By Katie Tsui
Increased interest in mobile health devices, fitness apps, and digital therapeutics has made the advent of digital health one of the most prominent healthcare industry trends. An estimated $4.7 billion was spent on digital health in 2017 and the collective market is projected to grow at a CAGR of 18% to 2022.
Digital therapeutics, which represent a subdivision of digital health, are behavior therapy options that leverage digital and/or online health technologies to treat medical and psychological conditions. They are intended to either supplement traditional pharma medications or replace them. Since digital therapeutics are frequently delivered through browsers, apps, or alongside medical devices, the field has the potential to significantly improve care delivery by decreasing costs in real time and at scale, especially for treatment of chronic diseases that account for 85% of health care expenses.
Pharmaceutical companies have long tiptoed around digital therapeutics due to the vague regulatory perimeters surrounding their usage. The FDA approval process for typical drugs takes an average of 12 years to complete, translating into over $350 million of capital needed to bring a drug to market. Half of the time is spent on clinical trials and the probability of a drug clearance is below 0.01% from the start of preclinical discovery to the stage of final approval.
A digital therapeutic, however, must be placed on a different regulatory timeline because the heart of it is not chemistry or pharmacokinetic profiling. It is software.
The current FDA drug approval model makes little sense for digital therapeutics. Software must be updated constantly, glitches need to be fixed, and patient feedback will be particularly important for product improvements. This deviation from traditional pharma has been unprecedented until recently when it has been turned into a reality.
The progression of digital therapeutics depends on a new paradigm of understanding and regulation. Like traditional medications, digital therapeutics may need to be put on formularies in order to be worthwhile for patients and payers, but regulations surrounding usage are vague, making it difficult for digital therapeutics to succeed over traditional therapies in comparative effectiveness trials.
However, these rules are starting to shift. Last year the FDA published a Digital Health Innovation Action Plan, which reimagined the approach towards access to high-quality, safe, and effective digital health products. Similarly, an FDA-run Pre-Certification Program was initiated in September 2017 in hopes of uniting digital health companies with healthcare stakeholders and patients to collaborate on developing new parameters. The Centers for Medicare and Medicaid services now reimburses digital therapeutics for diabetes prevention and management.
The FDA’s decision to redefine regulations and the projected growth of digital therapeutics suggest that pharma must also adapt to and embrace digital health as a worthwhile competitor and possible business partner. The long-established pharma business model is shifting and digital health marks a step towards prioritizing new, cost-effective methods of treatment at the intersection of technology and cognitive behavioral therapy. The implications are enormous.
Life science companies must acknowledge the presence of these up-and-coming startups that have the potential to significantly disrupt the future of traditional pharma products. Pharma should even consider partnerships with members of the Digital Therapeutics Alliance, a global non-profit trade association consisting of over a dozen startups. Pharma should follow in the footsteps of Novartis and Sanofi, two behemoths that are already expanding their own portfolios toward diversified, digital methods of care as the healthcare landscape changes and new stakeholders come into play in an increasingly digitalized world.