Dive Brief:

• The digital therapeutics sector must overcome regulatory, economic and technical challenges to fulfill its potential in the U.S., according to University of California-San Francisco computational health science researchers. 
• Writing in the peer-reviewed PLOS Digital Health journal, Atul Butte and his coauthors identified digital therapeutics' support for rapid updates, the limitations of current reimbursement policies and cybersecurity risks among the open challenges faced by the industry. The researchers also concluded there is a "pressing need for new regulatory frameworks in this field," while noting that "these new digital health tools fall under the FDA’s software-as-a-medical-device (SaMD) category and are subject to regulatory approval, much like conventional medical devices or therapeutic drugs."
• The publication of the PLOS paper coincided with an update by DTx pioneer Pear Therapeutics, which revealed it met its commercial operating performance targets last year and reaffirmed previous public guidance for full year 2022 operational and financial performance metrics.

Dive Insight:

Pear Therapeutics is the first company to receive FDA clearance for a prescription digital therapeutic, and has staked a sizable lead compared to DTx competitors with three products authorized by the agency. Pear shed light on the level of interest in digital therapeutics last year when it raised $175 million in a merger with a special purpose acquisition company.

In making the case for the SPAC combination, Pear set out plans to grow its revenues from $4 million in 2021 to $125 million in 2023. Now, analysts have bought into the growth story with the teams at BTIG and Cowen both recently initiating coverage of the company with upbeat notes.

"Pear Therapeutics is a trailblazer in prescription digital therapeutics (PDTs), with three commercial, FDA-authorized products, expanding payor coverage, and a long product pipeline," analysts at BTIG wrote at the start of January. "We believe the appeal and promise of the PDT industry is too important to dismiss and we believe PEAR is one of the best-positioned companies in the space. PEAR has a head start on a regulatory, commercial, and operational basis."

Both sets of analysts are aware of the challenges Pear and its rivals will face, though, with Cowen citing near-term barriers to uptake as a reason it may miss its 2023 targets even if it succeeds in the long term. Pear took a positive early step toward its 2023 goal this week with the revelation that prescriptions for its digital therapeutics topped 14,000 last year, beating its target of 12,500. It would have to reach 150,000 prescriptions to meet its 2023 goal. 

If Pear is to continue growing, it will need to address the challenges set out in the PLOS paper. Some of the challenges relate to the potential for digital therapeutics to continue changing after they are cleared for commercial use. 

"Unlike previous therapeutics, DTx support rapid updates to their software to align with changes to best-practice clinical care guidelines or use adaptive algorithms that can improve over time as they encounter new data. This makes their use and predictability towards outcomes more challenging, and there is a pressing need for new regulatory frameworks in this field," the researchers wrote.

The authors note the work FDA is doing to address the situation and the agency's efforts include the 2017 launch of a Software Precertification Pilot Program that will inform the development of a Total Product Lifecycle (TPLC) regulatory framework. However, they warn that "while the TPLC helps clarify the regulatory landscape for iterative DTx development, much work remains to ensure that this model is effective at producing safe and reliable DTx."

Researchers also point out that "collecting high quality data and modeling patient outcomes are non-trivial tasks," citing uncertainty about whether medical orders for digital therapeutics are captured consistently in electronic medical record systems as another issue.

Other sections of the paper cover the lack of comprehensive reimbursement policies from either public or private payers, and technical challenges related to cybersecurity and the evaluation of the safety and efficacy of algorithms in diverse patient populations, particularly for artificial intelligence and machine learning (AI/ML)-based DTx.

"Training datasets may not always capture social determinants of health or other biases that affect the performance of healthcare algorithms," researchers wrote.

The authors concluded that it will be crucial to fix the current shortcomings if digital therapeutics are to scale successfully. They note that with almost 150 FDA-regulated DTx expecting clinical trial results by 2022 "additional formularies and infrastructure around digital health education for patients and providers will help clarify questions on how to evaluate, prescribe, and effectively engage" with these new tools.