Digital Therapeutics 2.0, Part Two: Connecting Users to Outcomes

Once a DTx company has determined the value its software provides, it’s time to consider regulation and commercialization

By Nate Beyor, Managing Director and Partner and Stuart John, Product Director, BCGDV; Sonia Vergis Khatri, Health Care Knowledge Expert, BCG

This is the second part in our series on Digital Therapeutics. Read part one, on connecting products to value, here.

Once a digital therapeutics (DTx) company has determined the kind of value its software as a medical device (SaMD) provides, it needs to figure out which regulatory and commercialization strategies make the most sense.

Pharma and medtech companies typically structure and conduct regulatory and commercial activities separate from each other, in different organizations. By contrast, in DTx these activities must be intertwined if value capture is to be successful. DTx developers should treat regulation as an instrument of commercialization, structuring product design and clinical development to satisfy commercial goals. This means balancing the more traditional clinical development approaches aimed at measuring and improving clinical outcomes with the agile development processes necessary to optimize user adoption, engagement and retention.

Treat physicians, key opinion leaders (KOLs), and payer CFOs as customers. Getting buy-in from KOLs is also important because they can help to ensure that DTx solutions are put on the fast track to be integrated and studied within clinical settings and workflows. These individuals are interested both in taking part in programs that evaluate the efficacy of new treatments and in publishing the results.

Granted, the effort required to engage physicians and KOLs can add time to the commercialization journey. But it can also accelerate the lengthy process involved in getting a clinical study approved by the Institutional Review Board (IRB).

In traditional drug development, the registration trial usually provides enough evidence to support reimbursement by payers. This standard has not yet been established in the digital therapeutics industry. Many DTx players have found that their regulatory strategy succeeds in meeting FDA standards but does not meet the threshold of payers. That’s because payers are also interested in seeing the costs of care reduced, particularly when digital interventions are involved, because of the low unit costs that digital makes possible.

Making the clearance vs. approval decision. Most interventional SaMD products fall into the class II or class III device designations by the FDA. A class II clearance with appropriate controls does not require evidence from a clinical trial. By contrast, a premarket approval requires sufficient valid scientific evidence to assure the safety and efficacy of the device for its intended use.

The decision as to which route is preferable should be made based on which type of evidence best supports the clinical and commercial requirements of the market. If physicians are the customer, premarket approvals may confer a significant commercial advantage.

510(K). For devices that are immediately eligible for a class II clearance, a 510(K) submission offers a clear regulated path to market. A 510(K) builds upon a predicate (a legally market device used as a point of comparison to prove safety and effectiveness), while specifying sufficient operational and functional controls to lower the risk of potential hazards. This path is generally possible without the need to provide real-world evidence.

De Novo. To speed up the lengthy process of applying for a classification from scratch, firms can request a De Novo consideration, basing their case on a device that is technically similar but with different indications for use. A De Novo process can also be used in two other instances: if it’s likely that the FDA would give the device a class III designation; or if the device does not meet the criteria for a 510(K) submission because it does not have a satisfactory predicate. In the latter case, the company would need to submit a request to the FDA to reclassify the device as a new kind with a lower risk profile, while providing additional supporting evidence of the device’s safety and effectiveness. The need for additional evidence usually translates in practice into a clinical trial whose results are included in the package to the FDA.

WellDoc took the class II-clearance route with Bluestar®, the first mobile health product to secure reimbursement as a diabetes therapy. The company pursued a 510(k) submission, arguably the first SaMD ever, claiming equivalence to predicate software applications for blood glucose and self-management. Pear Therapeutics made waves as the first company to use the de novo strategy with reSET, a prescriptive digital therapeutic (PDT) for substance use disorder (SUD). The FDA approval made reSET the first FDA-approved mobile medical app with claims to improve clinical outcomes in a disease for patients with SUD, and gave Pear Therapeutics a substantial commercial edge.

Clearly, the demands of the regulatory guidelines and the market need to inform the regulatory strategy. But in some cases, they may not be the quickest path to monetization. There are examples of DTx solutions, such as Big Health’s Sleepio, that have launched successful science-backed digital therapies directly to patients without getting device clearance. Other companies have focused on subscription models with employer-benefit plans as a way to build revenue, engagement and support from KOLs, especially for chronic conditions that impair productivity.

Structuring a Clinical Development Program

DTx developers need to consider the sources of value that the SaMD will provide when determining how to structure a clinical program. While a device theoretically can provide all four sources of value — direct monetization, new data, pass-through drug revenue, and capability building — it’s advisable to prioritize one, keeping in mind that this decision will have material implications on product design and the development roadmap. For example, a focus on direct monetization would call for a rapid development program with streamlined product design, all geared towards a clinical trial that met payer demands. But emphasizing new data could support the need for a more expansive product experience, tested through a broader set of clinical trials that explore the potential of the DTX platform to capture real-world evidence.

Randomized controlled trials (RCTs) vs. Minimum Viable Product (MVP). Biopharma companies tend to think of clinical development in terms of one or two large RCTs that measure toxicity and efficacy. The goal of RCTs is good clinical outcomes — the focus on the user experience is limited. But the RCT process is lengthy, often requiring months if not years of preparation before a product is even provided to a patient. Digital approaches have the potential to speed up these efforts through real-world evidence programs and beyond, but so far the impact has been limited.

The clinical evaluation of a SaMD typically goes through a time-consuming process. Software development has a very different mantra: the Minimum Viable Product (MVP). In the words of Eric Ries, MVP is the “version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.” Software developers build towards an MVP using an agile development process. The idea is to get the product into users’ hands as quickly as possible to optimize engagement, with cycle times taking weeks, not years. Often the first version of a product is incomplete, and perhaps only one or two features are operational.

This MVP development process actively seeks out modes of failure in order to redesign the product without them. And it terrifies people who are used to the caution of traditional drug development.

Both RCTs and MVPs are integral to DTx development. No software product will gain large-scale or long-term adoption without a compelling user experience that meets everyday needs. And without adoption and retention, clinical impact will likely be diminished. With patients as the end-user, optimizing user experience must be considered paramount to near-term traction and long-term viability. Unlike eye drops that sting, injections that bruise, or infusions that take people away from work, user experience in digital therapeutics cannot be ignored in favor of clinical outcomes. Outcomes, in fact, go up when products are more usable.

Executing a Hybrid Development Program

To combine the traditional and software development processes successfully, the following practices are key:

Start with the desired clinical outcome. Convert this specific clinical outcome to a trial endpoint. Then ideate features broadly so that they address the needs of that endpoint.

1. Test for usability. Prototype the device quickly (but not completely) and move into testing. Test for user engagement first, under the guidance of a clinician principal investigator, continuously iterating the product until it is effective for its intended use. Iterate testing pilots to balance between usability metrics and outcome measures. This will take multiple rounds with increasingly larger subject populations. Depending on the clinical trial partner and principal investigator, this activity may trigger the need for an IRB approval to ensure the methods of testing are ethical and are a manageable burden for the care team.
2. Test for clinical outcomes. After usability optimization starts to taper and an efficacy signal indicates the testing should continue, the next step is to run a true clinical trial. Of course, the product and user experience need to be kept as is throughout the course of the clinical trial to ensure scientific rigor.
3. Don’t assume that an RCT is required. There may be no good mechanism for randomization or control, and regulators or payers may not require it. Pharma companies often fall into this thinking based on experience in the drug development world.
4. Keep testing. Once the clinical testing has come to an end, don’t assume testing is over for good. Continue to iterate and optimize for version 2.0. Digital products must be treated as living solutions, not static apps.

Be sure to check out Part 1 of this series, “Digital Therapeutics: Connecting Products to Value”, co-authored by Nate Beyor and Gunnar Trommer, Managing Directors and Partners, BCGDV.

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