Recently did some digging into a digital therapeutic company (non-telehealth). I've heard the sector is very challenging, but after digging, good to put some concrete thoughts behind it:
- Digital therapeutics require all the same things that bio therapeutics require -- regulatory approval (albeit fewer trials than bio) and solid clinical evidence, but then also payer adoption and provider prescribing.
- Payer adoption is hard (and where players like Akhili failed) -- you need to show clinical proof of medical necessity for payers to want to cover the digital therapeutic. This feels like valley of death number 1.
- Even if payers cover it, you need to get providers to prescribe it. Which means a sales/marketing team and a fleet of account managers, similar to pharmaceuticals but with a more untested care modality (digital vs. drug). Can be expensive and slow.
- Provider un-enthusiasm. A more speculative observation that heads into behavioral aspects of healthcare, but I believe that (a) doctors understand how drugs work and are generally not hesitant to prescribe them if the benefit is clear, but (b) doctors don't really believe that digital therapeutics work. I think in general, many providers are slower to change prescribing practices, but especially slow when confronted with a totally new modality of care (digital vs pharma). It might be the sort of thing that's a generational change (like getting comfortable typing notes into a computer instead of handwriting), not a multiyear change.
- Digital therapeutic adoption/compliance. Most pharmaceuticals you take a few times a week, then forget about it -- it takes less than a minute to take a pill (and still compliance rates are sub-par). However, many digital therapeutics have a longer duration -- e.g. "watch X thing for 1 hour a day, 5 days/week". To adopt it well, patients need to change behaviors and habits, which can be difficult. (This thought needs a little more workshopping, but prescribing self-directed therapies -- like many digital therapeutics, like prescribing exercise -- feels harder. Would love for some data to refute/support this claim.)
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