Digital health companies seeking FDA approval must weigh access versus price
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Companies in the growing digital health space increasingly are weighing Food and Drug Administration approval for their products, a strategy intended to differentiate them from competitors as they try to persuade insurers and employers to cover their offerings.
Companies like Biofourmis, Akili Interactive and Pear Therapeutics offer software systems for specific diseases. Patients need prescriptions from providers to use the products. Insurance coverage of these products and services could enable these companies to reach more patients—and get paid more for them.
As this $9 billion industry matures, payers should look beyond FDA approval when assessing the efficacy of these tools, and digital health companies should make decisions about whether to submit products to the FDA based on what’s best for their own business models, said Dr. John Torous, director of the digital psychology division at Harvard University’s Beth Israel Deaconess Medical Center.
The prescription requirement that accompanies Food and Drug Administration (FDA) approval limits patient access by restricting what kinds of medical providers can use these digital products to treat patients, Torous said. For example, Pear Therapeutics offers an app for people with opioid use disorder, but patients can only access it with a prescription from a medical practitioner who has the authority to prescribe treatments, such as a psychiatrist. But psychologists and other licensed medical professionals routinely treat patients with substance use disorders.
“As this space gets more crowded and apps that are all doing similar functions try to separate themselves, there may be a marketplace advantage to FDA approval,” said Torous, who also chairs the American Psychiatric Association’s Health IT Committee. “But it’s unclear if they have more evidence, or if they deliver more effectiveness and more value at this point.”
Some apps are backed by clinical evidence, Tourous said. Big Health developed a tool to treat insomnia and anxiety, and 30 peer-reviewed studies support its efficacy, he said. That research shows that the Big Health utility produces strong clinical outcomes at a lower cost than traditional mental health treatments, and without the use of pharmaceuticals. The San Francisco-based company has reached 12 million patients through contracts with employers like Comcast.
Big Health has not sought FDA approval even though it follows agency regulations anyway, CEO Peter Hames said. The company believes that requiring prescriptions directly contradicts the aim of digital health, which is to improve access and address provider shortages.
“I don’t understand the logic of prescribing them as necessary since it radically reduces access at a time when we should be striving to increase access to evidence-based digital solutions, rather than to just copy-and-pasting the old Big Pharma way of doing things,” Hames said.
The FDA approved the first digital therapeutics tool in 2017 when it cleared Pear Therapeutics’ opioid app. Pear Therapeutics has since entered the public markets through a $4 billion special-purpose acquisition company, or SPAC. The company plans to spend that capital on developing a suite of 14 apps that will target conditions ranging from anxiety to irritable bowel syndrome. The FDA so far has approved three Pear Therapeutic apps. Two are for opioid use disorder, one of which is used in conjunction with medication, and an app that uses cognitive behavioral therapy to soothe chronic insomnia.
Prescriptions for these products are legally necessary because the company is marketing them as treatments for illnesses, said Dr. Yuri Maricich, chief marketing officer at Pear Therapeutics. FDA reviews of digital health products are critical because patients rely on them for treatment and because those patients are sharing personal information with the app developers, he said.
But FDA approval does not necessarily signify a more secure product. Pear Therapeutics could have collected and shared opioid users’ data with third-parties, according to a recent report from the Opioid Policy Institute. That raised questions about the company’s privacy and security practices and could represent violations of federal law, the report’s authors concluded.
Pear Therapeutics has a strict post-marketing surveillance program that monitors all complaints and reports made the the FDA, said Maricich, who also said he had not read the Opioid Policy Institute report.
“For companies that don’t want to go to the FDA, what are they worried about?” Marcich said. “If they actually have the data and the data does show it’s safe and effective, and they have done the quality work to show it’s reliable, why should they be shy about taking that to FDA?”
As more payers consider covering the software, further research on efficacy is needed—particularly because their potential to enhance access to care without pharmaceuticals is so great, said David Whitrap, vice president of communications and outreach at the Institute for Clinical and Economic Review (ICER).
Pear Therapeutics’ opioid app offers a low long-term value at its current $1,200 price, ICER concluded last year. There were no randomized trial data demonstrating that the product works, Whitrap said.
FDA approval alone isn’t enough to justify insurance coverage for these apps, Whitrap said. Instead, the choice to seek the agency’s okay is more of a marketing and sales decision, he said.
“A lot of it’s dependent on how the company wants to market the product,” Whitrap said. “Is it something that they want to sell to consumers, or do they want to seek insurance reimbursement for it? Is there a price point beyond what a typical consumer is willing or able to pay? If those answers are yes, then an FDA approval’s a smart business decision for the company to pursue.”