Is Digital Medicine Bust? Lessons from Akili
(Thursday, February 17, 2022)
The first company to get FDA approval for an app with medical claims, Akili, had miserable sales of only $377,000 over almost a year with its product. The company’s projection of $500M+ revenue per year seems outlandish in the face of that. Whether it is a financial success or a bust, Akili could become the example for most of the digital therapeutic market. Digital therapies aim to treat diseases and health conditions just like drugs and devices. These therapies seek legitimacy by getting the stamp of FDA approval and eventually insurance coverage. While FDA has approved a few digital therapies, so far, digital therapies have been largely unsuccessful to get insurance coverage primarily because their potential to treat a disease is far from established. Akili was the first to get approval for a gaming app designed to treat ADHD in children. But questions have been raised about the practicality of Akili’s clinical trial designed to test its app’s potency. The market projections for digital therapies are based on those for pharmaceutical products but unlike drugs for which there are decades of market experience in getting people to take prescribed medication, such data does not exist for digital health products. The biggest barrier is assuring that a patient will actually use an app. Then there is competition from similar apps that could saturate the market for the FDA approved app. For example, there are numerous game apps that look and feel similar to Akili’s EndevorRx app that a patient can potentially use for practically free compared to the $387 price tag for the FDA approved prescription app. Akili has called its sales last year the “pre-commercial” market research and would like us to ignore its revenue so far. The company is bullish about its prospects. It recently raised $390M at a $1Billion valuation to use for a commercial launch of EndevorRx in the second half of this year. It plans to hire about 100 sales representatives to target more than 9800 prescribers and other influencers, along with extensive media campaigns targeting moms and dads of kids with ADHD to promote its products. The company’s market strategy will rely on direct consumer adoption supported by physicians and assistive programs. The company seems to acknowledge the tough battle to win insurance coverage as it focuses on generating more data to support lower cost-of-care and positive outcomes which could eventually get it the coveted coverage. It’s a risky strategy. Whether it is smart or tone-deaf, we will find out in about 2-3 years. And others will follow it to peak or the valley.
Dr. Mukesh Kumar
Founder & CEO, FDAMap
Linkedin: Mukesh Kumar, PhD, RAC