Digital Therapeutics

Digital Therapeutics: Utilizing Data to Manage Chronic Disease

July 07, 2020
Nick Talamantes

Digital therapeutics are the next evolution in the digital health paradigm shift – which is clearly supported by the massive amount of VC support these companies are receiving.

Chronic disease is a big problem

According to the CDC, 90% of the $3.5 trillion spent each year on healthcare in the US is for the treatment of chronic and mental health conditions.[1] Estimated annual costs to treat individuals with chronic conditions range anywhere from $5,300 to $6,032 per patient.[2] [3]For decades, most chronic diseases have relied upon a combination of behavioral modifications and pharmaceuticals to provide patient relief. The massive financial and procedural burden of chronic disease has produced the need for new solutions to monitor and manage these conditions.

Figure 1: Annual Total Spend on Chronic Conditions

The Digital Health market has gained critical mass within the last decade as the success of digital health startups are becoming more well-known. Building off these successes of digital health solutions, the promising results of digital therapeutics are generating immense interest from investors as a novel solution to address the unmet needs in chronic disease management.

What are digital therapeutics?

While digital therapeutics are categorized under the umbrella of digital health, they vary from mobile health applications (e.g. “Wellness Apps”) and wearable patient monitoring devices in that they must be prescribed by a physician. Furthermore, digital therapeutic treatments are eligible for reimbursement through a patient’s insurance. Digital therapeutics “deliver evidence-based therapeutic interventions to patients…to prevent, manage, or treat a medical disorder or disease. They are used independently or in concert with medications, devices, or other therapies to optimize patient care and health outcomes.”[4]

Why the fundraising buzz?

For a neophyte market, the fundraising happening in the digital therapeutics market has been nothing short of exceptional. Companies within this market have collectively raised over $1 billion since 2018, with several companies successfully raising over $100 million[5]. The interest and corresponding capital investment in digital therapeutics suggest that VCs see the potential for this industry.

$1.3B Raised by these 6 Startups

The potential for digital therapeutics is clear given the benefits for the stakeholders across the healthcare spectrum.

  • For patients, digital therapeutics can provide patients with personalized and flexible care for numerous chronic conditions. Patients also benefit from the increased access to clinically validated therapies for the treatment of chronic disease.
  • Providers can remotely support their patients and monitor their response to treatment without requiring an office visit (i.e. lower cost of care). For the physician, digital therapeutics are a novel tool that can be utilized to address unmet needs for their patients.
  • Payers benefit from the data generation and analysis of population health outcomes. While digital therapeutic formularies are still a few years away from being the norm, the pharmacy benefits manager Express Scripts has launched its Digital Health Formulary in December 2019.[6]
  • Finally, pharmaceutical companies are benefitting from the growing demand for digital therapeutics. Through digital therapeutics, pharmaceutical companies are improving the efficacy of their existing therapies. Pharmaceutical companies have also been a major investor in digital therapeutic startups (see Bayer, Otsuka, and Sanofi’s investments into digital therapeutic startups[7][8])

Jaunt sees are five elements that are compelling an interest in digital therapeutics.

  1. Data – as part of the digital health market, digital therapeutics collect massive amounts of patient information that can be used to personalize therapy for patients, enable data-driven care for providers, and improve the analysis of population health outcomes.
  2. Chronic Conditions – chronic conditions continue to increase in prevalence, intensifying the burden they place on the healthcare system.
  3. Clinical Evidence – there is a growing body of clinical data that demonstrate how  digital therapeutics are effective.
  4. Innovative – many chronic conditions have unmet needs, for example treatment-resistant depression and opioid addictions. These unmet needs have helped “open the door” for new therapies.
  5. Strong market growth – the estimated market value for digital therapeutics continues to grow in spite common early adoption hurdles.

Summary/Conclusion

There is a growing need for technologies and therapies to help any of the 126 million Americans who are currently living with chronic conditions. However, we at Jaunt believe the critical mass for the digital therapeutics market is still a few years out from seeing widespread stakeholder adoption. In the meantime, the strong fundraising within the digital therapeutics market clues us in on how the healthcare and medtech markets are looking to innovative solution to alleviate the burden chronic conditions place on the industry. As more data and evidence is collected, we believe more opportunities will arrive to push market competition.

For further information on the digital therapeutics market, including a comprehensive market opportunity analysis, please contact Jaunt at intelligence@jauntup.com


Jaunt LLC is a management consulting firm focused on new and emerging medical markets. We help executives and investors align the right product to the right market at the right time. This is done using market intelligence and commercialization expertise to develop and execute confident investment and go-to-market strategies. Located in Mesa, AZ, Jaunt services clients across the country. For additional information visit JauntUp.com.

Recommended additional reading:

When It Comes To Digital Therapeutics, It’s Time To Think Bigger
https://www.alleywatch.com/2019/08/when-it-comes-to-digital-therapeutics-its-time-to-think-bigger/

Monetizing Digital Therapeutics
https://www.simon-kucher.com/en-us/node/2754

Digital Therapeutics Emerging as a Future Key Area of Healthcare
https://www.triple-tree.com/strategic-insights/2019/august/digital-therapeutics-emerging-as-a-future-key-area


[1] https://www.cdc.gov/chronicdisease/about/costs/index.htm

[2] https://www.chronicdisease.org/page/whyweneedph2imphc

[3] https://www.fightchronicdisease.org/sites/default/files/docs/GrowingCrisisofChronicDiseaseintheUSfactsheet_81009.pdf

[4] https://www.pchalliance.org/news/what-digital-therapeutics-and-what-its-potential-population-health

[5] https://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/the-promise-of-digital-therapeutics

[6] https://www.express-scripts.com/corporate/articles/digital-health-formulary-announced

[7] https://www.businessinsider.com/pharma-edging-into-digital-therapeutics-2019-9

[8] https://www.dcatvci.org/pharma-news/5868-otsuka-click-therapeutics-partner-in-302-million-deal-for-digital-medicine

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