Digital Therapeutics – Are we where we want to be?

This was the title of the opening talk I attended at DTx East last week in a chillier-than-expected Boston! The start of the DTx conference had everyone a bit nervous. Founders, leaders, and investors in the digital therapeutics (DTx) sector are feeling a sense of unease due to several factors. Firstly, the recent bankruptcy of Pear, a prominent player in the field, has raised questions about the overall sustainability and profitability of DTx companies. This has made investors more cautious, as they worry about risks and uncertainties within the industry. And this means that the reluctance of payers to fully embrace and support digital therapeutics as is creating a significant barrier to widespread adoption. As well the proposed Prescription Digital Therapeutics Act (which would provide Medicare and Medicaid coverage and reimbursement for prescription digital therapeutics) is still laboring on. These combined challenges created a palpable sense of nervousness as the conference opened.

So, are we where we want to be? Panelists were a bit torn with answers ranging from “we are slowly getting there”, to “we are where we should be.” Happily, no one said “no!”.

My own take is that “we are happy, we just don’t know it yet.” Building on a comment from Chuck Gammel (Simon Kucher & Partners), no one 15 years ago would have thought people would be trusting care guidance without an in-person consult, that providers would be some of the leading advocates of digitally enabled care, or that “payers would be willing to pay for continuous glucose monitoring devices.”

We need to remind ourselves that in terms of adoption patterns and growth in solutions, the industry is still winding up the fly-wheel–but there are some very strong winds ahead, and it’s far from clear exactly what the route forward looks like. Here are four key topics and trends coming out of the DTx East event that are worth paying attention to as the industry bravely moves forward!

Pear Therapeutics fall and Akili’s pivot

We've seen a former darling, Pear Therapeutics, collapse and another, Akili, stumble. These were two companies that, in many ways, captured our imagination and gave us that blue ocean hope. But, instead of catastrophizing from these examples, the community has been focused on lessons and pivotable options. As with any industry transformation, some strategies soar while others plummet. The key? Learn, adapt, and pivot.

Akili's shift to a DTC model will give us more data points on the viability of this strategy for us to learn from. I think that in the near term, the most significant opportunity for the DTC model will be for those in the mental health DTx space.

Clinician burnout and the digital shift

The echo in the hallways and panel talks wasn't just about technology but about people – chronically overburdened clinicians. Recently, Dr. Jesse Ehrenfeld, AMA President, was invited to speak to our company about healthcare equity and shared that over the next 10 years, the US is projecting to be 100,000 physicians short.

Care systems are still catching up from pandemic-forced changes in the care model. The cancellation of in-person care during COVID and the almost immediate acceptance of digital technologies, as a result, should lay the groundwork for digital therapeutics to proliferate. Done correctly and at scale, this will ease clinician workload and hopefully contribute to reducing burnout–building more trust in the healthcare system and presenting a better dynamic and environment for clinicians.

The digital shift in the past few years was the rise and acceptance of patient apps and RPM. In the past six months, it’s been about the rise and opening of access to “prompt engineering” and generative AI. With the rise of AI–it isn’t about AI replacing you; it’s about AI augmenting you.

As with digital therapeutics, those who embrace and learn how to use AI will lead the way. Health systems, specialist associations, and eventually payers (who are leaning heavily into value-based care (VBC)) – all have a vested interest in removing the burden from those on the front lines. Imagine the American Neurology Association actively educating its members on incorporating digital therapeutics into their care plans or a health system sending messages through the EMR reminding physicians of the digital therapeutic available for prescription–within the clinician workflow.

Payers & the Reimbursement Dilemma

As we saw with Pear, reimbursement is a challenge, and the overall macroeconomic conditions have created even more friction and challenges–it doesn’t matter how good your product or evidence is, getting payers to reimburse DTx remains a challenge.

But there's hope on the horizon. Initiatives like the “Access to Prescription Digital Therapeutics Act” that is expected to pass this year (opening up reimbursement for those on Medicare and Medicaid). As we generate more clinical evidence showcasing DTx's efficacy, we will see payers slowly come around.

Payers are going to choose who they start to partner with carefully, and their first moves will likely be scale plays. I see scale winning initially, and then once reimbursement is an entrenched norm, smaller disruptors will themselves disrupt and breakthrough.

The Heart of Value-Based Care

I heard several conversations about how value-based care will “save digital therapeutics.” I feel strongly that VBC will be the leading energy source that starts the fly-wheel to deeper adoption. Here are four key reasons why

Personalized treatment: tailored recommendations and interventions that will lead to more effective care and increased (and measurable) health outcomes.

Cost efficiency: reducing complications by educating patients, digital nudges to take medications, becoming a triaging tool–these reduce the need for more traditional in-person visits and interventions

Real-time data collection: the information gathering and analysis level allows for near real-time adjustment in care plans and proactive interventions from providers. You no longer need to wait until the end of a study to see if something worked; you know right away.

Scalability: by definition, digital therapeutics can reach a wider audience with fewer resources over the long term. Treating more people and not having to increase the size of an expensive team will be a clear driver.

The mood at DTx East could've been all doom and gloom, especially with recent headlines, but it wasn't. It was about resilience, the shared drive to innovate, and the unwavering belief in the potential of digital therapeutics. And, as someone knee-deep in this world, I can't help but be excited for what's to come.

In our next blog, we'll share how to safeguard your DTx solution from some of the headwinds and challenges we’ve been discussing and how, at TXI, we are laser-focused on helping you navigate the multi-sided aspects of patient experience, payer value, and provider buy-in.