Making America's Health Care System Smarter — and Cheaper — with Digital Tech

Proteus Digital Health has developed ingestible sensor that tracks whether patients are taking their medication, and notifies their physicians of the drug's effectiveness.

The FDA's approval this week of Novartis' novel cancer treatment is making a well-deserved splash as the first ever CAR-T therapy approved for use in the United States. CAR-T is a revolutionary gene therapy that works by harvesting a patient's white blood cells and reprogramming them to target tumors. The drug, Kymriah, which has been approved to treat children and young adults with acute lymphoblastic leukemia, has a remarkable effect: 83% of patients were cancer free after three months of treatment in clinical trials.

It could, however, prove a costly cure. Novartis (NVS)announced Kymriah's list price for a one-time treatment as $475,000, and England's National Institute for Health and Care Excellence says CAR-T therapies could cost up to $681,000. Novartis says they will partner with the government to develop an outcomes-based pricing agreement for the drug, but questions remain on how best to deliver value to patients.

One of the major obstacles to successful value-based pricing models is patients skipping their medicines, called "non-adherence." Studies show that 20 to 30% of prescriptions are never filled, and that half of medicines for chronic diseases are not taken as prescribed. Non-adherence leads to an estimated 125,000 deaths and 10% of U.S. hospitalizations every year, in addition to costing our health care system hundreds of billions of dollars annually.

Yes, we need to ensure that patients can afford their medicines. But we also need to make sure that they're taking them as prescribed. Those may seem to be two different problems, but they're really two sides of the same coin.

We pay for medicines by the pill, but it's health outcomes — better, longer lives — that we really care about. A health care system that pays for each part of care individually has little sense of how it all fits together. Instead, everyone defends their own turf and profit margins.

Patients deserve better.

Fortunately, technology offers us a way to align market incentives. New digital tools are being developed that can easily and inexpensively track not only when patients are taking their drugs, but the effect they have on patients' health. By wirelessly sending the information to your doctor through the cloud, digital sensors can make it easier for patients to stay on their meds — and for doctors to make sure medicines perform as advertised.

And when patients can see the evidence for themselves, they tend to stay on track.

Tracking your prescription from the little bottle in your medicine cabinet into your bloodstream is the goal of high-tech firms like Proteus Digital Health. In 2012, Proteus received FDA approval for its "smart pill," an ingestible sensor that tracks whether patients are taking their medication, and notifies their physicians of the drug's effectiveness. The pill is being used in nine health systems across the U.S., including the Rush Medical system in Chicago, where patients with hypertension and diabetes are given iPads to track their medicines.

Smarter sensors can lead to better adherence, better treatment protocols, and even smarter, faster clinical trials testing new medicines that collect data on how patients feel and function.

For the field to succeed, innovators have to convince the FDA and payers — including insurers, Medicare and consumers — that the technology works reliably, and pays off in the form of better health outcomes and lower total health costs. Consumers especially need to know that their health data is secure. And we have to do that without drowning innovative companies in red tape.

Until recently, the FDA was seen an obstacle for fast-moving health tech companies who depend on software updates and real time data to improve their products. Rumor has it that Apple pulled sensors from its smartwatch out of worries it wouldn't meet FDA regulations.

That is changing. The 21st Century Cures Act, passed last December, revised the FDA's statute to reflect that certain low-risk digital health technologies fall "outside the scope" of FDA regulation. Working with agency staff, the FDA's new commissioner, Dr. Scott Gottlieb, expanded the Cures Act guidance a step further, committing the FDA to pre-certify certain digital health developers who "demonstrate a culture of quality and organizational excellence based on objective criteria." These developers would then be able to bring their products to market with little-to-no premarket certification.

There's even more the government can do to move the field forward. HHS can grant safe harbors for payers and providers who are willing to test out innovative contract designs built on real-world data that might otherwise run afoul of anti-kickback regulations or other pricing barriers. The IRS should also allow high-deductible health plans to offer first-dollar coverage for any drug or service — like a fitness tracker to encourage patients with heart disease or diabetes to exercise regularly — that is shown to prevent complications from chronic illnesses or save money elsewhere.

Silicon Valley has a unique opportunity to leverage trusted technology and data to break through payment and pricing silos by putting patients first. If Washington helps by continuing to streamline regulations, and encourage the secure sharing of trusted data, Americans will benefit from a more affordable, more personalized health care system.

That's the future of health care. And yes, there's an app for that.

This piece originally appeared in Investor's Business Daily

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Paul Howard is director of health policy at the Manhattan Institute. Follow him on Twitter here.

Tim Rice is project manager for health policy at the Manhattan Institute.

This piece originally appeared in Investor's Business Daily