• DHealth

Digital Therapeutics: Just Like A Pill?

Updated: Nov 18, 2019

Digital Therapeutics (DTx): Issues in scaling and commercialisation.

The label “Digital Therapeutics” has perhaps purposely tried to align aspects of digital health with established life science markets but analogies should be made with caution. A number of factors are considered below in making such comparisons which illustrate the potential benefits and challenges associated with this emerging market. (If a definition might be helpful please look HERE).

  • Revenue forecasts for DTx are modest ($8B by 2025) in comparison with revenue associated with established therapeutics ($1.5Trillion by 2023). These forecasts are based on estimates of uptake and pricing.

  • Price precedents are now evident for DTx; a number of start-ups offering DTx are now reimbursed by the NHS and can be prescribed by GPs in London; DTx reimbursement has become active in Germany; company insurance schemes in the US have been early adopters of DTx. A course of DTx treatment ranges from ~£50 up to £1,000 (an uplift being particularly evident where human coaching is combined with digital).

  • On average a new drug takes 12 years to reach market and costs between $0.5 to 5 billion. The time and money invested by digital health companies into the development of DTx is significantly less than that invested by pharma in the development of “traditional therapeutics”; profit is perhaps more interesting than revenue for DTx.

  • A strong evidence base is typically required to develop effective IP which forms the basis of the life sciences industry but less credible data sets supporting some DTx could compromise associated IP.

  • The benefit provided by new drugs over existing drugs is often marginal requiring a strong health economic case for reimbursement but the (health economic) evidence to support reimbursement of DTx appears to be less (note: routine use of health economics within pharma has been a relatively recent phenomenon: the last 10 – 15 yrs)

  • At this early stage in the Dtx market it is likely that DTx blockbusters will be/are being created and will have a major impact on chronic (life style associated) disease where “traditional therapeutics” have had a limited impact.

And so there appear to be real advantages for DTx.

  • Evidence is growing to demonstrate the effectiveness of DTx and it is likely that we will eventually see mass adoption/benefit if only because we have few alternatives in addressing the rising tide of chronic disease.

  • The development time and cost associated with DTx is significantly less that that associated with pharmaceutical development (as arguably are distributions costs) and so can support lower pricing which is suited to increasingly constrained healthcare budgets (and company development budgets).

  • A strong economic case is typically required to gain reimbursement for traditional therapeutics but early evidence of reimbursement for DTx has not relied on health economics in the way that is common-place within the pharma which again suggests lower development costs and quicker times to market.

Also some concerns:

  • Issues around IP may affect the appetite of traditional life science/healthcare players to embrace DTx. The value (both monetary and perceived) assigned by payers to DTx is lower than for traditional therapeutics (“apps are cheap, pills are expensive”).

  • Will the requirements for evidence to support DTx increase? It seems unlikely that reimbursement levels will increase with precedents having been set.

  • A lower level of evidence to demonstrate efficacy and value may result in DTx not delivering as expected in real world situations.

So what are the implications for the evolution of the DTx market?

As one pharma source shared about digital health in general “there really isn’t enough pain for us to start doing things differently; we’re still making too much money from the existing model”. In addition, DTx revenue forecasts may not be attractive enough for pharma to embrace DTx as stand-alone, alternative (to chemical/biological) therapeutics. The adoption of DTx by pharma as companions to traditional therapeutics could be driven by value and outcome based pricing but this is still not common-place. Pharma will also be looking closely at IP issues in DTx as well as those around evidence.

All the above suggests that the the pharma industry and the emerging DTx industry may be very different.

That said, we do not have many effective weapons in our battle to combat the rise in chronic disease and it is this phenomenon that threatens to overwhelm our current healthcare systems. With this in mind, we desperately need affordable and effective approaches which is why the promise of DTx is so attractive from a humanistic perspective. From a business perspective, change is driven by revenue (lack of it or the prospect of increasing it).

So some final food for thought:

  • The significant rise in chronic disease will not be effectively addressed by our healthcare systems that evolved to meet the challenges of the 20th century suggesting unmet need will rise as the demand for healthcare increases (unless we suddenly change our unhealthy life styles and learn to manage our chronic conditions by reading leaflets/listening to physicians).

  • DTx could stem this rising tide but It is likely that the rate of adoption of DTx will not be rapid. Healthcare is resistant to change and the life science industry will understandably focus on supplying products and services that maximise revenue (drugs are still and will be, big business).

  • Our payers/providers have not assigned a high value to DTx but appear willing to buy but scale is likely to be some way off.

  • Unmet need typically presents business opportunity and if our payers/providers cannot change rapidly enough to scale DxT and/or life science companies do not see DTx as being profitable enough to embrace then other organisations may step in to fill any gaps; different routes to market may be required.

The future is, as they say, unwritten.

Steven Dodsworth, D Health

I am grateful for historical and more recent conversations with the following people that have helped to shape this opinion piece.

Aislinn Bergin University of Nottingham

Adam March & Brian Clancy: IQVIA

Iain Caxton: Roboleo

Rob Stephen: CMS

Fard Johnmar: Enspektos

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