Digital Therapeutics

Let us reconsider the criticism (Webb et al., 2010) that using the Internet to change people’s behavior, through the delivery of targeted health interventions, lacks verification of effectiveness. In light of the growing social trend of person-generated health data, questions to consider are (1)What confidence should be assigned to “digital therapeutics”? and (2) How to start the dialogue with traditional therapeutics to acknowledge this trend?


Introduction to Digital Therapeutics
As smartphones and computers equipped with more powerful processors were developed, almost every industry went through some level of technological transformation, including healthcare. Over the past decade, countless digital health products have been developed to diagnose, treat, manage, and prevent health issues.
Digital therapeutics are a subset of the broader digital health sector. A digital therapeutic leverages technology and evidence-based interventions to prevent, manage and/or treat physical, mental and behavioral conditions. However, the difference between a digital health product and a digital therapeutic is significant. As the digital health ecosystem evolves, it is crucial to understand the differences between various digital health products.
The Digital Therapeutics Alliance distinguishes digital health products from digital medicine & digital therapeutics. Digital health include "technologies, platforms, and systems that engage consumers for lifestyle, wellness, and health related purposes; capture, store, or transmit health data; and/or support life science and clinical operations."1 These products do not require clinical evidence and do not require regulatory oversight in the U.S. Examples of digital health products include fitness apps like Fitbit Coach, electronic medical record system technology like CareCloud, and telehealth platforms like Teladoc.
Digital therapeutics are defined as some type of software that "deliver[s] evidence-based therapeutic interventions to prevent, manage, or treat a medical disorder or disease."1 Clinical evidence is required for a product to be considered a digital therapeutic, and some regulatory oversight is necessary. An example of a digital therapeutic is Propeller Health, which offers a solution meant to help providers and their patients with asthma and COPD manage their condition, and has been shown to increase medication adherence by nearly 60% and reduce inhaler use by nearly 80%.
For the purposes of this report, we will define digital therapeutics companies as companies that have developed or have plans to develop products that meet the digital therapeutic guidelines set out by the Digital Therapeutics Alliance above. While this definition is certainly less rigorous than some potential classifications, it is notable that we are including companies that have plans to develop digital therapeutics in addition to those that have already developed them.
Note that this report will not differentiate between digital therapeutics and prescription digital therapeutics. In general, digital therapeutics are not subject to the clinical rigor and regulatory scrutiny to which prescription digital therapeutics are subject.

Growth Drivers for Digital Therapeutics
There are two major factors driving the development of digital therapeutics (DTx): 1.
The increasing prevalence of chronic disease and mental illness 2.
The push for value-based care A digital therapeutic is, of course, not a physical drug that is consumed by a patient. However, DTx can influence or monitor patient behavior through software. This is why digital therapeutics treat, for the most part, chronic disease (which can require lifestyle or behavioral changes to reduce symptoms) and issues related to mental or behavioral health.
According to the CDC, 6 in 10 adults have at least one chronic disease3. Chronic disease is the leading cause of death and disability. Chronic diseases include heart disease and stroke, cancer, diabetes, obesity, arthritis, Alzheimer's, epilepsy, tooth decay, and others.
Furthermore, as the population ages, the demand for chronic disease care is expected to grow.
Additionally, according to NIMH, almost one in five adults live with a mental illness in the U.S.
According to AJMC and the APA, rates of mood disorders and suicide-related outcomes have increased significantly over the last decade among young adults and adolescents."4 It is evident that patient demand for chronic disease care and mental healthcare is increasing.
Furthermore, according to SAMHSA, by 2025, the US will have a shortage of more than 15,000 psychiatrists, more than 26,000 mental health counselors, and more than 57,000 psychologists. Diseases that is chronic requires treatment that is always available. Payers benefit from the increased exposure that patients receive to treatment options, without having to expand their workforce and with a comparatively reduced cost.
The push for value-based care is another tailwind for the development of digital therapeutics.
Healthcare providers benefit through their ability to prescribe digital therapeutics in addition to traditional therapeutics. This allows providers to provide a better quality of therapy and outcomes for their patients. Furthermore, providers are also able to make more data-driven decisions regarding prescribed therapies with the additional data points that digital therapeutics supply.
To summarize, there are significant advantages that digital therapeutics can provide for stakeholders across the healthcare industry. Digital therapeutics provide patients easier and more frequent access to personalized care. Additionally, patients are provided with greater privacy and ability to receive therapy without experiencing societal stigma. In a value-based care environment, healthcare providers can use the data from digital therapeutics to provide better care and achieve better outcomes. Payers benefit from the increased exposure that patients receive to treatment options, without having to expand their workforce. Finally, pharmaceutical companies find that digital therapeutics allow them to gain greater real-world evidence to support patient outcomes and provide them with economic value. Digital therapeutics can also provide pharmaceutical companies with insight into how medicine is consumed by patients, and with additional data on the impact of their treatments.7

Therapeutic Areas
Almost all digital therapeutic services can be categorized as either companion therapies or In the pain & MSK category, one startup is Kaia Health, which develops evidence-based treatments for conditions like musculoskeletal pain.
In the cancer category, France-based Voluntis developed Oleena, a software for oncologyrelated symptoms management and remote patient monitoring. Specifically, Oleena evaluates cancer-related symptom severity based on patient reported data and provides personalized recommendations for self-management of symptoms.
In the digestive category, metaME Health is developing a digital therapeutic product called Regulora, a fully digital behavioral intervention for the treatment of Irritable Bowel Syndrome (IBS).
In the neurodegenerative category, San Diego-based Dthera Sciences is developing digital therapeutics for Alzheimer's.
In the respiratory category, Propeller Health has developed digital therapeutics to treat asthma and COPD. Propeller provides patients with sensors to attach to their inhalers, which, through their software application, helps them more effectively self-manage their condition by better understanding their triggers.

Regulatory Environment
The FDA's Center for Devices and Radiological Health ("CDRH") regulates all digital health products in the U.S. CDRH launched the Digital Health Innovation Action Plan ("DHIAP"), which establishes the pathways for digital health product approvals. There are two typical pathways for digital therapeuticsthe 510(k) pathway and the De Novo pathway.
For devices (meaning hardware or software) that have a predicate device, filing a 510(k) submission is the typical pathway. According to the FDA, "510(k) is a premarketing submission made to FDA to demonstrate that the device to be marketed is safe and effective by proving substantial equivalence (SE) to a legally marketed device (predicate device)" 8. To clarify, a predicate device is a device to be used as a point of comparison and that is allowed to be marketed legally. For example, WellDoc's digital therapeutic BlueStar and Pear's reSET followed the 510(k) pathway.
For devices without any predecessors or points of comparison, the De Novo pathway is used.
According to the FDA, "The De Novo process provides a pathway to classify novel medical devices for which general controls alone, or general and special controls, provide reasonable assurance of safety and effectiveness for the intended use, but for which there is no legally marketed predicate device."8 This pathway is certainly more rigorous than 501(k) clearance.
On June 15, 2020, Akili announced that its prescription digital therapeutic to treat ADHD in children, EndeavorRx, was granted clearance by the FDA. According to Akili, "EndeavorRx was reviewed through FDA's De Novo pathway and its clearance creates a new class of digital therapeutics. EndeavorRx is designed to directly target and activate neural systems through the presentation of sensory stimuli and motor challenges to improve cognitive functioning."9 In addition to these pathways, in 2017 the CDRH launched the Digital Health Software Precertification to establish a regulatory framework for digital health products. This experimental program is intended to make it easier to release or develop digital products through a streamlined review of the software developer's processes.
In March, Somryst, Pear Therapeutics' prescription DTx for insomnia, was cleared through the 510(k) pathway, and was the first product to pass through the Software Precertification Pilot.
Due to the pandemic and subsequent increase in demand for mental healthcare, in May, the FDA temporarily waived rules for digital health devices intended to facilitate or aid treatment for mental heath disorders. The new rule waives the need for a 510(k) submission. A few digital therapeutic developers have taken advantage of this temporary relaxation of regulation.
This presents a critical opportunity to digital therapeutics developers. If a developer can use this temporary waiver to deploy a digital therapeutic and demonstrate efficacy and outcomes, the case for formal FDA clearance will be significantly stronger.
Overall, launching the Pre-Cert program and easing regulatory burden on developers in time of crisis evidences the cooperative attitude of the FDA regarding digital health products, at large.
These steps encourage innovation, and send an encouraging message to the digital therapeutics industry.

Monetization
Partnerships between digital therapeutics and pharma are likely to continue, given the benefits for both parties. However, since DTx are not simply digital health apps sold online, it is important to consider the range of monetization opportunities available to DTx developers.
The three routes are insurance plan reimbursement, DTC, or enterprise sales.

Insurance plan reimbursement
Digital therapeutics can be reimbursed through insurance plans, similarly to any prescription digital therapeutic. Realistically, this route is achievable by prescription digital therapeutics, that have undergone a higher level of regulatory scrutiny. Traditional reimbursement can happen in multiple ways: value-based, fee-for-service, or medical device reimbursement.
With a value-based reimbursement model, digital therapeutics developers would need to demonstrate cost savings for payers. Notoriously, the issue with this model is attributing the cost savings specifically to use of the therapeutic. DTx developers may establish rates for app usage under a fee-for-service model, but this is unlikely without rigorous studies / testing.
Through medical device reimbursement, CPT codes would be establish for reimbursement.
The software would warrant higher levels of regulatory scrutiny to achieve this.

Direct-To-Consumer (DTC)
Of course, insurance plan coverage is coveted by digital therapeutics developers. However, some do choose the route of providing the therapeutic directly to consumers. Before partnerships with EVERSANA and Novo Nordisk, Noom provided its weight loss app directly to consumers. Obtaining payer coverage is often a long process, so one benefit of DTC is realizing revenue sooner. Patients' willingness to pay is crucial to the success of this option.
This model can even lead to insurance plan coverage, if significant traction is proven.
The DTC approach may be employed in a hybrid-model with insurance plan coverage. For patients without insurance, a simpler version of the therapeutic could be sold. The differences between the prescription and consumer versions would have to made clear to patients and payers.

Enterprise Sales
Digital therapeutics developers can pursue an enterprise sales strategy as well, as self-insured employers can offer the therapeutic to their employees as a covered benefit. Many digital health companies have pursued self-insured employers as clients as opposed to insurance plans due to quicker sales cycles.
Furthermore, universities, coworking spaces, or other entities that are not self-insured employers may be interested in buying access to the digital therapeutic. Another route is to license the DTx out to a company looking to develop or gain exposure to DTx.
Digital therapeutics all work differently, so it makes sense that different developers will pursue different pathways to monetization. Another sign that the market for digital therapeutic will continue to experience rapid growth is the establishment of digital formularies by some of the largest pharmacy benefit managers.
Express Scripts established a stand-alone digital health formulary in 2019. To be included, digital health products have to be reviewed by doctors and pharmacists to ascertain therapeutic value and safety among other factors. CVS Health also established a service that will help CVS Caremark PBM clients manage digital health products. These moves by Express Scripts and CVS Health will certainly increase access to digital therapeutics and provide visible channels for DTx developers to participate in. Happify demonstrated a 25% reduction in anxiety and depression symptoms in a randomized controlled trial, as well.

Conclusion
However, as with any emerging technology, there are significant risks in the space. Proteus Digital, a digital therapeutic unicorn that raised over $500 million, filed for Chapter 11 bankruptcy in June 2020. Proteus made an ingestible sensor for tracking medication adherence. According to MobiHealthNews, Otsuka, the company's pharma partner, said that "delivery of Abilify MyCite -a sensor enabled version of Otsuka's schizophrenia drug that was developed as a result of the companies' collaboration -will not be affected."16 2020 has certainly been eventful for digital therapeutics as Akili announced FDA approval of their prescription digital therapeutic, EndeavorRx, for children with ADHD. The therapeutic comes in the form of a video game. In addition, in June, MedRhythms, a digital therapeutic that employs music and sensors to assist with post-stroke walking rehab, received an FDA Breakthrough Device Designation.
As chronic disease and mental illness take a larger toll on the global population, managing the cost of care is expected to become an even higher priority. We are also seeing a sharp rise in digital health tools available to consumers worldwide, and simultaneously, the temporary loosening of regulations by the FDA has sparked a flurry of activity in digital therapeutics. While there have been signficant developments in the diabetes segment, we expect growth in other therapeutics areas going forward. Given the positive clinical results of many digital therapeutics coupled with the demonstrated interest from investors, payers, and pharmaceutical companies alike, we expect the digital therapeutics industry will continue to grow substantially on all fronts over the next decadefrom company formation and investment to adoption. Cognoa's ASD Therapeutic will help improve socialemotional reciprocity in children diagnosed with autism between the ages 3 and 7 years. Partners is poised to take advantage of disruptive opportunities that help move healthcare forward.