Digital Health Company’s Bankruptcy Highlights the Challenges of DM Products
(Thursday, April 13, 2023)
The bankruptcy of Pear Therapeutics serves as a cautionary tale for the digital medicine industry. The Boston-based startup had raised over $200 million in funding, developed digital therapeutics for the treatment of substance use disorder and other mental health conditions, and got them through FDA approval. However, it was unable to yield returns it projected as it faced stiff headwinds in convincing payors to cover its therapeutics or getting patients to pay for it directly. This highlights challenges for digital medicine companies, most of whom are developing therapeutics in the mental health space. The biggest challenge was thought to be regulatory approvals but with FDA approving several digital medicine products in recent years and taking an industry-friendly stance in general for such medicine, has made FDA approval much more feasible than it was a few years ago. But such products face market competition from companies that do not pursue FDA approval; they would rather stay in the gray areas of “general health awareness” claims whereby they can be available directly to consumers at a much lower cost. Add to that the competition from traditional pharmaceuticals and therapies, and the related lack of reimbursement from payers, makes commercial success hard, as Pear Therapeutics found. Digital medicine companies must invest significant resources in marketing and education to convince patients and providers of the benefits of digital therapeutics. They also need to establish clear distinctions between them and the non-FDA-approved products to justify the cost and coverage by insurance, and acceptance by patients and practitioners. While digital health products have the potential to solve several medical issues and be an integral part of healthcare, their commercial success depends on practical aspects rather than regulatory or technical.
Dr. Mukesh Kumar
Founder & CEO, FDAMap
Linkedin: Mukesh Kumar, PhD, RAC