Pharma-DTx partnerships can be a good strategy when both the pharma and the DTx companies speak the same language. While successful pilots have been demonstrated, there are challenges in scaling and sustaining innovations that generate value and return on investment (ROI) for pharma companies.
 

The recent news of Pear Therapeutics, the trail blazers of DTx, unable to secure a critical mass of formulary contracts to build a sustainable business before their cash ran out, highlights the importance of a receptive environment when developing and scaling DTx. It is crucial to leverage the lessons learned from this and other experiences to promote future success for pharma-DTx partnerships, and prevent pharma companies withdrawing from DTx commercialisation. 

In this article, we will explore the key challenges and recommendations for scaling pharma-DTx partnerships beyond the pilot phase, as recommended by experts from the HealthXL community in our recent two-part meeting series on the topic. 

Key Challenges of Growing and Scaling Pharma-DTx Partnerships:

Multiple stakeholders or ‘customers’ drive up customer acquisition costs 

Customer acquisition cost (CAC) is usually very high in healthcare, and the revenue from the DTx may not justify that upfront investment. The fragmented nature of having many customer segments to be considered (e.g. patients, payers, healthcare professionals etc.)  can drive up the cost of customer acquisition.

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Misalignment between pharma and DTx companies and partnership goals

Pharma companies have traditional strengths in developing and commercialising drugs. Digital products like DTx are different, and it's not always easy for pharma stakeholders to align on goals and value of these products. This can make for a challenging and unagile partnership with DTx or digital health companies. 

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Scaling DTx across regions is difficult due to differences in regulatory and reimbursement pathways 

Scaling DTx solutions is difficult due to the fragmented nature of regulatory and reimbursement landscapes. Establishing partnerships with healthcare providers is crucial for adoption, but cultural differences across regions can pose challenges for this and how patients interact with digital products.

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So how can pharma and DTx overcome these challenges and scale successfully?

1. Tailor your DTx solution to address the needs of the main stakeholder group.

The first step when addressing the challenge of high CACs, should be to categorise stakeholders into validators (clinicians), users (patients) and choosers (payors). By tailoring your solution to the specific stakeholder of interest, you can ensure you are demonstrating value to the target end-user, and create a loyal customer base sustainably. This will help to address the challenge of high customer acquisition costs (CAC). 

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2. Customise the DTx value proposition according to the therapeutic area. 

When building a customer base, it is also important to consider the therapeutic area. DTx in rare diseases tend to suffer from higher R&D costs and CACs than other therapeutic areas, and so pharma will be more willing to seek other methods of reducing costs. This is where DTx can come in and have great value for pharma. Therefore, DTx focused on rare diseases may benefit from more flexibility and scalable partnerships with pharma than other therapeutic areas. 

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3. Prioritise and adopt a true omnichannel approach to scale globally.

Start with a minimum viable product (MVP) that targets key stakeholder needs and develop over time based on real-world feedback. To overcome difficulties with identifying the most efficient distribution channels for DTx solutions and efficiently bringing together single point solutions, a holistic end-to-end ecosystem with a well tuned, omnichannel approach to physician engagement has a better chance of supporting customer acquisition at a lower cost. Moreover, DTx companies should highlight the value add that they can bring to the partnership by providing pharma with a more appropriate HCP network infrastructure for digital products, which can lower the CAC of HCPs evenmore. 

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4. Harness pharma’s lobby to help improve regulatory guidelines.

Regulation of digital health products is an evolving space that can be complex to navigate, and requires a different set of skills and knowledge compared to traditional drug approval pathways. In partnering with DTx companies, pharma may benefit from their digital regulatory expertise, which may not exist within traditional pharma companies. Additionally, pharma can leverage their lobbying power to  promote more open communication and transparency between stakeholders. This will help improve regulatory pathways that are more suited to digital products, and ensure standardisation across the industry.
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5. Work with key opinion leaders as advocates. 

Adoption of DTx solutions hinges on collaboration and co-creation with centralised influence through key opinion leaders (KOLs) and patient advocates. KOLs should be consulted not just in the development process of DTx, but before, during, and after it. This will promote HCP and patient adoption, by creating solutions that are effective and relevant to the end user.  

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Identifying the most influential KOLs and establishing local partnerships with healthcare providers and systems in different regions, will be important to drive adoption when scaling DTx. HCPs that serve as KOLs represent a crucial segment in this effort, as they can influence prescribers and drive adoption, while ensuring that patients view the solution as a medical product rather than a consumer product. 

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This distribution model is especially important for standalone DTx, as it allows both parties to leverage their networks and reach clinical stakeholders. Yet, selecting appropriate markets and KOLs can be challenging, given the regional differences in hospital requirements. Therefore, careful consideration of both the target markets and the KOLs are required to spearhead the push for adoption of these novel technologies, and enable appropriate scaling. 

There's still a huge potential in DTx if pharma can work with digital partners and play to their strengths
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Pharma has the potential to be an enabler of DTx reimbursement, but they must take actions to facilitate this otherwise they will miss out on downstream benefits from scaling these DTx partnerships. 

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They can combine their traditional strengths and lobbies with the new digital expertise brought by DTx companies for a complimentary partnership that will see products scale more effectively than ever before. 

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By developing a reimbursable DTx, CAC will be lower and the partnership will be more favourable for pharma. However, pharma companies can lack digital health expertise and agility, and so can struggle to assist DTx companies in the reimbursement process. However, as with improving regulatory guidelines, where pharma companies can be of value, is through using their network and lobbying power to facilitate reimbursement and promote DTx adoption. 

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The approaches that can be employed to promote adoption of DTx are different than for traditional pharmacologics; as D2C marketing is legal and can be utilised, pharma will need to adjust their approaches accordingly. As MedTech and big tech companies are increasingly showing interest in DTx, it is essential for pharma to drive successful outcomes and establish synergistic connections through these DTx partnerships. This will ensure that pharma remains relevant in the evolving DTx landscape, and opportunities to form relationships with these big tech companies are not missed.

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