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The Path to Scale for Digital Therapeutics

June 16, 2017

Thanks to our friends at Omada and other companies in this space, the term ‘digital therapeutics’ is working its way into our lexicon. There are now many examples of how a digital intervention can have the same or better clinical outcome as a chemical therapeutic, demonstrating the power of connected health, particularly in the realm of lifestyle-related chronic illness.

For the sake of argument during this post, let’s assume that digital interventions can be effective as tools to combat illnesses like type II diabetes, hypertension, asthma and others. With that premise in mind, consider this….

I recently had to complete a clinical research safety training program and the learning module went into some detail about how new drugs and devices get into widespread use. I couldn’t help but compare this to digital therapeutics, and quickly came to the conclusion that we need a better strategy for getting digital therapeutics into the mainstream. Here are some thoughts.

1. Discovery phase: This is where large pharma and/or med device companies work in the lab to create new interventions. This is probably the development phase when digital
therapeutics are most similar to new therapeutics and devices. Innovators and scientists tinker, try new things and publish papers in academic journals. If the research is internal, the path to commercialization is straight forward. If it comes from an academic lab, there is a need to license intellectual property. One way that digital interventions may be different is that the software and/or hardware tested in this early phase is rarely product-ready. There is a commercialization step in software that I believe is not part of the process of pharmaceutical development. It may be part of device development.

2. Preclinical studies: There really isn’t an analogous phase for digital interventions (except perhaps ingestibles or implantables). Since digital interventions are mostly intended to work based on their interaction with our psyche, they have to be tested, from the start, in humans. There is also less worry about safety. Yes, these interventions need validation and patient safety is always important, but this is very different from introducing a new molecule into the bloodstream or a new implanted device.

There are a lot of individuals and organizations weighing in on this issue, including groups like WLSA and others, and I expect that there will be some important debate, and even consensus, building in the near future.

The U.S. Food and Drug Administration (FDA) approach to digital interventions deserves separate attention. For this post, I’ll just mention that, more and more, digital interventions are being approved as class II medical devices, especially if there is a decision support function. The fact that digital interventions can largely leap frog this stage should be attractive to investors, as these products can reach the market that much sooner; and inevitably, these companies are more capital efficient.

3. Clinical validation: Increasingly, companies that wish to have their digital interventions as part of the healthcare delivery armamentarium are spending time and money to do proper clinical validation of their products. As potential consumers of these tools, we should be comforted by this trend. But, from a business perspective, there are challenges here. It takes a long time to do high quality clinical research. Technologies change rapidly and it is common for the software or hardware being studied to go through several upgrades/improvements during the time of the trial.

In addition, there are some research methods that can help move trials faster, but the randomized controlled trial is still industry standard. Because digital interventions can’t be studied in a double-blind manner (the investigator always knows which subjects are in a control group vs the intervention), there is less likelihood that a trial can be stopped early. There is also a fear of investigator bias while looking at data prior to the conclusion of the trial. And while there is a high degree of regulation in the pharma and medical device industries, due to the interactions with the FDA and the need for clinical trials of new interventions, we don’t yet have that for digital therapeutics. I am sure some individuals pray we don’t get to that point, as it adds costs and time to market. I only bring it up because it will be hard to legitimize digital therapeutics without a regulatory framework.

4. Negotiating with payers: Both device manufacturers and pharma companies devote tremendous resources setting prices with pharmacy benefit managers and large insurers. There is nothing like this in the land of digital therapeutics. Each entrepreneur toils in the quicksand of these negotiations, starting with pilots and eventually getting contracts with either employers or health plans. The work is tedious and resource intensive. It is fun to imagine what the world would be like if there were a handful of negotiation points for digital intervention pricing. It seems like this would be necessary to achieve scale.

I asked my friend and colleague, Rob Havasy, HIMSS subject matter expert in connected health, his opinion on this topic. He clearly articulated that, if our goal is to secure reimbursement, our thinking needs to embrace digital therapeutics as a replacement for traditional therapeutics, rather than as an add-on to traditional care, which is often perceived as being an additive cost. In addition, he suggests that we need to focus on comparative effectiveness trials to demonstrate that digital therapeutics can achieve the same or better outcomes as traditional treatments.


5. Distribution: This may be the area where pharma and medical device products have the strongest divergence with digital therapeutics. In both the pharma and device
industries, there are well-worn paths to achieve distribution. In the case of a drug, once the price is set and the drug is in the supply chain, there is a marketing blitz by the manufacturer and folks like me start to write prescriptions. I simply go to the ‘order’ section of my EHR, type in an order for the drug, the software allows me to prescribe it and the patient goes to a pharmacy to pick it up (or has it mailed to their home). In the case of digital therapeutics, there is no pharmacy and no uniform way of prescribing. This may be one reason why so many entrepreneurs are going to employee health plans with these interventions.


It is time we begin to think of digital therapeutics as a legitimate tool in the battle against chronic illness. We need to:

a. Hone the clinical trial process; b. Establish a uniform regulatory process; c. Engage payers in high level negotiations for these products, and; d. Create a distribution network that includes the ability to prescribe and a mechanism for filling prescriptions.

Developers, providers, regulators, payers, consumers. We all have some skin in this game. What’s your take?

3 Comments leave one →
  1. robmccray permalink
    June 26, 2017 11:14 am

    Joe – thank you for the very good overview of the emerging class of Digital Therapeutics. I suggest that the best source of evidence for the effectiveness and safety of these products is in the real world. Being connected to patients who are by definition “engaged” through a communication link with the products and indirectly to clinicians, the products create the pathway to collect this evidence, including patient reported outcomes. Compared with traditional therapeutics, digital products are relatively easy to create and modify. This is the strength of the field and it also creates the challenge for patients, clinicians and consumers facing thousands of sterile medflies in Internet stores. We will solve this problem. In the early days of of cars, there were hundreds of competing manufacturers. Over time the small number of companies that could deliver quality products at affordable prices won. Eventually they even began delivering uniformly safe and efficient vehicles. I believe that with appropriate regulatory and payment approaches Digital Therapeutics will complete a similar journey much more quickly. As this happens, you and other clinicians will be able to prescribe the right service through your EHR. Let’s keep the dialogue going.

  2. June 26, 2017 9:19 pm

    thanks for your thoughtful comments, Rob

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