Redefining the DTx Frontier: Navigating the Tensions Between Innovation and Commercialization in Digital Therapeutics

Contributors:??

Moderator – Matthew D. Tucker , NightWare

Panelist – David Benshoof Klein , Click Therapeutics, Inc.

Panelist – Theo Ahadome , MDisrupt

Panelist – Shefali Shah, MBA , MindMaze

Panelist – Danny Kim, PharmD , WELT corp

Abstract:

The Digital Therapeutics (DTx) category has witnessed a surge of innovations, with some products even gaining FDA approval. Yet, many face commercialization hurdles, struggling with market adoption. Traditional commercial pathways, like payer-supported models, face challenges from dated evaluation methods and an absence of comprehensive published evidence. This white paper delves into the DTx commercial landscape, compares and contrasts the traditional methods, like the payer supported model with a newer approach many DTx companies are undertaking:? direct-to-consumer. During a panel at the DTx Conference Series , Boston - Sept'23, the advantages and disadvantages were discussed and the panelists gave insights to uncover keys to success or factors of failure for each.

Introduction

Digital therapeutics represents a convergence of technology and medicine, offering solutions ranging from mental health apps to software that complements or even replaces medication. However, the market's nascent state and its intersection of tech and healthcare mean that it faces unique commercialization challenges.

The Payer-Supported Model in Digital Therapeutics: Challenges and Evolving Evidence Requirements

Digital Therapeutics (DTx) is poised to reshape healthcare delivery with innovative digital interventions. While several commercialization pathways exist, the payer-supported model remains prominent but not without its challenges. Industry panelists provided a comprehensive perspective on this model, and this section will delve into their insights.

Strengths

The payer-supported model serves as a beacon in the evolving landscape of Digital Therapeutics (DTx). Rooted in the familiar and comprehensive architecture of existing reimbursement structures, this model offers DTx innovators a relatively structured pathway. By aligning with payer criteria, products can find a more streamlined route to market, minimizing some of the uncertainties that come with newer, less-traveled commercial pathways. An often-understated benefit of this model is the reputational boost it offers. Securing reimbursement isn’t merely a financial win—it's a testament to a product’s value, efficacy, and potential place in standard care protocols. Such endorsement from a reputable payer resonates with healthcare providers, often serving as a precursor to wider clinical adoption. Patients, too, can derive confidence knowing a DTx solution comes with payer backing, which might influence their adherence and trust in the product. Furthermore, in an industry marked by volatility and rapid technological shifts, the predictable revenue streams offered by this model are invaluable. Companies can craft long-term business strategies, scale operations, and invest in research and development with a clearer financial outlook, bolstered by the stability inherent in established reimbursement mechanisms. In essence, while challenges undoubtedly persist, the payer-supported model remains a cornerstone for DTx commercial success, weaving together financial, reputational, and strategic benefits.

Weaknesses:

The payer-supported model, while robust in many respects, also grapples with distinct challenges that can sometimes overshadow its merits in the Digital Therapeutics (DTx) domain. A standout concern is the rigorous evaluation benchmarks set by payers. Often, these benchmarks are oriented towards traditional therapeutic solutions and might not be wholly attuned to the unique attributes and delivery mechanisms of DTx. This can inadvertently demand from DTx solutions an evidence level on par with, or even surpassing, established therapies. The model's structured nature, though a strength in many ways, can sometimes slow the pace, delaying innovative DTx products' time to market and thereby potentially impacting patient access to groundbreaking solutions. Moreover, communicating the true value of a DTx product is both an art and a science. The industry must articulate not only the direct health benefits but also the broader economic value, encompassing long-term patient outcomes and healthcare system cost savings. Any oversight or shortfall in this intricate communication dance can result in undervalued pricing or even non-reimbursement. Lastly, with DTx being a relatively nascent field, there exists a palpable void of comprehensive published evidence. This scarcity often clashes with the data-intensive appetites of traditional payers, posing another barrier to seamless commercialization. In sum, while the payer-supported model offers undeniable advantages, it's a pathway peppered with hurdles that DTx players must astutely navigate.

Insights from the Panel:

• Elevated Data Requirements: Panelists highlighted the need for DTx evidence to be on par with, or even exceed, that of traditional therapies. This underscores the rigorous standards the industry must meet.

• The Economics of Value: A common theme was the importance of economic value. Demonstrating this, both in terms of health outcomes and cost savings, can command better pricing.

• Understand Patient Needs:? Understanding the Patient journey and their need for a healthcare provider to prescribe and titrate the dose of your digital therapeutic are critical in determining whether to choose the payer pathway.? As in traditional medicines, prescribed drugs are covered and managed by payers whereas OTC drugs are not managed by payers.

• Anticipate Payer Queries: One cannot overstate the importance of evidence. Preparing a comprehensive evidence generation strategy tailored to anticipated payer questions is non-negotiable for market success.

• Brighter Horizons with Evidence: There's a silver lining: as more DTx players recognize the pivotal role of high-quality evidence, the industry's outlook becomes optimistic. The market efficiently filters out those lacking evidence, while those investing in data generation are rewarded with longevity and success.

Direct-to-Consumer (DTC) Model in Digital Therapeutics: A Dive into Consumer-Centric Commercialization

The Direct-to-Consumer (DTC) model represents a paradigm shift in how DTx products reach their end-users. By bypassing traditional gatekeepers, this model focuses squarely on the patient or consumer, aiming to empower them with direct access to innovative digital health solutions.

Strengths:

At its core, the DTC model offers DTx companies speed and agility. With direct market access, there's potential for rapid user adoption, bypassing the often protracted negotiations and evaluations characterizing traditional pathways. Furthermore, this model offers DTx companies unparalleled control over their branding, messaging, and engagement strategies. Direct interactions with end-users can foster a sense of community and trust, invaluable in healthcare where the personal stakes are high. From a commercial perspective, the DTC model can also open up diverse revenue streams, such as subscription models, one-time purchase options, or tiered pricing based on feature access.

Weaknesses:

However, the DTC model isn't without its complexities. One of the most glaring challenges is the credibility factor. Without endorsements from payers or healthcare providers, DTx products might face skepticism from potential users questioning their efficacy, safety, or value. This model also places the onus of cost directly on the consumer. Without insurance or payer support, affordability becomes a significant concern, potentially limiting the user base. Moreover, navigating regulatory landscapes can be trickier; while some regions may have lenient or clear guidelines for DTC health products, others may pose regulatory mazes, adding to commercialization challenges.

Insights from the Panel:

• The panel discussion brought to light several poignant insights that offer a deeper understanding of the intricacies and challenges inherent to the DTC model in the DTx landscape:

• The Primacy of Evidence: The unanimous sentiment reverberated the age-old principle: in healthcare, evidence reigns supreme. This is especially crucial for DTx products venturing into a direct-to-consumer pathway. As highlighted, data isn't just information; it's a pillar of confidence, especially at the prescriber level. If DTx players aim for broad and sustainable adoption, the roadmap must be paved with robust, compelling evidence.

• Navigating Pricing Dilemmas: The panel shed light on a crucial dichotomy: while DTC offers direct market access, it inadvertently can clip the wings of pricing power. The ingrained perception is clear – a product's direct availability might be construed as signaling lower value, given the decades-old design of healthcare markets that lean on insurers to cover costs of validated, prescription-only products.

• DTC versus OTC – The Fine Line: A distinction was made between DTC and OTC was illuminating. It underscored that many DTx products, due to their nature and the severity of conditions they address, aren't mere over-the-counter solutions. This delineation creates a dual challenge for companies: convincing both the patient and the prescriber. Such a duality, as discussed, carries its weight in costs, particularly when it comes to fostering awareness and adoption at potentially constrained price points.

• Dual Facets of Evidence: An insightful observation emerged on the nature of evidence required in the healthcare domain. While regulatory bodies weigh heavily on safety and efficacy, payers look through a different lens – one that focuses on clinical utility and economic implications. For DTx companies, understanding and adeptly maneuvering this bifurcation is paramount.

• Strategic Imperatives for Revenue Generation: Many DTx entities, in their quest for revenue generation, are pivoting towards DTC, often without ample groundwork. The critical misstep? Not garnering compelling evidence that resonates with payers from the outset and the competing priority of pressure from investors to generate sales. Meaningful, proactive interactions with payers can lay the foundation for subsequent commercial success.

• An Uncertain Horizon: Despite the diverse viewpoints, a thread of skepticism about the DTC model's viability in the immediate future ran through the panel's discourse. The consensus tilted towards the need for the DTx category to first garner broader acceptance and traction within the overarching healthcare community.
• Cost of Acquisition: Often overlooked and underestimated is the cost to acquire patients/users in a DTC model. This could be in the hundreds of dollars per patient and can significantly erode margins or create a loss for DTx players.?

Drawing from these insights, it becomes evident that while the DTC model offers avenues for DTx companies, the path is riddled with complexities. Evidence generation, strategic pricing, stakeholder engagement, and nuanced payer dialogues emerge as the linchpins for any DTx entity contemplating this commercial route.

Sage Counsel from the Front Lines: Navigating the DTx Commercialization Odyssey

The panel discussion, rich with insights and experiences, culminated in valuable advice for DTx entities navigating the multifaceted landscape of commercialization. These pearls of wisdom, distilled from the collective expertise of industry stalwarts, offer a guiding light for both nascent and established DTx companies.

• Elevate Evidence Generation: David Klein noted that at the heart of healthcare lies evidence. For DTx solutions to gain traction, companies must invest in rigorous, comprehensive data generation, encompassing both efficacy and economic impact. In the words of one panelist, healthcare truly moves "at the speed of evidence."

• Engage Payers Early: Theo Ahadome's advice - "Talk to payers before you talk to payers." By deeply integrating feedback and considerations from payers, providers, and even employer experts early in the product life cycle, companies can tailor their solutions and evidence to meet market needs more effectively.

• Understand Market Perceptions: The panel emphasized the importance of being attuned to market perceptions, particularly concerning pricing in the DTC model. Recognizing the nuances of value perception can guide DTx entities in crafting more effective pricing and positioning strategies.

• Navigate the DTC Complexity: While some companies might be drawn to the DTC commercial model as it enables a faster path to market, they should also consider the patient population they serve. If it is important to make treatment claims, the OTC regulatory pathway is still FDA regulated, and reviewed by the Agency for safety and effectiveness, while enabling a DTC model that is differentiated from general? digital health and wellness apps. As David Klein highlighted, it is also important to consider the indication you are targeting from a safety perspective when making the choice to go OTC or the prescription route. Some higher risk indications (i.e., OUD, MDD) may require physician oversight, making the prescription route important for those patients, while other indications could greatly benefit from OTC options.

• Stay Nimble and Adaptive: In a rapidly evolving industry, agility is an asset. DTx entities must remain open to pivoting their strategies, learning from both successes and setbacks, and continuously iterating to align with market dynamics.

• Collaborate and Build Community: The journey of DTx commercialization isn't solitary. Building a community of stakeholders, from payers to prescribers, and from patients to tech partners, can amplify a product's reach and impact. Collaboration fosters a holistic ecosystem where innovation thrives and delivers tangible health outcomes.? Shefali Shah noted the importance of collaborating as a DTx community especially around legislative issues that can help raise all tides.

• Exercise Caution and Forward-Thinking: Moderator Matthew Tucker gave a poignant warning: changing business models out of sheer desperation for revenue is a perilous move. In the fervor to commercialize and innovate, it's imperative for DTx companies to lay down clear plans, objectives, and timelines from the outset. This foresight helps in comprehending the intricacies and durations involved in bringing a product to market. Knowing the 'runway' length – the financial, emotional, and strategic cushion – is crucial. It's a disservice to all stakeholders, including friends, family, angel investors, and institutional backers, to haphazardly burn through resources without a well-anticipated plan. Businesses must act responsibly, ensuring they're not just fueled by enthusiasm but are grounded in meticulous planning and realistic goal-setting.

Conclusion: Harnessing the Future of DTx Commercialization

The horizon of Digital Therapeutics (DTx) stands at a critical juncture, resonating with promise yet riddled with challenges. This discourse, underpinned by the collective wisdom of industry veterans, underscores a resounding truth: the bedrock of DTx success is unyieldingly anchored in evidence, strategic foresight, and market acumen. As innovators venture forth, it is imperative to heed the lessons shared, ensuring that in the quest for commercial triumph, the core mission remains unwavering - delivering transformative health solutions that resonate with efficacy, trust, and value. In this evolving narrative, the DTx community holds not just the potential but the responsibility to redefine healthcare's future landscape.