In May, Big Health achieved a rare feat - it managed to get a digital therapeutic (DTx) endorsed as a treatment by a national body. The National Institute for Health and Care Excellence (NICE) in the UK recommended the use of the company’s Sleepio app as an alternative to sleeping pills for insomnia patients after clinical evidence showed its effectiveness.
As Colin Espie, co-founder and chief scientist at Big Health put it in an announcement; “Digital therapeutics aren’t wellness apps; they are proper treatments backed by data and clinical evidence, fit for assessment by world-leading bodies like NICE.”
While the world may be waking up to the potential of DTx as 'proper treatments', the level of adoption is still low. Sleepio is one of only a few examples of a DTx successfully getting in front of patients as companies still struggle to get traction and land on the right business model.
Significant advancements have been made in the field, but implementing a successful go to market strategy remains a major challenge. We have seen a lot of trial and error, as well as migration between commercialization pathways.
The routes include direct to consumer, pharma partnerships, agreements with payers and launching via employers alongside alternative routes. None have proved simple.
At the meeting of our community advisory board in April, that question around the right business model was a key topic. As the digital health market matures, it is still a tricky one to answer. We will deep dive into this topic in our upcoming meetings. Join the DTx community here to have priority access to these sessions.
Questions to answer
A core issue seems to be a disconnect between what DTx are, and what that market expects. As with much of modern tech, almost all DTx are a service. Within healthcare, traditional therapies are generally non-software products. The terminology and analogy between DTx and traditional prescription (Rx) products create issues, particularly when it comes to sales channels.
The analogy of DTx with traditional pharmaceutical products is tricky. DTx and drugs are very different care solutions, but DTx are often compared to traditional pharmaceutical products because the terminology and definitions are unclear.
While products often involve one-off transactions, services usually imply a continuous billing cycle; products can have low adoption barriers, while services often require continuous engagement; products can be separated from their provider, but services can’t.
There are a lot of questions that companies need to navigate: to partner or not, to go down the prescription route or market a consumer product, the evidence generation strategy, the best regulatory pathways, etc.
We address many of these and more in our meetings in the DTx community over the next few months. Join the DTx community to have priority access to these sessions. .
A rocky marriage with pharma
In our 2022 Digital Therapeutics Routes to Market report, we found an almost two-fold increase in the number of DTx solutions currently on the market in comparison with a previous report in 2018.
Mental health and cardiometabolic disease areas continue to remain among the top therapeutic areas. However, we are now seeing an expansion into newer therapeutic areas such as gastroenterology, nephrology, and ophthalmology.
There are many ‘Route to Market’ commercialization strategies for DTx including direct-to-consumer (D2C), pharma partnerships, and employers, alongside pathways such as Germany’s DiGA and the UK’s NICE programs.
Our report found that provider, employer, and D2C are the leading strategies in the commercialization of DTx, with only 14.2% of DTx companies taking the pharma route.
As we have heard anecdotally in HealthXL meetings, some of this is likely down to the rigorous clinical evidence and regulatory requirements of this path. Working with pharma isn’t easy, the pace of development is different and so far DTx companies have found it hard to build a two way value creating model with pharma. convince pharma of the value proposition.
Among the key takeaways from one of our digital health meetings, last month was the idea that co-developing a DTx with a drug is currently seen as a risk by pharma companies.
That all said, some companies have navigated the route successfully. A good example of this is Happify, a behavioral change technology company that drives personal, business and healthcare outcomes through improved emotional health.
Mounting evidence
On the flipside, there is a feeling in the DTx industry that the bar of clinical and economic evidence can sometimes be higher compared to drugs.
Evidence requirements also change depending on the route to market. Tracking safety in the long-term makes a lot of sense for drugs. However, for most DTx products, proving long-term efficacy becomes more important.
Unlike drugs, DTx will also regularly update and change, which adds an extra nuance to manage.
The right evidence, however, can open doors for reimbursement and partnerships with pharma, payers or providers
The employer route to market is beginning to become more well established in the US due to the low barrier of entry in terms of evidence thresholds, which makes it an attractive entry point for DTx companies. The market is much smaller in other regions such as the EU.
Relatively high volume therapeutic areas - think mental health, cardiometabolic disease, metabolic disease - tend to gain traction. However, it may be difficult to retain end users and the long term viability of this option is still up in the air.
Flying solo
As we found in our Routes to Market report, ‘over-the-counter’ DTx solutions are more prevalent than ‘Prescription’ DTx.
While partnering might be tricky, taking a standalone product directly to marketgoing it alone presents its own challenges.
Programs such as Germany’s DiGA (discussed in more detail here) have opened new paths for reimbursement, but they don’t always lead to any significant level of adoption.
In a direct to consumer route, significant investments in marketing and sales are needed making it difficult to obtain a critical mass. D2C marketing is not the norm in healthcare, but companies such as Ro have carved out an effective strategy
For others, particularly those taking the prescription route, the big challenge is to educate and convince doctors. No one has found the silver bullet yet, but it seems like an approach that may work is a mix of the traditional detailed promotion and innovative promotion strategies.
Pricing is also a big issue for any DTx taking the standalone approach, through both B2B and B2C models as comparisons to consumer apps such as Netflix or the likes of Headspace and Calm leads to perception of high cost.
Fresh thinking required
DTx are often not comparable to drugs or standard treatment protocols. They are high-quality software systems that are designed to help treat various medical conditions.
However, since DTx can sometimes intervene in the care regimen of a patient and play a substantive role in the therapeutic process, in many countries they are required to meet the same gold standard of clinical and economic evidence. That, however, doesn't mean they always have to follow the same model.
We have to revisit what a DTx is to understand the differences so we can play to its strength rather than trying to fit a square peg into a round hole.
At our DTx community, we plan to do just that. Join now to be part of the conversation.