PERTH, Australia – The COVID-19 pandemic has highlighted the importance of digital health technology, and the Australian government quickly enabled programs in telehealth and e-prescriptions. It now is embracing opportunities to build on this momentum to accelerate the country’s economic digital transformation.

Not only will this transformation contribute to Australia’s recovery, but also to its long-term prosperity, said Sue MacLeman, chair of Australia’s Medical Technologies and Pharmaceuticals Industry Growth Centre (MTPConnect), during a recent ANDHealth teleconference.

ANDHealth (Australia's National Digital Health Initiative) is a federally and commercially funded consortium focused on building a digital health sector. It works with medium-stage digital health companies to bring them to proof-of-concept, clinical validation, investment readiness and market entry.

The difference between digital and other technologies is that digital technologies can be scaled globally from Australia, MacLeman said.

MTPConnect has been working with the Commonwealth Scientific and Industrial Research Organization (CSIRO) and the Therapeutic Goods Administration (TGA) on adaptive regulatory frameworks that will make Australia a more attractive place for digital therapeutics.

“We will see continued uptake and promotion of digital technology by business and government, and Australia has a strong foundation on which to build its digital future, and there is a strong opportunity for government to be a strong exemplar,” MacLeman said.

“It’s tragic what’s going on, but on the other side, in digital health we have the opportunity to show we have a lot of the tools to solve a lot of the health challenges,” said Rob Grenfell, director of health and biosecurity at CSIRO.

Because Australia has always had to cope with huge distances, it had already incorporated many digital solutions into its business infrastructure, he said. And, due to its isolation, it had a healthy sovereign capability and supply chain.

A recent ANDHealth survey of 300 digital health companies found that many were optimistic that the COVID-19 pandemic would lead to greater adoption of digital health services, more favorable regulatory and reimbursement environments, increased digital health acceptance among patients, and positive changes to the regulatory and reimbursement environments.

Although this optimism is encouraging, access to capital remains a significant issue for Australian companies seeking to commercialize in this space. In the next two to three years, accessing capital will be difficult, particularly when there are no specialized investors focused on the industry.

“Capital restraints are likely to exacerbate cash-flow issues for pre-revenue companies developing medical grade products and services, as will the likely reality of a global recession,” the report said, noting that many companies also will need highly specialized support to enter international markets, especially while barriers to international travel remain in place.

“But among the doom and gloom there is overwhelming opportunity, primarily in the destruction of the institutionalized inertia that has been a hallmark of healthcare systems to date.

“Health policymakers have embraced rapid reform during the COVID-19 crises, enabling them to adjust reimbursement and regulatory levers to rapidly change the way healthcare resources are deployed. Simultaneously, clinicians and patients have been forced by circumstance to put aside their misgivings around virtual care and ‘give it a go,’ resulting in significant changes to adoption rates.”

Digital health is the “sleeping giant of the Australian health technology sector, which, if awakened, will achieve the triple aim of economic growth through high-value STEM-based job creation, increased advanced manufacturing and clinical trials activity, and sovereign health system capability and resilience.”

However, the industry is hampered by some key challenges, particularly those related to capital. When asked about the key impacts that the pandemic had on their businesses, 71% of respondents said it had a negative impact on their ability to access customers, 63% said it affected their ability to raise capital, and 46% said it affected their ability to access government funding.

And yet, 84% of respondents said that they intended to raise capital in the year ahead, reflecting the optimism and energy of the industry overall.

Pandemic leveled the playing field

“When you’re from Australia, and you’re a long way from the rest of the world, you’ve already built up capability of working remotely, you already have tools and systems in place and a capable team,” said Samuel Lanyon, co-CEO of Planet Innovation in Victoria.

“Companies were already in place that had solutions, and they came to the fore really quickly. … Investors have a long view of things, and they tend to invest in things that will be around for some time. What we saw is that there was a lot of money going into diagnostics and telehealth because they were seeing there are going to be some long-lasting changes around policy solutions.”

Digital health technologies have lowered the entry barriers, but that has also resulted in newer entrants that may not be familiar with regulations.

“We are seeing a huge number of people that come in from accelerator programs that aren’t from a health and med-tech sector environment,” said ANDHealth CEO Bronwyn Le Grice.

“For us, regulations provide a third tick of approval that your product does what is says it does, and in health care that is key. When people try to avoid regulation, there have been discussions that apps can do harm.”

Tracey Duffy, first assistant secretary of the TGA’s Medical Devices and Product Quality Division, concurred with Le Grice on the number of new entrants who are not well versed in TGA regulations, and the TGA has been working on its regulation on software as a medical device for more than a year.

“One of the reasons it’s taken so long is preparing guidance and documents that will guide developers, making it easy for market entry by making it clear and understandable.

“It was clear that our regulation captured a lot of products that wouldn’t do as much harm as others, and we’re looking at carving out products that could be cut out of regulatory oversight to make it less burdensome for developers.

“The digital health landscape will be booming at a much faster rate than we’ve seen before, so both the regulator and industry really need to work together to support that industry.”

“Aside from doing no harm, the validity piece is really important,” said Le Grice. “Looking at CPT codes, you have to be a medical device to qualify for reimbursement. We need to be willing to subject ourselves to third party validation as quantifiable evidence that reduces the health care burden.”

Duffy said that companies need to have a plan early on about both regulatory and reimbursement pathways.

“We have quite a few companies that want to have pre-submission conversations, and I always ask them about reimbursement and where they see [their product] being used. Third-party oversight is part of that investment. We do want to encourage people to get into the market, particularly in Australia, where you don’t have to be onshore, but you need that pathway … even in clinical trials and research, it’s important they have an eye to what the regulatory pathway is.”

Through the COVID-19 pandemic, the TGA has expedited and prioritized thousands of new devices, Duffy said, “but that hasn’t come without a cost.”

The TGA has been flexible with its workforce and was able to shift employees around, with most of the agency working seven days a week to make sure that it is keeping up with the demand.

“That’s not sustainable, so we need to think about what we’ve learned and put that into making it easier for the applicants as well as the assessors.”

CSIRO’s Grenfell said that the COVID-19 pandemic has torn down systemic barriers, and we’re likely to see a shift around reimbursement.

The areas most likely to grow are telehealth, remote monitoring, data analytics, digital mental health, self-testing and wearables, he said.

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