This blog is the output from HealthXLs’ meeting series that explored DTx in the Neurology space. Collective inputs from:
Richie Bavasso (CEO, nQ Medical), Ciara Clancy (CEO, Beats Medical), Nikos Green (Digital Health Ventures, RoX Health), Beth Wolff (CCO, Brain+), Chris Wasden (Head of Pharma Specialty Solutions & Corporate Strategy, Happify Health), Laura Cohen (Director, Global Partnerships and Innovation, Merck), Mansa Shroff (Chief of Staff, Head of Partnerships, WKD.SMRT (MIT)), Louis Payet (Head of Mergers and Acquisitions, Zuellig Pharma), Kris Karson (Co-founder & CEO, Phebe Health), Vasyl Pyrozhyk (VP - Healthcare, SMBC), Abigail Pohl (Associate, Merck Global Health Innovation Fund), Matt Norton (VP of Marketing & Commercial Development, S3 Connected Health), John Gordon (Digital Innovation Lab Lead - International Markets, Pfizer), Celine Ulmann (Head of R&D Digital, Almirall), Veena Somareddy (Co-Founder, Neuro Rehab VR), Tai Chung (Director of Partnerships, Medullan), Judit Faus (Community Manager, HealthXL), Tessy Huss (Senior Digital Health Consultant, HealthXL), Chandana Fitzgerald (CMO, HealthXL).
*All opinions are participants’ own and do not reflect the stance of their respective employers.
The combined neurology and neuropsychiatry categories encompass the majority of DTx products announced during 2020 as well as in nearly every year prior. DTx in neurology have many applications - from being used in pediatrics (ADHD) to geriatrics (Alzheimer's, dementia and so forth) and across use cases such as cognition, stroke rehabilitation, motor symptom and tremor control, pain management, to list but a few. In this HealthXL meeting series we explored current DTx solutions in neurology, unmet needs and the different commercial and adoption strategies for the companies operating in the area. Keep reading to find out the key insights from the meeting series.
Status Quo: Solutions, Unmet Needs and Challenges
A number of neurological conditions are complex diseases with no disease modifying therapies. Neurological disease management is one of the disease areas that requires a medical approach that goes beyond the drug; for example, stroke is managed by a multidisciplinary team that includes rehabilitation post the acute stroke and initial thrombolysis stage. All this makes neurology an area more amenable to add on solutions to standardized care and practices. It is therefore no coincidence that the majority of DTx products announced thus far have been in the area of neurology.
What are the most explored use cases so far? The group agreed that the top areas are: pain, Alzheimer’s Disease and cognition, Parkinson’s Disease, neurorehabilitation and Multiple Sclerosis. From these, pain was unanimously voted as the most opportune area for large-scale intervention due to the ability to address larger population problems, but also because of the increasing opioid abuse, which has raised high profile concerns (a good example of DTx in this area is Pear Therapeutics with reSET & reSET-O). Another area ripe for intervention in neurology is the improvement of self management and the communication between patient-physician and the treating team more broadly.
Commercialisation models for DTx companies in neurology
There is no true one-route to market and the right approach seems to combine more than one path. We explored four distinct routes to market in the meeting:
- Pharma Partnerships
DTx - Pharma is seen as the most successful route to market for DTx companies in the neurology space. While pharma knows how to market and commercialise treatments, clinical care knowledge can be limited – and this is where DTx companies can play an important role. There is a real need for new tools, like DTx products, that can help the clinical team, supporting them and improving patient care and self management of often chronic long term disorders.
Pharma - DTx partnerships are more likely to succeed when the pharma company is already established in the therapeutic area the DTx product is focused on. Otherwise, the pharma company might be hesitant to engage and also might not have a convincing offer for their DTx partner in terms of value add.
A story to keep in the back of our minds is the DTx company Dthera Sciences being sunk by multiple drug failures among potential pharma partners and CMS reimbursement limitations. Companies should not rest the success of their organizations on the backs of others. While pharma is a good source of funds, one must keep pace with them and adapt to their timetable. In this case, it seems that Dthera put too much faith in a) pharma understanding of what to do with their technology and b) pharma funding their go-to-market strategy.
Companion DTx or Standalone DTx?: Currently, pharma companies still see more value in companion DTx rather than standalone DTx. The shift from the former to the latter is moderate due to the infancy of DTx business models and healthcare systems adoption. The pandemic has fueled this shift in lessening the rigidity towards digital innovation.
In terms of what pharma companies look for in return for these partnerships, while revenue share models seem to be an attractive option for them, this is not their first objective in the short term. At this moment, pharma sees more value in getting insights generated by the patient data collected by DTx.
- Going D2C
Going D2C is a great option at the beginning as it gives you quick revenues and generates advocacy across patients.
In D2C models, patients pay out of pocket for the product, so they are more demanding, which leads the company to continuously improve the product to meet consumers expectations. Hence, D2C subscription products often have a strong focus on adherence, which can provide valuable lessons for DTx long term engagement.
However, D2C can be prohibitive in terms of cost particularly in markets like Europe where patients are not used to paying out of pocket for their healthcare. Clinician prescription and incentivisation for the same is key, something which is difficult to unlock in the D2C industry. In payment models where prescription is needed, D2C can be used to raise awareness and education amongst patients, and they may even proactively advocate and ask the clinician for the tool.
- Payers partnerships
Although it might become a good option in the future, right now, the industry still does not know what is the right way to get reimbursed by payers.
In the US, the biggest barrier at the moment is that the Center for Medicaid and Medicare Services has yet to define the benefit category for SaMD. Even though CMS does not dictate what insurers will and will not reimburse for, it sets the standard because it is the largest payer in the US (more information on CMS finalized rule called the ‘Medicare Coverage of Innovative Technology’ here). For now, it seems that the realistic reimbursement pathway is through medical benefit, and this is where a lot of DTx companies are looking. However, digital health formularies are not nailed down yet and most DTx get listed in tier III or IV (i.e tagged as nice to have), so what are the current benefits of being in these formularies?
In Europe, the payer landscape is varied in maturity, including countries that have developed reimbursement pathways for acute and chronic care like Germany (DiGa, Digital Healthcare Act) and the UK (NHS published a guidance for digital therapies on how to gain acceptance by the NHS), whereas markets like Sweden and Denmark have no clear pathways.
In the future, when there are more DTx products in the market, payers will probably choose 1 or 2 per therapeutic area, there will not be room for more. Hence, it will be critical for DTx companies in the space to find a way to stand out from the crowd.
- Employers partnerships
We have seen a lot of success stories of digital health companies partnering with employers in the US market. In the neurology space, most of the conditions might not fit in this route to market though (e.g Alzheimer’s Disease, Parkinson’s Disease, etc). However, there are some that are getting traction in the employers path (e.g musculoskeletal pain management and behavioural health).
The decision-making process in employers is less complex, making it an easier route to market for DTx companies. The downside is that it is not a strong route in the long term as they might remove the product in a year, when they review their services portfolio. This should however drive DTx manufacturers to deliver long lasting value to these providers
Even though every route to market has its particularities, there are 2 matters that are key to succeeding in any partnership:
This is critical in any route to market. Due to the complexity of the conditions and treatment, neurology tends to need more personalized solutions compared to other therapeutic areas, which leads to more costly products.
Regardless of the condition, the whole industry needs to be careful in pricing. The right price for these products is critical so that these are not seen as ‘free candy’.
To make it a long term success, it is important to work on increasing the adoption by physicians and patients. If patients and clinicians are not onboard, the partnership will never take off. The main challenge in the adoption of DTx for neurological diseases seems to be physician education and integrating DTx into their workflow.
There are certain digital solutions that might get physicians engaged quicker. Digitized paper assessments are likely to resonate better with physicians and will therefore see greater adoption. Therefore, digitized paper assessments are a viable first step in digitizing treatment/monitoring in neurology that will create a pathway for more complex and sophisticated interventions like DTx.
However, even when you get physicians to prescribe the digital product, the patient might be the one who pays, hence there is no guarantee of patient adoption. It is also important to take into account the fact that DTx are over reliant on patient behavioral change, which is very hard to accomplish, especially over the long haul. Therefore, it seems logical to think that the rapid uptake for DTx will only occur when using it is as simple and easy as ‘popping a pill’.
Factors that determine the best routes to market for a DTx product in neurology: (sorted from most important to least):
- Disease being addressed (e.g cognition, stroke rehab, pain management, Multiple Sclerosis, motor symptom and tremor control, etc) and the unmet need for adjunct therapy.
- Objective of the product (i.e screening, early diagnosis, treatment, etc).
- Geography: For instance, in Asia, a D2C approach is a good option since most patients are used to paying out of pocket.
- Organizational structure of the company (e.g internal talent)
- Patient and clinician appetite for a solution.
The below can serve as a checklist for those who want to assess the potential of a DTx solution:
- What is the unmet medical need?
- What is the market opportunity?
- How big is the market?
- What is the DTx level of confidence that it will resolve the unmet need?
- What data (R&D) is required to convince clinicians, regulators, payors, users that a product meets unmet needs?
The future of DTx in neurology
The future success of DTx is likely to be through partnerships, with key stakeholders bringing value to the table:
- Pharma partnerships can bring value in terms of market access and established sales channels and DTx companies can bring the technical skills and expertise in terms of technology deployment where pharma has struggled in the past.
- Successful partnerships are likely to be where pharma has an existing and established relationship with drug delivery in that specific disease space and DTx has an offer to meet the clear unmet need of the current drug offering on the market i.e. additional clinical outcome and enhanced user experience.
- Payers will form an integral role in the future adoption.
- DTx companies need to think like D2C offerings in terms of the perceptive value they deliver to the patient and the clinicians that use them.
- Keep in mind that the big thing to remember is that even though a partnership aligns two companies around the same thing, it does not mean the companies will ever choose the partnership over themselves. Pharma, like all firms, thinks about itself first and foremost, hence why it is dangerous to put all your eggs in one basket as a startup.