The Digital Therapeutics Race Begins

The Digital Therapeutics Race Begins

Key Takeaways

Digital therapeutics are among healthcare’s most innovative developments, with great potential to alter how care is delivered, both amidst a pandemic and beyond. We've recently seen the emergence of true digital therapeutics (which we refer to as DTx), is something we're defining for the purpose of this article as digital treatments that produce measurable positive outcomes for patients. 

To understand the potential and likely trajectory of the industry moving forward amidst COVID-19, we believe it's most productive to focus on two crucial aspects: Who is making the treatment decision – the physician or the patient? And who is paying for it – the patient or the health insurer?

More short-term impact on healthcare is likely to come from one of two payer-supported models. One is the benefit model, in which there is no prescription by a provider, and patients, either on their own or in response to encouragement or incentives from the payer, choose to use the DTx. The second is the pharma-like model, where a healthcare provider prescribes the DTx.

But which of those models will prevail, and in what arenas? Companies following the benefit model have taken what looks like an early lead. Wall Street recently gave a resounding vote of confidence to the model, greeting the initial public offering of one diabetes-oriented company with strong support, and bringing the company to a valuation of $3.4 billion on its first day of trading. This company may prove an outlier in time, however: It uses live coaches extensively and markets to employers rather than insurers (a move that encourages continuity of care at a time when companies frequently switch health plans).

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