How to Level Up to Digital Therapeutics 2.0
Background
Over the last 5 years, health tech has seen a boom in the development of digital therapeutic (DTx) software. But turbulent times over the last few months have not left DTx unscathed, with ex-unicorn Pear Therapeutics recently filing for bankruptcy amidst poor adoption of their opioid use disorder and insomnia DTx tools. Pear were pioneers; they were the first company to secure an FDA De Novo Classification for DTx, and so their demise puts a question mark on the promise of the DTx space.
In this blog we’ll shift the focus of the recent narratives that have been dissecting the past, and look to strategise for the future. Lessons learned so far from the advancement of DTx should be taken forward to maximise the potential of these platforms for the benefit of patients and healthcare systems. As the regulatory and health economic requirements change, getting DTx to market in 2023 holds tougher challenges that companies need to overcome. Here are the 3 key pointers Hardian puts forward in levelling up to DTx 2.0:
Regain clarity on defining your DTx and its mechanism
Strengthen your health economic analysis and value proposition
Re-think your regulatory strategy in a post-Covid era
Let’s dive in.
Regain clarity on defining your DTx and its mechanism of action
DHT = Digital Health Technology, SaMD = Software as a Medical Device, DTx = Digital Therapeutics, PDT = Prescription Digital Therapeutics
First, we need to get clear on the definition of a digital therapeutic. As the barriers to building software tools continue to fall with the emergence of “no code/low code” platforms, the line between wellness apps and digital therapeutics needs to be re-emphasised. This definition serves as a starting point regardless of where in the world you intend to deploy DTx:
A digital therapeutic is software as a medical device which uses evidence-based therapeutic interventions to prevent, manage or treat a medical disorder or disease.
Digital therapeutics can have two main mechanisms of action, and often employ both in combination:
Driving behavioural change by offering concrete recommendations or by suggesting certain activities.
Driving psychological change through the delivery of psychological interventions.
By keeping this precise definition and mechanism in mind, companies can craft an Intended Use Statement that hits the mark, and concentrate their commercial and evidence-generating efforts on developing a clinically meaningful product.
The need for consistency of definitions and approaches in the DTx space has also prompted the International Standards Organization to draft ISO/DTR 11147.2 - Health Informatics - Personalized digital health - Digital therapeutics health software systems. Developers should stay up to date on these standards which will soon apply to any DTx they plan to ship.
The definition of DTx determines the limitations of DTx
Understanding the definition of a digital therapeutic also helps to outline its limitations. DTx is constrained because therapeutic intervention is commonly delivered through screen interaction. The effectiveness of any tool therefore depends on the user choosing to engage with the interface in the first place. This may have some impact on the efficacy of DTx, as a recent large meta-analysis found that digitally delivered CBT was not as effective as face-to-face CBT in treating depression.
Recognizing these limitations provides a useful framework for developing DTx that can better address unmet needs. While constraints on delivery intensity shouldn't hinder attempts to create useful products, they should inform the design process to ensure that the end result meets the requirements of healthcare systems and clinical pathways. And even though the roadmap for DTx holds potential for improved efficacy (e.g. through gamification or virtual reality), understanding these limitations is critical. Defining your product and acknowledging its limitations should lead to a proposal that effectively fulfils unmet clinical needs and adds genuine value to adopters.
Strengthen your value proposition through robust health economics
Considerations in the US
Let us briefly re-visit Pear Therapeutics, as an illustration of difficulties in assessing market readiness and pricing. Many have focused on the issues around murky routes to reimbursement and partnerships (see this BCG report as an example), but we think that the troubles started upstream of monetisation: a limited demonstration of clinical and cost effectiveness. One of the key stumbling blocks of poor adoption of Pear’s solutions can be traced back to a detrimental economic analysis conducted by the Institute for Clinical and Economic Review (ICER). Published in 2020, the ICER report highlighted that the clinical effectiveness (and therefore cost effectiveness) of Pear’s ReSET® platform could not be substantiated beyond the 12-week therapeutic period due to lack of data. For context, we know there are high relapse rates with opioid use disorder, and ICER recommended that real-world clinical benefit of the DTx should therefore be evaluated over a course of 12-24 months. This data gap stunted the outlook of the economic model, particularly given the high price-point of ReSET®.
The ICER report perfectly illustrates that the evidence required for regulatory approval (to determine safety and efficacy) is necessary but not sufficient to demonstrate economic or long-term clinical effectiveness. Whilst the regulatory frameworks address this by mandating data collection in post market settings, economic models also require real-world data based on healthcare utilisation and more holistic measures of disease burden.
Having said all of this, there are more foundational changes happening at the level of the US legislature which may change the market strategy for DTx companies. Firstly, a bill that proposes to ban the use of quality adjusted life years (QALYs) has been introduced into the House. The derivation of QALYs is fundamental to evaluating the cost effectiveness of DTx, and so the possible enactment of this bill may downplay the role of cost-effectiveness when it comes to price-setting. Secondly, the Senate has introduced a bill that would offer Medicare and Medicaid coverage of DTx treatments, which would promote the widespread adoption of DTx, and facilitate reimbursement. Both of these bills could fundamentally change market access and pricing strategies for companies entering the DTx space.
Considerations in the UK
Unlike the US, the UK’s National Institute for Health and Care Excellence (NICE) remains steadfast on the need for clinical and cost-effectiveness data prior to giving population-level recommendations for digital therapeutics. Acknowledging the nascency of DTx amongst other digital health technologies, NICE have been conducting Early Value Assessments (EVA) to determine the possibility of conditionally recommending specific DTx tools. Digital therapeutic assessments will cover CBT for adults, CBT for children and young people, obesity management, and virtual reality for agoraphobia. Whilst we await the EVA outcomes for most of the guidance documents, the EVA has been published for digital CBT in children and young people. The recommendations verify that there is indeed an unmet clinical need which DTx may address, but it’s clear that big data gaps exist in assessing impacts on cost and resource use, as well as clinical outcomes. If the draft guideline for CBT for depression in adults is anything to go by, lack of clinical and economic evidence appears to be a recurring theme across all the appraised topics.
In this context, companies wishing to deploy in the UK should focus on prioritising collecting the relevant clinical and economic data within appropriately designed studies in order to facilitate wider adoption. Until then, B2B sales directly to Hospital Trusts and Integrated Care Systems will likely result in a fractured and poorly evidenced narrative of the true effectiveness of DTx tools in real-world populations.
Re-think your regulatory strategy in the post-Covid era
Considerations in the US
In April 2020, the FDA published an enforcement discretion policy for DTx in treating psychiatric disorders, which allowed several companies to place DTx products on the market without requiring formal regulatory oversight from the Agency. In March 2023, the FDA announced plans to end this policy over a phased transition leading up to November 2023. Investors should take note that the flurry of activity seen between 2020 and 2023 in the DTx space may be a result of this now withdrawn policy, and the pace of future DTx deployment may not necessarily reflect the activity of the past 3 years. The roll-back of this temporary policy reflects the Agency’s stance to return to business as usual, which may lengthen the go-to-market timelines of companies planning to deploy in the US.
Considerations in the UK
The UK has plans to adopt a new set of medical device regulations since Brexit, but has suffered a number of delays due to the pandemic. For now, the UK Medical Device Regulation (UK MDR) enacted into law in 2002 remains enforced. Under these regulations, the majority of DTx tools (provided they do not allow for direct diagnosis) fall in the low-risk category of UKCA Class I medical devices. This is not the case in the EU or US, where all DTx products are higher risk, Class II devices and require direct regulatory oversight by a notified body (EU) or the FDA (US). This loophole is likely to be closed by June 2024, as the UK moves to an updated regulatory framework that may better account for the clinical potential and risks of digital therapeutics that was previously not conceived in the early 2000s. It’s not yet clear what this framework will look like, and companies should consider the ongoing developments that may allow easier UK market access for products which already have regulatory approvals from other trusted jurisdictions such as Japan and the US.
Closing thoughts
As we look ahead to the challenges that DTx faces, it’s important to remember that innovation works by iteration. The heavy lifting done by trailblazers like Pear Therapeutics has paved the way for the development of the next generation of digitally enabled therapeutics with lower costs, as they can iterate on Pear’s R&D and go-to-market strategy. DTx 2.0 may also face a lighter regulatory burden, as some companies may no longer need FDA De Novo classification. Easier routes to market may help to deliver the promise of lower prices to healthcare providers and patients. This gives DTx 2.0 a better foothold for widespread adoption, and ultimately, better outcomes for patients.
Hardian Health is a clinical digital consultancy focused on leveraging technology into healthcare markets through clinical strategy, scientific validation, regulation, health economics and intellectual property.
