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In the last three years, the Digital Therapeutics space has exploded. Positioned as a non-invasive and data-driven approach to health and care, it’s easy to see why. But the big question on everyone’s mind is whether Digital Therapeutics (DTx) is in collaboration or competition with the Pharma industry. A few months ago, I got to the spend the day at DTx West in San Mateo, CA, where I spoke on a panel on precisely this topic - Pharma and DTx: A Match Made In Heaven? - and was in good company alongside Sanofi, Sandoz, and Genentech.
Setting aside its rapid growth for a moment, Digital Therapy is itself a revelation. And with any disrupter, the regulatory framework usually needs a few years to catch up. In the United States, the FDA is actually willing to co-create with the industry. They are looking to us - pharma, payers, providers and start-ups - to help them build new adapted frameworks. With FDA starting to recognize DTx and its medical outcomes, DTx companies are exploring business models based on payer reimbursement. The FDA’s pre-cert program is gaining a lot of attention since it is focusing on expediting the review of DTx and other digital health solutions, including real world evidence in the regulatory process. DTx and other software-based health solutions present very different challenges compared to more traditional molecular APIs. While molecules entering a regulatory assessment will not change throughout the approval process, software-based health solutions are based on iterative changes and continuous refinement of its code and algorithms. This creates a dilemma on the approval process since potential future changes of that software product can affect its medical outcomes. Also, patents granting market exclusivity for molecules cannot be applied for software based solutions. In these cases, finding ways to grant market exclusivity for software solutions are desired to ensure that the pre-market research pays off and remains a viable approach for DTx companies. Pre-cert could bring some answers to the open questions that software-based health products are rising. Also, specific pathways need to be developed to guaranty DTx’s financial viability. A good example of analogic pathways existing currently for APIs can be found in 505(b)(2), currently used for indication expansion, companion therapies or Rx to OTC switch, allowing companies to have an expedited approval process and potentially qualify for 3, 5 or 7 years market exclusivity.
All signs point to growth, and in particular, DTx is being integrated into indications around mental health, pre-diabetes/diabetes and cardiovascular, among others. A lot of these areas have a strong behavioral component that can be managed and all of them cause a heavy economic burden for the healthcare system. In these areas, DTx has the highest potential for impact both on outcomes and on the bottom line. We see folks like Akili (focused on ADHD), Omada (commercially mature on pre-diabetes and diabetes and now moving into mental health), or Livongo - all of whom were pioneers along the DTx road - who are now mature enough to be gaining their traction through meaningful partnerships. Partnerships play a key role because the future of DTx is not in technological competition with pharma and drug development, but rather it is within the adaptation of all the systems at play. DTx can provide solutions based on combination therapies linked to a molecular API as well as they can be advanced as an independent business by unlocking new revenue streams and helping pharma diversify their portfolio.
My colleague Eugene Borukhovich will continue this conversation at DTx Europe next month in the session Pharma and Digital Therapeutics: The Go-to Partnership Model?
At G4A we are excited about DTx’s potential. Recently, we announced a challenge focused on DTx as part of our 2019 Partnerships and we are actively looking for startups and companies ready to partner and work together. And as DTx Europe draws near - where the folks who are disrupting the space, come to congregate -, we’ll be keeping close watch on how the space evolves.