As it moves past Pear Therapeutics' downfall, the digital therapeutics industry is looking for a path to regulatory reimbursement and focusing on non-prescription products.
Pear Therapeutics, which had been one of the most notable companies in the digital therapeutics industry, declared bankruptcy in April and subsequently sold off its assets in May. Michael Pace, founder and CEO of PalmHealthco, which advises digital therapeutics companies, is bullish about the potential in digital therapeutics but said more work is needed before the sector is fully defined.
“We still have a reasonable amount of headwinds the industry needs to move through,” Pace said.
Digital therapeutics advocates are looking to avoid a repeat of the Pear situation by focusing on reimbursement pathways. The Digital Therapeutics Alliance, an industry group, spent last week on Capital Hill lobbying for the Prescription for Digital Therapeutics Act, introduced in the Senate in March by Sen. Jeanne Shaheen (D-N.H.). The proposed legislation would provide for Medicare and Medicaid coverage of prescription digital therapeutics and establish a payment methodology through the Centers for Medicare and Medicaid Services.
Megan Coder, chief policy officer and founder of the Digital Therapeutics Alliance, said the alliance is making efforts to provide a foundation for the industry to build upon. Documents from the alliance include how it defines the sector, which policies the industry should support and how companies can implement and scale products. The efforts will help the digital therapeutics industry advocate for reimbursement pathways in Congress, she said.
"The lack of a Medicare-Medicaid benefit category for digital therapeutics is stopping patients from having access to these therapies. That's one of the reasons why policy is so important to us and the industry in general," Coder said.
With a lack of payer reimbursement, companies are taking alternate approaches to growth. Akili Interactive, a company that developed a Food and Drug Administration-cleared video game treatment for children with attention deficit hyperactivity disorder, is attempting to widen its scope. Last week, the company introduced EndeavorOTC, a direct-to-consumer digital therapy for adults 18 and over.
Akili will use the FDA's enforcement discretion for psychiatric disorders to bring the therapy to market. The enforcement discretion was implemented in April 2020 as part of COVID-19 reimbursement flexibilities and expanded the availability of digital health therapeutic devices for psychiatric disorders.
Akili is determining the best market fit for its new therapy after the enforcement discretion pathway expires in November. With the adult therapeutic EndeavorOTC, the company will study how adults use it in real time. This gives the company an opportunity to adjust its approach.
“The outcomes for people with ADHD haven’t changed much,” said Dr. Scott Kollins, Akili’s chief medical officer. “The ability to access those treatments needs to improve but also just having additional options that are out there is important.”
EndeavorOTC is largely the same as its EndeavorRx therapy, which was approved for use in patients ages 8 to 12 with a prescription by the FDA in June 2020. But the pediatric product includes a caregiver companion app to track cognitive metrics through a behavioral health assessment, perceived effort and other areas. This is not currently available in the over-the-counter product.
Rick Anderson, president of digital therapeutics company DarioHealth, said a direct-to-consumer approach can be successful for companies operating in nascent spaces like digital therapeutics.
“You can get to your target audience much quicker,” Anderson said. “They can make their own decisions, so you don't have as many hurdles in the way.”
It remains uncertain how successfully Akili can market its product to adults. Experts said the move could give the company valuable insight into a different market.
“It allows an organization to get real-life experience with the product in the market,” Pace said. “Imagine releasing drugs that have never been authorized by the FDA and you get to have people take them not even in a clinical trial setting, [but] in a real-world setting.”
The announcement comes at an important time for the company. Akili had one of the only initial public offerings in digital health last year. The company’s shares debuted at $36.06 per share in August and is currently trading at around $1.30 per share. In January, it laid off 30% of its workforce, according to a Securities and Exchange Commission filing. Despite these challenges, executives are still optimistic about the company's future.
"Once we are able to get traction and build momentum commercially with the products that we have for ADHD that will then allow us to start to think about how we how we extended to other indications,” Kollins said.