In just a few short years, digital therapeutics (DTx) have become an exciting, incredibly competitive new frontier in healthcare. For those not familiar, DTx deliver evidence-based therapeutic interventions to patients via software applications, and are meant to prevent, manage or treat a broad spectrum of physical, mental and behavioral conditions. Often touted to be just as clinically effective as pharmaceuticals, DTx development costs are significantly less than typical pharmaceuticals, which usually take billions to bring to market. But cost is just one of a growing number of factors that are attracting more and more people to take DTx seriously.
An independent part of the larger digital-health ecosystem, the market for DTx has been steadily growing. A May 2019 forecast by Juniper Research predicted a 1,000 percent growth trajectory over the next five years to more than $32 billion. However, while the data indicates it’s a fertile area in the notoriously stodgy healthcare arena, like all things in health, reaching full market maturity will require convincing healthcare’s four big “Ps” — patients, providers, policymakers and payers.
Madorra Pennington is a seasoned writer who is probably best known for her Pain News Network reporting and personal journey with chronic pain. She writes a regular blog for PNN chronicling her experiences with many pain-relief modalities over the years. She recently tried a digital therapeutic (DTx) to see if it could help relieve chronic pain associated with her Ehlers-Danlos Syndrome.
Pennington turned to a virtual reality headset and program supplied by Los Angeles-based AppliedVR. After just a few weeks of treatment, she came away impressed with the overall experience. She writes, “The benefits of VR therapy continued for me after the sessions ended. When pain or panic about pain began to set in, I found it drifts away rather than latching onto me like it used to.”
Convincing other patients like Pennington to rely less on pharmaceutical interventions and actually trust a digital tool to achieve a health outcome is the biggest challenge for any DTx.
For chronic pain, however, relying less on pharma has potentially huge implications. While all eyes are rightfully on COVID-19, our country is still being ravaged by the opioid crisis, a health catastrophe that not only takes lives and devastates families, but also costs a mind-blowing 3.4 percent of the country’s gross domestic product (GDP). So it makes sense that many industry insiders and patient advocacy groups see the potential in DTx, such as the virtual reality Pennington found helpful, to improve the quality of life for all patients suffering from chronic conditions.
Unfortunately, many DTx (like virtual reality, or “VR”) still aren’t readily available to the average patient: they haven’t been widely adopted by the provider community, haven’t been fully cleared by the FDA and, in many cases, haven’t been approved for reimbursement by payers.
For most DTx players, getting those groups onboard is not an easy (or cheap) proposition and requires rigorous clinical and feasibility studies.
Getting Providers On Board
Like most other DTx makers, AppliedVR has undertaken multiple studies to validate that its program is both an effective treatment and is cost-effective as compared to modalities like pharmacological interventions. A few of those studies are currently being conducted through a partnership with Geisinger’s Steele Institute of Health Innovation project, which is evaluating VR in home and clinical settings.
“We’ve been very innovative in our approach, looking at how VR can serve as an opioid-sparing digital therapeutic that also has the potential to be a lower-cost treatment over time,” said Emily LaFeir, senior director of operations at Geisinger. “I was already familiar with how VR worked from using it in my home, so it was really just a matter of taking it to our leaders to prove out the benefit. Everyone was pretty open to it.”
While having Geisinger actively testing and using DTx can be a big influence for the broader healthcare community, it doesn’t mean companies like AppliedVR are over the hump. Convincing the very diverse provider community to use a DTx in their practice will require substantial investments in further rigorous studies. DTx companies, like their counterparts in pharmaceuticals, are engaged in randomized controlled trials (RCTs), which are considered the gold standard in clinical testing, and then publishing the results in relevant medical journals.
“The COVID-19 pandemic has totally exacerbated the psychological and social components of pain,” said Matthew Stoudt, co-founder and CEO of AppliedVR. “At the same time, it’s a huge challenge for patients to get to their providers, their clinics or the hospital, if needed. That’s why it’s critically important to take this unique device [VR] beyond the hospital and into the patient’s home. That’s where we believe you create the biggest opportunity to both improve care and reduce costs.”
Stoudt added that AppliedVR now is heavily focused on building out the evidence and the partnerships required to make its VRx solution a care standard in pain management – ultimately moving to a model where doctors prescribe, and payers reimburse for it. The company is currently collaborating with multiple payers to establish pricing that reflects its value. They also recently published results from an RCT that looked at VR’s feasibility and effectiveness as a self-administered, at-home treatment for chronic pain, something that’s increasingly important ever since COVID-19 disrupted in-person care. The data suggested an at-home, self-administered treatment program is feasible and effective, reducing pain intensity and improving quality-of-life metrics by 30 percent or more.
In Chicago, DTx company MetaMe Health is in a similar position. Its team is developing a DTx treatment program for irritable bowel syndrome (IBS), another costly, and physically and emotionally devastating chronic condition. The company is currently engaged in its own RCT and is actively pursuing FDA clearance to become a DTx that can be prescribed by a qualified healthcare provider.
“Think of it as no different from a drug approved by the FDA. Typically, these prescriptions are sent to specific specialty pharmacies that the manufacturer [developer] has contracted with to process, which includes adjudicating insurance, collecting co-pays, and distributing access codes,” said Tim Rudolphi, CEO at MetaMe. “More broadly, digital therapeutics is the next advancement in therapeutic modalities. They won’t replace other modalities, but will provide another option to get effective treatments into the hands of patients who need them.”
Where do Policymakers Stand?
While we’re seeing a lot of chatter about DTx, the market overall has much maturing to do. Process and clarity are needed from policymakers and the FDA to drive greater adoption.
However, it’s only fair to remember that we’re not even three years out from the first FDA de novo clearance for a software-only digital therapeutic. Many simply aren’t up to speed on their potential impact within their respective categories. And, many healthcare experts feel more robust data is needed to prove they actually work, especially given some of the risks associated with digital treatments. That was a concern that even industry insiders acknowledged at the 2019 DTx East conference.
On the reimbursement front, the country’s largest payer, Medicare, also still isn’t on board. Benefit categories do not exist for technologies that weren’t around when Medicare was formed, such as software and prescription digital therapeutics — therefore they are not covered.
Last December, a U.S. House of Representatives bill was reintroduced to change just that. The “Ensuring Patient Access to Critical Breakthrough Products Act of 2019” would not only require CMS to hasten the pace of approval for “breakthrough” medical technologies, it also would make coding available for new devices and diagnostics. While its passage would have knocked down the walls standing in DTx’s way, progress has slowed since December.
The Covid-19 pandemic could be the hammer that breaks down those walls. Covid-19 is disrupting in-person care, and as patients want greater access to virtual treatment across a myriad of conditions, Digital therapeutics are becoming an attractive proposition for both patients and providers.
However, to date, DTx hasn’t enjoyed the same fast-tracked policy changes that telemedicine experienced over the past few months. It’s no doubt a bit of an apples-to-oranges comparison, but as this pandemic rages on, something may have to give. One thing is clear: increasingly, support for digital therapeutics is accelerating across the healthcare spectrum and increasingly, well-respected organizations are reporting successful experiences. The data is building.
Investors seem to be sensing this. DTx represented a significant percentage of the $588 million in digital health funding amid the pandemic. 2020 is on pace to be a record-breaking year overall as an increasing number of influential commercial payers report data on how DTx delivered ROI for them.
Setting a Payer Example
Blue Shield of California is a commercial payer that has long been known to lean into digital innovation, and is now seeing the value of DTx via its Wellvolution program. Part of the larger Health Reimagined initiative, Wellvolution is the insurer’s “lifestyle medicine” program that contains a suite of solutions, many of which are digital, that promote well-being and address chronic conditions.
Working through its platform partner Solera, Blue Shield of California provides eligible members free access to dozens of well-known vendors, many of which are high-acuity, FDA-cleared digital therapeutics that, as the insurer reported, have actually reversed chronic conditions.
Bryce Williams, Blue Shield of California Mind Body Medicine Vice President, leads the Wellvolution program. He understands that digital therapeutics are a key part of breaking the status quo in preventing and treating chronic conditions.
“We’ve been trying to turn over an industry that’s needed turning over for around two decades,” said Williams. “We want to give members more self-empowerment and ownership over their journey, whether that’s physical or mental health, by providing a choice of tools that best resonate with them.”
DTx are increasingly the preferred pathway for Wellvolution members, as Williams noted. “One year since launching Wellvolution, we noticed that the digital tools were chosen approximately eight out of every 10 times. Now, as a result of Covid-19, it’s nearly 100 percent.”
While having Blue Shield of California embrace DTx is a big endorsement, there’s a catch. Like every smart payer, Blue Shield of California only reimburses its platform partners if they continually prove they’re delivering positive outcomes for members. This strategy puts huge pressure on the DTx vendors to actively engage their users and drive successful outcomes. But that’s the sort of pressure the industry may need to help it reach full maturity.
As for the payer, the real question is how their DTx strategy delivers ROI. Take weight loss as an example. According to Blue Shield of California, one year since launch, Wellvolution has enrolled around 24,000 members, generating a collective weight loss of nearly 42 tons across its entire program. One of Wellvolution’s providers, Betr Health, reported that Blue Shield of California members saw an average weight loss of 12.6 percent and 1.4 percent reduction in A1C, with many reporting side benefits like improved sleep.
Even more impressive, some members reported reducing or outright eliminating prescription medications, which can generate significant lifetime cost savings. These are the types of results that payers and policymakers alike recognize as part of the “Triple Aim” of healthcare: improving outcomes, improving the patient experience, and lowering costs.
Wellvolution may prove to be a useful model to establish DTx market maturity, providing a roadmap for other commercial payers to follow.
Blue Shield of California is not the only major player stepping up its DTx game. CVS Health recently announced that it is offering five new digital health apps to its pharmacy benefit manager clients.
One of those is the Daylight app from digital therapeutics maker Big Health, which like AppliedVR, also is building a body of evidence to prove its clinical effectiveness. The company recently published its own RCT data in the journal Depression and Anxiety, demonstrating that Daylight reduced anxiety symptoms.
Digital therapeutics for mental health continue to present tremendous opportunities, and findings like these are coming at the right time. A recent study by mental health provider Lyra Health found that a whopping 83 percent of U.S. workers are experiencing symptoms of mental health issues. And a recent CNN.com op-ed by CEO David Wennberg of Quartet Health (a provider of mental health technology for payers) and Dr. Ezekiel Emanuel (vice provost and professor at the University of Pennsylvania), reported that mental health issues have been greatly exacerbated by Covid-19, especially given access and disparity issues. They note that improving patients’ access to mental health care reduces overall costs for health plans, particularly around chronic physical conditions.
Further studies, such as those published by Big Health and AppliedVR, will help a DTx industry that has struggled to fit into payer reimbursement paradigms. Dr. Jenna Carl, vice president of clinical development and medical affairs at Big Health, points to a steadily maturing DTx market:
“Although digital therapeutics are still a relatively new category, our collaboration with CVS can help to increase awareness and adoption of our products … That’s because streamlining billing and reimbursement via the pharmacy benefit management formulary reduces friction for health plans, self-insured employers and their employees. In other words, digital therapeutics claims can be processed just the way drugs are; it’s that simple.”
It’s yet another suggestion that we’re closing in on a DTx maturity inflection point. The processes that get DTx into patients’ hands must be in place and streamlined.
As MetaMe’s Rudolphi put it, “The biggest challenges we face in development are the unknown. Unlike drug development and FDA review, which is very well known and documented, the requirements for FDA clearance, and more importantly, provider utilization and reimbursement, are not clear. It’s simply a matter of a new industry finding its way. In time, people will try, fail, and we’ll all learn from this.”
The pieces seem to be coming together, with platforms such as Bright Insight providing a platform to help digital therapeutic developers navigate the complex regulatory, security and privacy landscape.
While there is more work to be done, the DTx market has come far in just a few short years. It is now possible to see a future when stories like Pennington’s – about the success of DTx- will become as familiar to patients as the now pervasive direct-to-consumer pharmaceutical advertisements.
By: Seth Joseph