Digital Therapeutics Alliance Summit 2024: 5 Takeaways for DTx Innovators
The Digital Therapeutics Alliance Summit 2024, held in Washington, D.C., brought together over 500 industry leaders (including NLG’s own Carrie Nixon and Michael Schellhous), innovators, and key stakeholders to discuss the current state and future of digital therapeutics (DTx).
This year’s Summit emphasized the resilience of the DTx community in the midst of a challenging funding period and uncertainty around reimbursement pathways. During the Summit, DTx founders and investors expressed optimism that the next 12-36 months will bring tremendous opportunities for the industry. Carrie and Michael share their own key takeaways below.
1. DTx as a Pathway to Patient-Centered Care
Though DTx is still largely in its “promise and potential” phase — especially when it comes to new innovations in mental health care — DTx technology offers a key opportunity for a more personalized, patient-centered approach to care.
One of the most compelling aspects of DTx is its potential to transform the patient-provider relationship. Research indicates that patient outcomes significantly improve when patients feel like they have an important role in their healthcare journeys.
DTx can engage patients in their care and can be customized to meet individual needs. This patient-centric approach ensures that patients feel heard and valued, which is essential for treatment adherence.
It is important to place health equity considerations at the forefront of DTx development conversations. Though DTx can successfully drive patient behavior, it can hinder it, too, if access to care is not considered or technologies aren’t accounting for the social determinants that impact patient health.
2. Digital Health and DTx Collaborations Will Shape the Future of DTx
The future of digital health innovation lies in the collaborative efforts between Digital Health and DTx companies. But this involves more than just a technological alignment.
Companies that develop synergistic approaches—leveraging digital health infrastructure to support the deployment and scalability of DTx solutions—tend to achieve better outcomes and sustainable growth. For instance, leveraging data from Digital Health platforms can increase the personalized delivery of DTx interventions, thereby improving patient adherence and clinical outcomes.
The alternative is a siloed approach that we know is likely to result in fragmented patient experiences, inefficient resource allocation, and missed opportunities for innovation.
Successful integration requires strategic considerations around regulatory compliance, interoperability standards, data privacy, and evidence-based validation. Companies that proactively address these aspects create a foundation for sustainable growth and competitive advantage in the digital health ecosystem.
3. Changes in the DTx Investor Landscape
The investor landscape of Digital Therapeutics (DTx) is changing rapidly, a challenge that founders and stakeholders must navigate strategically. Here are the most important evolutions to keep an eye on:
Funding Dynamics and Strategy—Recent trends indicate a rise in "unnamed rounds," often signaling down rounds with diminished valuations—a less than ideal scenario for founders. Additionally, smaller rounds and less favorable terms pose challenges for DTx companies. Founders are advised to diversify their funding strategy beyond traditional venture capital. Non-dilutive funding sources like NIH grants can provide crucial support while preserving equity and control, especially during early-stage development.
Diversifying Revenue Pathways—The absence of a standardized business model and straightforward reimbursement pathway remains a concern in the DTx sector. Instead of limiting themselves under a prescription-based model, founders should explore alternative revenue streams. Collaborative ventures with school systems, employers, payers, and health systems are good opportunities to consider.
Strategic Mergers and Acquisitions—Mergers and acquisitions (M&As) may offer strategic advantages to both Digital Health and DTx companies, providing access to complementary sales channels, expanding product offerings and customer base, and accelerating market penetration.
Educating Healthcare Providers—Education that highlighting the benefits of non-pharmaceutical treatment options for patients is essential. Educated clinicians are more likely to incorporate DTx solutions into patient care plans, fostering broader acceptance and utilization.
Investor Perspective and Revenue Models—Investor interest in DTx products is on the rise, despite challenges in establishing consistent revenue models. Demonstrating a clear path to revenue and scalability is pivotal for securing investment in the competitive healthcare technology landscape.
4. The Importance of FDA Engagement
The FDA, particularly through its Center for Digital Health Excellence, plays a pivotal role in supporting DTx developers every step of the way.
FDA staff at the Center for Digital Health Excellence aren’t just regulators—they want to collaborate with innovators. Their goal is to facilitate the regulatory process, provide guidance, and serve as thought partners to help DTx companies navigate the complexities of compliance.
One frequently overlooked or misunderstood pathway for DTx products is the FDA's “enforcement discretion” framework, allowing DTx applications that pose low risk to patient safety enter the market prior to undergoing a 510(k) or de novo approval process. For early-stage and pre-revenue companies, this pathway is invaluable, enabling them to start generating revenue, gather real-world evidence, and refine their products based on user feedback—all while laying the groundwork for future FDA submissions.
Engaging early with FDA regulators can streamline the regulatory journey, allowing companies to navigate complexities effectively while bringing transformative digital therapies to patients in need. For more insights into navigating FDA regulations for DTx products, check out our article here.
Embracing Value-Based Care in DTx
As we navigate the evolving DTx landscape, it's clear that a paradigm shift in reimbursement strategies is essential for sustainable growth and accessibility. While DTx products differ from traditional medicines, aligning reimbursement frameworks solely with pharmaceuticals may not be the best path forward.
Value-based care incentivizes outcomes and patient-centric care, ensuring reimbursement based on the actual value delivered by DTx solutions. This approach not only encourages innovation but also ensures that patients receive effective, measurable benefits from digital therapies.
Want to learn how Nixon Law Group can help your organization navigate the complexities of value-based care and DTx? Whether you're a DTx developer, healthcare provider, or investor, click here to learn more about our tailored legal solutions for your organization.