The trying circumstances of the COVID-19 pandemic underscored the demand for mental healthcare, and a relaxed regulatory environment inspired entrepreneurs and investors to dive into virtual behavioral health services. Now, circumstances have changed, forcing these young companies to make difficult pivots to new models.
The federal public health emergency declaration is set to expire May 11, and along with it many of the regulatory flexibilities that enabled companies such as Bicycle Health, Done, Ophelia Health and ReKlame Health to gain business. In addition, law enforcement agencies took notice of rising prescriptions for controlled substances—which are popular as drugs of abuse and frequently diverted to the illegal market—and started cracking down on telehealth providers. Cerebral and Done, for example, have been under federal investigation since last year.
The pandemic was not going to last forever, but at least some in the digital behavioral health sector believed the favorable regulatory environment would.
“The industry almost assumed that these flexibilities would be permanent after the [public health emergency] ends,” said Ankit Gupta, founder and CEO of Bicycle Health, which offers remote prescriptions for buprenorphine (also known as Belbuca, Buprenex, Butrans, Probuphine, Sublocade, Suboxone and Subutex) to treat opioid use disorder.
Digital mental health providers that sprang up or expanded during the public health crisis filled a need for patients unable or unwilling to make in-person visits. Research and digital health venture firm Rock Health estimates that digital mental health companies have attracted nearly $60 billion from investors since 2020.
Authorities helped this trend along by waiving or easing regulations governing such as patient privacy and prescriptions for controlled substances including Adderall (also known as amphetamine/dextroamphetamine salts) for attention deficit hyperactivity disorder and the anti-anxiety drug Xanax (also knowns as alprazolam).
Now, the federal government is poised to restrict online prescribing, which means digital-first companies must offer in-person services or risk going out of business. These companies, which have limited funds and leaders with little to no experience managing in-person healthcare, will have to adapt. That could prove difficult for some.
“We can't build brick and mortar locations. We're in too many places, too many counties. We don't have the money to do that,” said Zack Gray, co-founder and CEO of Ophelia Health, which specializes in prescribing opioid use disorder medications.
The executives who run these companies argue that stricter regulation would be bad for patients, as well as for their businesses.
“Discontinuing a patient's medication is extraordinarily dangerous because they're going to experience cravings and withdrawal, they'll be tempted to go to the black market, and they're at high risk of overdose and death,” Gray said.