion won ($429.2 million) in 2025 from 2019, compared to a 15.8 percent growth in the global DTx market during the same period, the report said.

The country’s licensing guidelines were published in August 2020. In December 2022, the Health Insurance Review and Assessment Service (HIRA) announced plans for DTx insurance benefits.

Notably, Germany operates provisional insurance benefits for 12 months regardless of whether the treatment is proven effective. When entering the market, the manufacturer's price is first set and later revised based on performance.

This system has been praised by industry experts as it allows them more flexibility to get their products into the market and helps to engage more patients in using unfamiliar DTx technologies.

Furthermore, Germany also compensates doctors for DTx prescriptions as it usually places more burden on the physician as they have to spend more time educating their patients about using the technology and may also have to comb through more data generated by the DTx.

Meanwhile, the U.S. has applied the healthcare common procedure coding system (HCPCS) which are codes representing medical procedures, supplies, products, and services to quantify the use of these devices in remote settings for processing health insurance claims.

DTx companies are concentrated in North America, followed by Europe and Asia. However, the report predicted that Asia, excluding the Middle East, will have the largest DTx user growth of 113 percent from 2020 to 2025, followed by Europe and North America which is the reverse of the current user standings in 2023.