Digital Therapeutics Demonstrate Proven Results But an Untested Model


Software-only products providing free-standing treatment represent a key healthcare opportunity for incumbents.

Fritz Heese and Julian Offenhammer

10 min read

Editor’s Note: The following article is part of an ongoing series offering our strategic advice and expertise on what healthcare industry stakeholders should do in response to the rapidly evolving novel coronavirus (COVID-19) pandemic. With home care now the norm amidst the pandemic, the role of digital therapeutics and remote monitoring is rapidly evolving. Here’s a glimpse of what the future may hold. This is part one of a two-part series. Stay tuned in coming weeks for more.

Digital therapeutics are among healthcare’s most exciting developments, with the potential to alter how care is delivered. With patients hesitant to receive face-to-face care given COVID-19, telehealth is becoming “the new front door.” But digital therapeutics raise many questions in the meantime. Which therapeutic areas will be affected in time? What are the implications for healthcare stakeholders, including, of course, patients? Which business models are emerging? And what should incumbent healthcare companies do to prepare for what could become a genuine revolution in care?

Consumer-oriented wellness offerings have been around for a while. Yet, the past several years (as well the past several months with COVID-19) have seen the emergence of true digital therapeutics (DTx), which we define as digital treatments that produce measurable positive outcomes for patients.

DTx products come in many forms, focused on many different therapeutic areas (TAs) at various stages of the treatment lifecycle. These different kinds include software-only or a human-like dedicated device (which is often in the form of a wearable monitor). Some other kinds are free-standing, while others focus on complementing existing therapy (for example, by increasing adherence to a drug or other prescribed regimen).

Digital therapies are an exciting (if not formidable) development for all members of the healthcare ecosystem. There are four key reasons. First, pharmaceutical companies see a new competitor rising and have reacted by investing into the most promising opportunities. Second, patients obviously (hope to) have a health benefit from the new approach. At the same time, they feel increasingly closer to treatments in your pocket as opposed to what they consider black-box drugs. Third, providers are innovating and adapting to a new and necessary way of treating patients remotely amidst our global public health crisis. At the same time, they tend to fear competition, something often masked under the cloak of (partly reasonable) quality concerns. Fourth, payers are leaning towards better cost efficiency, including induced by a shift to low-cost preventive approaches. 

The Future of Free-Standing Treatments

In this article, we'll focus on the class of DTx – software-only products providing free-standing treatment – that we believe are one of the most immediately relevant solutions for payers and healthcare providers navigating the uncertainty of what care delivery many look like as the pandemic unfolds.

We have three predictions about these products:

  1. They will create massive value for patients by changing treatment paradigms in therapeutic areas in which risk factors can be modified by altering patient behaviors, especially cardio-metabolic, respiratory diseases, and mental health.
  2. Although there are currently multiple business models for DTx (including direct-to-consumer and as a benefit provided by a payer), the most successful approaches will emulate the traditional physician-focused pharma business model, with prescriptions, proven efficacy, and regulatory approval.
  3. Incumbents – manufacturers, payers, and providers alike – that successfully integrate DTx into their own business models will address a broader range of patient needs, design more holistic solutions, and cope with increasing care access issues. This will provide them with a meaningful competitive advantage.

We know behavior can have a great impact on many diseases, and especially on how diseases spread. We’re living this right now on a global scale as we work to combat the novel coronavirus. 

The Sweet Spot: Behavior Modifiable Risk Factors 

We know behavior can have a great impact on many diseases, and especially on how diseases spread. We’re living this right now on a global scale as we work to combat the novel coronavirus.

The pharmaceutical industry has made incredible advances in recent decades, developing targeted therapies for highly specific forms of cancer and rare diseases that previously had no treatments at all. This might create the impression that areas where pharma made huge advances a generation ago – including cardiovascular diseases, diabetes, respiratory diseases, and mental health – have no more room for improvement. But that is far from the case.

These diseases continue to impact an enormous number of people worldwide, with mental health issues including depression and suicide taking a particularly relentless toll. Even when treatments exist, unmet need is amplified by access issues, including geographical distance to providers, local physician shortages, and underinsured patient populations. Access is an especially significant problem in developing countries, but it is also common in rural areas of developed countries.

According to a recent study published in Diabetologia, healthy behaviors like increasing physical activity, eating a balanced diet, and drinking less alcohol, dramatically reduce the risk of developing type 2 diabetes by up to 75 percent.

Digital therapies will soon become a significant tool in this sort of behavior modification. Digital therapeutics have key advantages over traditional medicines. Here are three of many. First, they can be developed quickly – in less than three years from idea to market. This is not feasible for a biopharmaceutical product. Second, they have rapid update cycles, with immediate reaction to patient data and inputs. Third, they scale well, potentially requiring less physician time than traditional therapies, supporting direct-to-consumer models, and offering low barriers to patient interaction.

When digital therapeutics have been put to the test (and not all have), they can deliver outcomes comparable to those of prescription drugs in TAs with behavior-modifiable risk factors.

But their biggest strength of all? When digital therapeutics have been put to the test (and not all have), they can deliver outcomes comparable to those of prescription drugs in TAs with behavior-modifiable risk factors. That will benefit any patient population, but all the more so in TAs with access issues and those that incorporate non-personal interaction (for example, in the case of stigmatized diseases). Scalability is key in creating value with DTx. For example, even approaches with comparatively small efficacy can be successful as long as the population targeted is sizable enough. (This is due to the negligible marginal cost of providing digital treatments.)

We expect DTx may play the biggest role first in mental and behavioral diseases. We also expect it may play the biggest role in addressing crucial cross-TA risk factors like smoking, obesity, and hypertension, with their resulting major diseases like diabetes, cardiovascular diseases, and respiratory diseases like COPD.

But we also see opportunities in other high-need areas. Take, for example, the need for mental health and nutritional support for cancer patients, a group that suffers from the flip side of the access problem. Here, treating their primary disease takes so much time and energy that it leaves them vulnerable to other conditions – and in need of convenient, responsive, near-to-hand solutions.

These are merely a few areas DTx will take hold in time. As the novel coronavirus presses on, we will learn more and better understand how to implement winning business models that improve care access and delivery at a broad scale, while operating under unprecedented pandemic limitations.

Stay tuned for Part 2 of this series in the coming weeks here on Oliver Wyman Health where we’ll discuss designing or reshaping a successful digital therapeutics business model.

  • Fritz Heese and
  • Julian Offenhammer