Digital Therapeutics Market Continues to Experience Growing Pains

Investment in Digital Therapeutics is expanding rapidly with industry stakeholders working to develop their strategies for success. This growth has not come without concerns, including coverage by payers, and the need to demonstrate effectiveness and improve outcomes in the long term.

Proteus Digital Health, once valued at $1.5 billion, is now struggling to survive as the company is undergoing a restructuring after failing to close a $100 million funding round that had forced it to furlough the majority of employees.

Investors have become wary as the company’s growth with patients has weakened. Otsuka, a major investor in Proteus, is reconsidering its $88 million, five-year partnership. Otsuka is not the only pharmaceutical manufacturer that is reconsidering its investments in digital health.

Sanofi, with new CEO Paul Hudson, announced a major strategy shift for the company that will end its diabetes and cardiovascular R&D efforts and focus on growing its immunology and vaccine businesses. Onduo, Sanofi’s diabetes management $500 million joint venture with Verily will be impacted as Sanofi will be involved as a financial backer only. Also, Novartis’ Sandoz recently relinquished commercial rights for prescription digital therapeutics to Pear Therapeutics. 

However, payers have recently shown a willingness to acknowledge that digital therapeutics has a role in patient’s care by complementing the current treatment model. The traditional medication review process is beginning to expand to include additional considerations, most importantly the perceived benefit among patients.

Recent initiatives by Express Scripts and CVS Health are leading the way among payers as they are implementing models that facilitate payment and coverage of digital therapeutics.

Express Scripts has identified the companies and programs it is including in its digital health formulary which has been developed to help clients review vetted digital health programs. The formulary is comprised of 15 clinically validated digital health programs and includes companies such as Livongo, Omada Health, LifeScan and Propeller Health.

CVS Health also introduced its Vendor Benefit Management program, a new service that will help clients introduce and manage third-party health products. CVS Health selected Big Health’s Sleepio app, as the first vendor in the program.

Takeaway:  The market digital health and therapeutics will inevitably grow, driven by continued patient and payer acceptance.