Digital therapeutics offers a new model of medicine but faces obstacles

Startups have raised billions of dollars in venture capital to develop software-based digital therapies for a range of diseases.

Now many are grappling with the challenge of bringing these treatments to patients. Many are experimenting with new business strategies to remove barriers to business success.

Digital therapies, often delivered through an app or video game, are designed to treat a disease or manage its symptoms. Globally, venture capitalists invested $3.41 billion in the sector last year, up from $1.46 billion in 2020, according to market tracker CB Insights, betting that these therapies can treat many physical and mental health conditions, including those that aren’t well served by medication, or where physicians who specialize in the disease are in short supply.

Companies have been developing software-based therapies for more than a decade, but Covid-19 has accelerated investor and patient interest in digital alternatives to conventional care.

Companies are finding that it can be difficult and expensive to get the attention of busy doctors and persuade them to prescribe digital therapy. Patients must also be willing to embrace digital treatments, which usually require more effort on their part than taking a pill.

“The pandemic has likely placed unrealistic expectations on a lot of digital health, not just digital therapies,” said Dave Stevenson, chief executive of the Merck Global Health Innovation Fund, a drugmaker arm of Merck & Co. focused on research. digital health. “Not unrealistic expectations of potential, unrealistic expectations of how quickly we reach potential.”

Welldoc Inc., backed by the Merck GHI Fund, launched a prescription digital therapy for diabetes patients in 2014 and initially marketed it to physicians. That proved too difficult and expensive, so the company worked in 2017 with the Food and Drug Administration to overhaul regulations for the therapy, called BlueStar, Welldoc chief executive Kevin McRaith said.

As before, BlueStar still requires a prescription for aspects of treatment that help patients manage their insulin. Under the 2017 change, other aspects of BlueStar, such as supporting diabetes patients, no longer require a prescription, a change that allowed Columbia, Maryland-based Welldoc to sell the technology to customers such as health insurers and employers, which may offer it as a benefit to members or employees.

This led to a turnaround for Welldoc, allowing it to grow faster. Welldoc, which says its chronic care platform also provides support in areas such as hypertension and heart failure, made a profit in 2021, according to McRaith, who was an executive at drugmakers Human Genome. Sciences and Genentech before joining Welldoc in 2014. There is a playbook for launching a product in the pharmaceutical industry, he said.

“In the digital therapy and digital health space, that playbook is still being written,” he said.

Similarly, Kirkland, Wash.-based Freespira Inc., whose digital prescription therapy treats respiratory problems linked to panic attacks and post-traumatic stress disorder, was marketed directly to clinicians when it launched in 2014. It changed its strategy to focus largely on health insurers. in 2020 after concluding that the original approach would not grow fast enough, said chairman Simon Thomas.

One customer, Children’s Community Health Plan, a Wisconsin insurer that primarily serves Medicaid patients, found that they saved twice as much from reduced health service utilization as the cost of Freespira treatment, said Mark Rakowski, the health plan. Chief Executive Officer.

Competition among digital health companies seeking the health plan business is high, and it can only adopt so many of these therapies with the resources it has, Rakowski said.

“Not a day goes by that I don’t get three to five emails letting me know which is the latest and greatest solution,” Rakowski said. “This is one of our biggest challenges: how to evaluate all these digital or remote solutions? We don’t have the bandwidth to do an unlimited number of treatments or solutions.

Some venture capitalists see an opportunity to avoid some of these challenges by backing companies whose digital therapies don’t require a prescription. Often, company-backed startups going this route have conducted clinical studies to validate the effectiveness of their product, even if it doesn’t require a prescription.

While this allows them to get to market quickly, it also means companies with clinically validated products must rise above the noise created by less well-studied digital products, some observers said.

Some startups have won over patients by tapping into the willingness to pay out of pocket to manage a disease that is not well treated today.

Boston-based Embr Labs, for example, sells a bracelet, used in conjunction with an app, designed to relieve hot flashes caused by menopause. He managed to sell these devices directly to consumers for $299. The device uses thermal technology to help regulate temperature.

People want immediacy and the ability to control their health, and are often frustrated with existing options and the medical system, CEO Elizabeth Gazda said.

“There’s this kind of attitude of sticking with the man,” she said. “If you can tap into that frustration, you’ve got a business that’s going to explode.”

From WSJ

Comments are closed.