Pharma stands to harness the potential of DTx for tackling healthcare issues such as access.
Last year marked a major commercial inflection point for the digital therapeutics (DTx) market, adding pressure on pharmaceutical companies to help DTx become a standard part of care delivery. DTx and pharma are a natural fit for a joint effort. Together, the digital health evolution turns into a revolution.
From the growing need for real-world evidence (RWE) and to the ongoing shift toward value-based agreements (VBA), multiple trends in healthcare are converging. This is creating tailwinds for digital health. DTx offers the opportunity to address these, as well as the deepening physician shortage and growing healthcare costs. Technology is known to be a silver lining of the COVID-19 pandemic, with expectations for care gravitating toward remote settings and technology permeating everyday lives.
"We are the leaders in the digital health revolution," Pear Therapeutics President and CEO Corey McCann argued during Pear's first earnings call as a public company on March 28. "And we are proud of the role we've played in pioneering software as medicine," McCann added.
Pear achieved strong financial results and commercial progress from its portfolio of marketed products across the key performance metrics of prescriptions, fulfillment rate, covered lives, and revenue.
"We think Pear's rapid acquisition of covered lives in 2021 driven by real-world outcomes data is a great reason to believe PDTs are here to stay," McCann added. Pear's products include reSET for substance use disorder and reSET-O for opioid use disorder (collectively reSET-O), as well as Somryst for insomnia.
There are only four prescription digital therapeutics (PDT) companies that have gone public so far. These include the two that went public in 2021—Better Therapeutics and Pear Therapeutics—and one more this year—Akili Interactive. The fourth—Dthera Sciences—was the first to become public in 2016 but has since then become inactive.
Yet the consensus is that it is not a matter of whether DTx will be widely used but when.
HealthLeaders obtained insights from Pear, Cognito Therapeutics, and Big Health, among other DTx companies, into how they view pharma as a natural fit, particularly when it comes to scaling growth.
"There's a tremendous opportunity at what I would think of as the drug-software interface," McCann told HealthLeaders. "For many conditions, we believe that a combination of a drug and a prescription digital therapeutic will be clinically superior to either product alone," he added.
Digital health encompasses all products that engage lay people in wellness and health-related endeavors. These products generally have no regulatory oversight and are not evidence-based.
But within the umbrella term "digital health" lies "digital medicine," a term referring to evidence-based digital software or hardware that measures a person's health. From digital diagnostics to biomarker tests to remote patient-monitoring devices, digital medicine includes wide-ranging technologies.
Digital therapeutics fall into the digital medicine category and refer to products that deliver evidence-based therapeutic interventions to prevent, manage, or treat a condition. DTx, particularly PDTs, typically undergo review and have regulatory oversight. Approvals require clinical evidence and data on real-world outcomes to be reviewed by regulators for efficacy and safety.
"Digital therapeutics basically came out of the wild, wild west of mobile health, probably since the first iPhone came out," Digital Therapeutics Alliance (DTA) CEO Andy Molnar told HealthLeaders. Molnar started in the DTx space at Pear Therapeutics four years ago and served as the director of market access and payer data strategy, following twelve years in market access in pharma.
DTA has doubled in membership growth over the past year, underlining the momentum around the market. The industry trade association now has a total of 92 members. It has had some larger pharma companies join in the last few months. Member companies in pharma include Astellas Pharma Inc., Bayer, Boehringer Ingelheim, Bristol Myers Squibb, Novartis, Roche, Sage Therapeutics, and Takeda.
The lay of the land
There were more than 318,000 health apps and 340 consumer wearables available worldwide as of July 2017, with over 200 health apps being added each day, IQVIA reported. Yet most of these apps were being downloaded less than 10 times, which wouldn't be on the FDA's radar, according to Molnar.
This gave rise to creating digital solutions that could meet the FDA's standards.
"Early-stage companies started taking these products through randomized clinical trials and going through the rigor that you would see more like with medical equipment, medtech, and pharmaceuticals, and out of that activity sprung digital therapeutics, or DTx," Molnar added.
At least 25 DTx products have been granted market authorization through regulatory processes and another 23 are commercially available. Their use indications are predominantly in the mental health and behavior modification areas. An additional 89 products were in the earlier stages of development and evidence generation in 2021. Many rely on cognitive behavioral therapy as part of their therapy.
The mandate on these companies is a big one: to make software mainstream medical treatment.
With that, comes a necessity to build out a whole new space and a whole new degree of structure that did not exist before. When it comes to business models, the PDT model resembles pharma's model in several ways. These include how a clinician writes a prescription that then puts a patient on a product.
For PDT companies, it happens to be a piece of software instead of a pill.
The PDT and pharma models also resemble each other in that either product has its own set of reimbursement codes, and insurance companies provide payment based on those respective codes.
These digital therapies cater to the same constituents as pharma, also.
DTx and pharma aim to make the same three constituents—patients, physicians, and payers—happy.
On the patient side, DTx companies are working to make their products simpler, demonstrate long-term rates of engagement, and quantify that they work in the real world.
For example, publications around Pear's reSET-O demonstrate that the product helps in keeping patients with opioid use disorder out of the emergency department and in preventing inpatient hospitalizations.
DTx companies are doing everything they can to simplify the process on the clinician side, also. A few milestones have already been achieved on this front, including the Current Procedural Terminology (CPT) codes released by the American Medical Association (AMA) last year targeting remote patient monitoring. These provide an opportunity for clinicians to be reimbursed when setting up a patient with a product and monitoring the clinician dashboard, including subsequent monitoring.
"As digital medicine continues to expand and takes a more prominent role in patient care, the CPT code set has kept pace with this innovation," Mark Synovec, chair of the AMA's CPT Editorial Panel, told HealthLeaders. The new CPT codes "help break down policy barriers for payment and open doors for greater clinical integration of these emerging digital technologies," Synovec added.
Another milestone was achieved when the Centers for Medicare & Medicaid Services established a new Level II HCPCS code to describe FDA-cleared prescription digital behavioral therapy per course of treatment, including PDTs, earlier this year.
The HCPCS set of codes is on par with CMS' remote patient monitoring codes and formed part of the agency's 2022 Physician Fee Schedule. They came into effect on April 1.
By granting the set of HCPCS codes, DTx products can now be coded and reimbursed as both medical and pharmacy benefits. Previously, they were primarily reimbursed as pharmacy benefits.
One example of simplifying the process for clinicians is meeting the clinicians where they are through the integration of digital therapeutics with electronic health record systems.
Payers represent the third constituent for DTx and pharma companies alike. DTx companies are attracting the business of more and more payers as they continue to publish promising health economic data. These companies are, in effect, selling products that save more money than they cost to make.
Pear continues to bring on large payers in various states, particularly those that have been most heavily affected by the opioid crisis, including Kentucky, Ohio, and Massachusetts, among other states.
Payers are increasingly reaching out to DTA, also.
DTx companies are also touting a bipartisan, bicameral piece of legislation aimed at ensuring access to PDTs that was introduced recently. Introducing this legislation to establish new Medicare and Medicaid benefit categories for PDTs is "a critical step toward ensuring that these evidence-based treatments get into the hands of those who need them most," DTA's Molnar said.
The legislation is a "Hail Mary for the space" when it comes to where its headed, McCann said.
A match made in heaven
Some experts expect DTx products to displace certain medications. But DTx products and pharmaceuticals are a match made in "healthcare heaven," if you will, for a variety of reasons.
DTx products sometimes aim to complement traditional drug therapies, boosting health outcomes.
These products are expected to be used for monitoring therapies in some cases and as combination therapies in other cases. Pear's reSET-O product, for example, is indicated for use in combination with pharmaceutical medication buprenorphine for opioid use disorder to make both products work better.
DTx innovators are increasingly seen as ideal partners for pharma manufacturers.
Next to in-person care and medications, DTx as the third modality in care delivery would allow for gaining insights into health outcomes with RWE that can, in turn, aid in delivering VBAs.
"The way I see it is, it's really about increasing patient choice and patient access to evidence-based options in a way that is equitable," Big Health CEO Peter Hames told HealthLeaders.
Pharma companies would also benefit from giving their products a commercial edge, adding value to new and existing medicines. In 2019, digital health investor Rock Health argued that pharma leaders must decide if they are going to be "first movers" or "fast followers" when it comes to DTx solutions. It claimed that the two naturally fit where DTx innovators have the drive to push an innovative idea forward while major pharma players are well-positioned to help with robust R&D expertise and the ability to complete clinical trials that will differentiate a true DTx product from health and fitness apps.
Another problem area DTx products can help address is medication adherence. Hundreds of thousands of deaths in the U.S. and in Europe have been directly linked to poor adherence.
"Success in healthcare hinges on data," Cognito Therapeutics CEO Brent Vaughan told HealthLeaders. "That's as true for pharma as it is for digital therapeutics, yet digital products inherently create data that can be used for clinical development, health economic evidence, as well as to advance uptake and utilization."
The DTA recently announced new task groups to tackle existing roadblocks. These include task groups for the Asia-Pacific policy landscape, clinical evidence, DTx value assessment and integration guide, European policy, public relations and communications, U.S. commercialization and reimbursement, and U.S. policy.
Editor's note: This story was updated on April 29, 2022.
“The way I see it is, it's really about increasing patient choice and patient access to evidence-based options in a way that is equitable.”
Peter Hames, CEO, Big Health.
Ana Mulero is a contributing writer for HealthLeaders, an HCPro brand.
Next to in-person care and medications, digital therapeutics (DTx) as the third modality in care delivery would allow for gaining insights into health outcomes with real-world evidence that can aid in delivering value-based agreements.
DTx and pharma aim to make the same three constituents—patients, physicians, and payers—happy.
DTx products can now be coded and reimbursed as both medical and pharmacy benefits.