Somebody out there in history who was obviously pretty grumpy took the time to categorize the official list of seven deadly sins, at least in the Biblical sense, which are pride, greed, wrath, envy, lust, gluttony, and sloth. No one has yet categorized the official list of seven deadly “oopsies” associated with Digital Therapeutics (DTx), so I thought I’d give it a shot.
If you’re within 10,000 yards of healthcare right now, you can’t escape hearing about DTx. The concept is one that has appeared as if out of the ether. According to the all-seeing, all-knowing Wikipedia, digital therapeutics first appeared in an official communication worth noting in about 2012, when it appeared in a US Patent and Trademark filing for Click Therapeutics. The first known peer reviewed publication on the topic dates back to 2015, when dinosaurs still roamed the digital health part of the earth. In other words, the term, if not the concept is barely coming on 10 years old, at least officially. And like anyone under the age of 10, they can be really cute and interesting to have around, and also really lacking in judgement.
Now, at the age of not quite old enough to ride the big kid rides at the County Fair, DTx are having quite a moment. Some are demonstrating pretty substantial efficacy in helping treat various conditions, especially behavioral health conditions. Some are able to show off a substantial body of valid clinical evidence suggesting there is a real there there. And a very few, like the number that could fit on the head of a pin, are getting substantial adoption. Nearly all of them are getting feted with zillions of dollars of venture capital, all of it banking on some variation of DTx is the New Black.
I am definitely one of the people who is hoping/betting that there is a real live pony underneath some of the pile. I have seen a few DTx products demonstrate enormous promise – Freespira and Propeller Health come to mind – and the world would be a better place if it can begin to rely on these products to help make the patient’s experience and recovery much better than some current more traditional treatments allow.
Nevertheless, in my role advising companies on the conceptualization, packaging, marketing, distribution, pricing, business modeling and other strategies around DTx, there is a clear set of patterns I see that for all intents and purposes constitute the 7 deadly sins of entrepreneurs and innovators trying to make it big in the land of DTx. I will refer to them here as the 7 Oopsies, because all of them are acts not of commission, but of denial or chosen ignorance, committed by not paying adequate attention to the realities of the healthcare system in which we dwell. In a nutshell, here they are:
- Design – number one question I ask and get a “No” answer to: Have you asked any patients if they actually want or need this thingy you have come up with? In other words, Oops! I designed this DTx in a vacuum and no one seems to want or need it.
- Build – It may be needed, but Oops! You designed it to be used only by aerospace engineers, so the target market is going to get really small, in that your product is now not only limited to a market of 69,000 (the US aerospace engineering workforce size), but the subset of that who have the condition you are trying to treat. So a Total Addressable Market of 11.
- Prove – OK, good news you designed it well and the user interface is a joy to behold, but Oops! No one did any clinical studies, much less real clinical trials, to prove the result of using the DTx offering makes a difference. And double Oops! You totally forgot that economic ROI studies are equally important in most market situations – very few customers are going to pay for products that cost more than is saved.
- Price – and speaking of payment, Oops! You set up your pricing in such a way that no one can figure out how to pay for it, code for it, submit a claim for it, or figure out why they should go on paying you a subscription fee after the product is no longer being used. Also, Oops! If one adds up your ongoing fee for the product, it can start to cost more than pharmaceuticals or surgical intervention if you’re not careful. And by the way, this cost is coming out of the medical claims flow, not the pharmaceutical benefit, despite the advent of “digital formularies” appearance on the scene. So far, nothing in this category has made it to the legit pharmaceutical/PBM budget, so far as I can tell (please tell me if you have seen otherwise!).
- Distribution – Hot damn, got that other stuff right but Oops, how in the heck are you going to get that product from your server into the hands of patients? If you package it with a pharmaceutical product “beyond the pill” style, who will sell it? Pharma reps? That has not gone so well so far. Are you going to hire reps to detail doctors? No, you say…you’re going to sell it to employers? Oops! Guess what, they are not excited to buy your niche offering and will direct you to their TPA/Payer. Oops! Payers may like the idea, but they have no ability to persuade clinicians to prescribe the product, so now you have to cover both sides of that transaction. And remind me again who is going to do the tech support when the patient isn’t able to get the app working? Yikes – this one is a biggy.
- Prescribe – Most DTx products, if truly meeting the definition, are FDA approved and likely to require a physician’s prescription (and even if a prescription isn’t required, patients will typically ask their doctor before relying on some alleged treatment that they don’t fully understand). Oops! How is the physician going to even know to prescribe this stuff? How are you training them about the risks? What if the value-based model they are in doesn’t cover this cost and neither does the member insurance? And more likely, since most digital products make the claim that they reduce visits and hospitalizations, why would most fee-for-service providers even want to grease those skids? Hmmm…this is a tough area too.
- Use – And lastly, those infernal patients who don’t take their medicines? Well, they also don’t use their apps. Oops! I left my phone in the car, doc, and so I didn’t take my “digital pill.” “I was using my DTx and I got a text from my mom and lost the plot,” may well be the new “The dog ate my homework.” This isn’t that different from what is experienced with regard to compliance with any medication regimen, but try convincing someone who has spent the entire day on Zoom that they need just a little more screen time.
Much of the time entrepreneurs and innovators in the DTx area try to tell me that getting regulatory approval is the hard part and they bend over backwards to try to avoid it, but I will tell you (and I tell them), that compared to the last three Oopsies above, the FDA is a piece of cake, or at least something edible. Trying to grow a revenue stream through the distribution, prescription and economic challenges of DTx is like eating glass. You can do it, but it cuts on the way down.
So please, those of you trying to make a living at this DTx thing, think about these issues early in the life of the product, not after you have launched and have the heel of your hand firmly planted on your forehead. There are ways to get this right, but don’t let the old-fashioned sins of pride and sloth get in the way of your success. Patients are counting on you and no patient likes to hear “Oops!”
Lee Shapiro says
Well said Lisa! The easy part is often conceiving a solution – getting it used and paid for is the hard part.
Lisa Suennen says
True that, Lee. Best, L
Dr. Sherif Khattab says
Really good one.
This may be a great start for an expanded list of deadly sins in healthcare startups. The avoidance of or the opposite of which may help founders and their teams seek a more hopeful path. Even then it is difficult enough to fight the status quo gravitational forces, think Haven Health!
Thanks for that
Mike Pace says
Kudos on a very creative, engaging and timely DTx narrative.
Since you asked if anyone had seen otherwise, probably important that this inaccuracy is cleared up:
“So far, nothing in this category has made it to the legit pharmaceutical/PBM budget”.
There are in fact multiple FDA authorized prescription digital therapeutics that are included on the Standard Formularies and PDLs of Health Plans/PBMS (not digital health formularies), adjudicated and paid as a pharmacy claim and applied to a member’s pharmacy benefit.
A number of firms are in a position with even more PDTs to increasingly penetrate standard formularies based on supporting evidence, value, unmet need and provider group advocacy. Early pioneers paved the way across many constituencies to build these fit-for-purpose DTx reimbursement pathways that are growing in adoption. These efforts continue amongst a group of us representing multi stakeholder views, a wide variety of use cases and industry segment adoption frames.
Lisa Suennen says
Hi Mike, can you give me specific examples? I’ve seen lots of digital formularies beyond the pill products, but none where the payments actually come from the drug side of the claims budget. FDA approval, yes. Digital formularies – check. Adjudicated and paid as a healthcare claim from the “general” claims budget – yep. Adjudicated and paid as a pharmacy claim as if it were a drug in the drug budget? Nope. So please do show me as I would welcome knowing! Lisa
Dominic Shaull says
Thanks. A good overview and entertaining.
Lisa Suennen says
Jonathon Feit says
Funny to think how those among us with a cash remit base, and cash flow positivity, are still seen as the odd ones. 🙄🥳 🤜🏼🤛🏽
Lisa Suennen says
Yeah, Jonathon, what the heck are you thinking making money? L
Niels Christian Ganderup says
Interesting read. Thanks for putting it up.
There is so much cool innovation going on in this field, it is truly mind-blowing. The health and care industry is in for some earthquake scale changes over the next few years.
One facet of DTx and all other digital health solutions which require regulatory approval is the fact that market access / reimbursement is often forgotten and is not an integral part of the journey from the very beginning.
It should be a strategic focal point for the entire organisation as this is where future cash flow is coming from. That needs to be on everybody’s agenda in this space. If you don’t get this right you don’t get cashflow. It comes as a surprise to many digital health start-ups when in reality it shouldn’t.
Lisa Suennen says
Niels, you are singing my song. Lisa
Michael Hoad says
This is great! When we started teaching design thinking to medical students, one of the profs said … y’know, it is humbling to me that when you send a group of students into a hospital, they find an infinite list of poorly designed things that can be transformed. After that moment of discovery, however, the rest is humbling to them.
Lisa Suennen says
thanks Michael! L
Rashida Bobb says
Lisa, echoing the feedback of others, this post is both accurate and useful. I’m going to re-iterate these concepts with the start-ups I work with. Start-up teams are taught to move fast, test fast, break it, repeat. That theory is usually not best for the end-users, the patients, clinicians, and healthcare consumers.
Lisa Suennen says
Rashida, so true! Move fast and break things isn’t that great when the “things” are people! Lisa
Kyle Hart says
Nice posting. Perhaps the DTx term implies a traditional reimbursement approach, but some of the Oops barriers don’t apply to out of pocket offerings. Don’t you agree that digital market is much larger? All outcomes are not regulated, either, when medical utility is not claimed, but I understand the focus on that in this piece. Behavioral modification DTx is close to nutrition and fitness in software offerings.
Lisa Suennen says
Kyle, I think of DTx as mainly products that are prescribed by clinicians. I generally ascribe to the definition that DTx, vs. digital medicine, require regulatory approval and a prescription. But I agree with your basic premise on the broader digital health front. Thanks for writing in, Lisa