Key Takeaways:

Digital Therapeutics (DTx) entered the discourse of digital health nearly a decade ago but have yet to reach a broad consumer market due to lack of mature payment models and support from PBMs. The mainstreaming of DTx at the consumer level still has a distance to go to reach mainstream consumers and lack of payment models is one of the primary constraints.

The issue of fit between consumers, clinician workflows and pharmaceutical products is a difficult climb for the DTx market for the near and medium term. While growth opportunities look optimistic there are important challenges that include designing for both clinical workflows and consumer engagement, but also bundling with pharmaceutical products. This is a complex ecosystem of users for any given product that will require alignment of user design, payment models and distribution.

Cybersecurity is a growing concern across the wearables and digital health ecosystem. The same cybersecurity issues that wearables have encountered with lack of security in mobile apps in many cases, could raise the threat of setbacks if cyberattacks continue to grow.

COVID-19 has facilitated adoption of digital therapeutics. Riding the tide of virtual care platforms are remote patient monitoring technologies and digital therapeutics due to the need for remote access to data and monitoring technologies. While the market is still in the early stages, many digital therapeutics companies have experienced a boost due to lockdown conditions.

Industry associations such as the DTx Alliance have a major role to play in addressing the most serious hurdles to reaching the market. Many industries have fallen short of expectations by viewing the market in a purely competitive manner. A market as complex as the one DTx companies face will stand to gain more by providing a united front on reimbursement, provider and patient engagement and distribution.

Introduction

Digital therapeutics have been rising on our radar at Chilmark Research as the number of solutions has grown from a handful 2-3 years ago to now approaching dozens of solutions in the marketplace.  According to the Digital Therapeutics Alliance, digital therapeutics (DTx) are “evidence-based therapeutic interventions driven by high-quality software programs to prevent, manage, or treat a medical disorder or disease.” It should also be noted that hardware solutions have also entered the market in addition to software.

Digital Therapeutics Application Areas

DTx have been used for a range of conditions including pre-diabetes, opioid treatments, asthma and behavioral health. DTx modalities can include the following:

  • A companion to a drug regimen or administration of a drug such as albuterol for asthma (eg. Propeller Health)
  • Promotion of behavioral change in a patient or improve medication adherence through an app (eg. Pear Therapeutics and opioids)
  • A mobile app used in conjunction with a wearable that can collect data and provide feedback to patient and communicate with provider (eg. Abilify)
  • Connect to a standard medical device such as a blood glucose monitor to assist the patient in maintaining blood sugar levels (e.g., Livongo)
  • Patient support for behavioral modification such as smoking cessation (eg. Click Therapeutics, Headspace for meditation)

In many respects these applications are familiar to most in the digital health space, but the category of DTx implies the existence of an evidence-base and approvals for use with certain conditions, thus a more mature application compared to earlier generations of mobile health applications.

Challenges to Adoption

Regulation. In 2020 the FDA released guidance on Software-as-a-Medical Device (SAMD) and these have continued to evolve to provide more guidance on how AI solutions will be regulated by the FDA. This has been a multi-year effort to adapt the FDA regulatory guidance to the dynamics of the digital health market. Software, and increasingly AI, are an essential component of many digital health devices that, for example, can determine a dose of a drug, diagnose a condition from an image, and track other physiological metrics that inform a medical decision. The FDA has created their Pre-Cert Pilot program that will be involved in developing key performance indicators (KPIs). The Pre-Cert pilot helps create a risk-based guidance framework for working with industry to develop an appropriate regulatory framework. This is maturing in a way that will provide more rules for the road for DTx companies.

Physician Adoption. The next challenge, and perhaps, the greatest, is physician adoption of which reimbursement represents only part of the challenge. As DTx solutions proliferate they will need to be easily integrated into EHRs and clinical workflows with simple interfaces for physicians to adopt readily. The evidence base for DTx solutions will need to be pretty clear cut for the conditions under consideration to ensure adoption. Liability issues are also a concern for physicians when adopting new technologies. On the EHR integration front, there is growing interest in platforms such as Xealth, Solera Health or the Express Scripts digital formulary that focus on scaling digital health solutions and managing the data flows for providers.

Reimbursement. Trade associations are lobbying the Centers for Medicaid and Medicaid Services (CMS) on the reimbursement front but CMS still has some way to go for a robust set of guidelines for reimbursement. The Medicare Coverage for Innovative Technology rule proposal would provide a mechanism for reimbursement once the FDA grants approval of a solution. But the challenge is that there is currently no benefit category defined by CMS to cover DTx unless existing categories are extended to cover them or legislation is passed to cover the new category. In a recent blog post Lisa Suennen highlights the uphill climb many DTx companies face in becoming a pharmacy benefit via PBMs while also gaining traction with distribution networks via payers. These barriers will be at least as challenging as FDA approvals.

Cybersecurity and Data Privacy. As healthcare becomes more decentralized and distributed so do the risks of cybersecurity breaches and threats to data privacy. In the past, the apps for wearables and many mHealth apps were notoriously insecure and we have yet to see significant improvements. With the rise in ransomware attacks, hospitals are far more concerned about hackers making their way up their software systems from software on the periphery. The FDA also has cybersecurity guidelines but to date many device makers have been lax in providing information on cybersecurity risks with their products

Evidence base. By definition digital therapeutics require an evidence base (for FDA approvals as well) of data demonstrating the apps have actually improved outcomes, efficacy and saved costs for users of the application. Industry organizations such as the Digital Therapeutics Alliance have a role in creating a marketplace of companies and apps with the requisite evidence base but we are also seeing other organizations creating databases on new DTx tools. In Digital Psychiatry we have the M-Health Database and Navigation database. Another source of applications includes the app stores from EHR providers such as Epic’s AppOrchard, Cerner’s validated app marketplace code, athenahealth’s MDP Labs, and Allscripts.

Conclusion

We are seeing growing interest in the DTx space due to the maturity of digital health solutions over the past decade as well as a boost from pandemic conditions that favor remote data collection, monitoring and virtual care. Solutions are expanding across mental health, substance abuse, diabetes, autism, heart disease, pain management and asthma as the most popular areas for DTx in the early stages. The category is new to the market and many providers are likely unclear on exactly what is a DTx. Managing the “fit” within the health system characterized by a complex ecosystem of payers, PBMs, providers and patients is going to be a challenge.  FDA approvals, adoption by the provider/patient/pharma nexus are very challenging hurdles to clear.This is where industry organizations that can facilitate partnerships around integration and building the evidence-base be needed via cooperation of companies across the spectrum of DTx companies to facilitate lowering of the barriers so the entire industry can reach the market sooner and with greater impact.