Your Prescription Is Ready for Download
A close up of a doctor pointing at a smart phone, heralding the new era of prescription digital therapeutics.
You may be familiar with Moore's Law, the prediction made by Intel co-founder Gordon Moore that computer chips would get faster and cheaper with each passing year. That's been borne out by the explosive growth of the tech industry, but you may not know that there is an inverse Moore's Law for drug development.
What if there were a way to apply the fast-moving, low-cost techniques of software development to drug discovery?
Eroom's Law—yes that's "Moore" spelled backward—is the observation that drug discovery has become slower and more expensive over time, despite technological improvements. And just like Moore's Law, it's been borne out by experience—from the 1950s to today, the number of drugs that can be developed per billion dollars in spending has steadily decreased, contributing to the continued growth of health care costs.
But what if there were a way to apply the fast-moving, low-cost techniques of software development to drug discovery? That's what a group of startups in the new field of digital therapeutics are promising. They develop apps that are used—either on their own or in conjunction with conventional drugs—to treat chronic disorders like addiction, diabetes and mental health that have so far resisted a pharmaceutical approach. Unlike the thousands of wellness and health apps that can be downloaded to your phone, digital therapeutics are developed and are meant to be used like drugs, complete with clinical trials, FDA approval and doctor prescriptions.
The field is hot—in 2017 global investment in digital therapeutics jumped to $11.5 billion, a fivefold increase from 2012, and major pharma companies like Novartis are developing their own digital products or partnering with startups. One such startup is the bicoastal Pear Therapeutics. Last month, Pear's reSET-O product became the first digital therapeutic to be approved for use by the millions of Americans who struggle with opioid use disorder, and the company has other products addressing addiction and mental illness in the pipeline.
I spoke with Dr. Corey McCann, Pear's CEO, about the company's efforts to meld software and medicine, designing clinical trials for an entirely new kind of treatment, and the future of digital therapeutics.
The interview has been edited and condensed for clarity and length.
"We're looking at conditions that currently can't be cured with drugs."
BRYAN WALSH: What makes a digital therapeutic different than a wellness app?
COREY MCCANN: What we do is develop therapeutics that are designed to be used under the auspices of a physician, just as a drug developed under good manufacturing would be. We do clinical studies for both safety and efficacy, and then they go through the development process you'd expect for a drug. We look at the commercial side, at the role of doctors. Everything we do is what would be done with a traditional medical product. It's a piece of software developed like a drug.
WALSH: What kind of conditions are you first aiming to treat with digital therapeutics?
MCCANN: We're looking at conditions that currently can't be cured with drugs. A good example is our reSET product, which is designed to treat addiction to alcohol, cannabis, stimulants, cocaine. There really aren't pharmaceutical products that are approved to treat people addicted to these substances. What we're doing is functional therapy, the standard of care for addiction treatment, but delivered via software. But we can also work with medication—our reSET-O product is a great example. It's for patients struggling with opioid addiction, and it's delivered in concert with the drug buprenorphine.
WALSH: Walk me through what the patient experience would be like for someone on a digital therapeutic like reSET.
MCCANN: Imagine you're a patient who has been diagnosed with cocaine addiction by a doctor. You would then receive a prescription for reSET during the same office visit. Instead of a pharmacy, the script is sent to the reSET Connect Patient Service Center, where you are onboarded and given an access code that is used to unlock the product after downloading it onto your device. The product has 60 different modules—each one requiring about a 10 to 15-minute interaction—all derived from a form of cognitive behavioral therapy called community reinforcement approach. The treatment takes place over 90 days.
"The patients receiving the digital therapeutic were more than twice as likely to remain abstinent as those receiving standard care."
Patients report their substance abuse, cravings and triggers, and they are also tested on core proficiencies through the therapy. Physicians have access to all of their data, which helps facilitate their one-on-one meetings. We know from regular urine tests how effective the treatment is.
WALSH: What kind of data did you find when you did clinical studies on reSET?
MCCANN: We had 399 patients in 10 centers taking part in a randomized clinical trial run by the National Institute on Drug Abuse. Every patient enrolled in the study had an active substance abuse disorder. The study was randomized so that patients either received the best current standard of care, which is three hours a week of face-to-face therapy, or they received the digital therapeutic. The primary endpoint was abstinence in weeks 9 to 12—if the patient had a single dirty urine screen in the last month, they counted as a failure.
In the end, the patients receiving the digital therapeutic were more than twice as likely to remain abstinent as those receiving standard care—40 percent versus 17 percent. Those receiving reSET were also much more likely to remain in treatment through the entire trial.
WALSH: Why start by focusing your first digital therapeutics on addiction?
MCCANN: We have tried to build a company that is poised to make a difference in medicine. If you look at addiction, there is little to nothing in the drug pipeline to address this. More than 30 million people in the U.S. suffer from addiction disorders, and not only is efficacy a concern, but so is access. Many patients aren't able to receive anything like the kind of face-to-face therapy our control group received. So we think digital therapeutics can make a difference there as well.
WALSH: reSET was the first digital therapeutic approved by the FDA to treat a specific disorder. What has the approval process been like?
MCCANN: It's been a learning process for all involved, including the FDA. Our philosophy is to work within the clinical trials structure, which has specific disease targets and endpoints, and develop quality software, and bring those two strands together to generate digital therapeutics. We now have two products that have been FDA-approved, and four more in development. The FDA is appropriately cautious about all of this, balancing the tradeoff between patient risk and medical value. As we see it, our company is half tech and half biotech, and we follow regulatory trials that are as rigorous as they would be with any drug company.
"This is a new space, but when you look back in 10 years there will be an entire industry of prescription digital therapeutics."
WALSH: How do you balance those two halves, the tech side and the biology side? Tech companies are known for iterating rapidly and cheaply, while pharma companies develop drugs slowly and expensively.
MCCANN: This is a new space, but when you look back in 10 years there will be an entire industry of prescription digital therapeutics. Right now for us we're combining the rigor of the pharmaceutical model with the speed and agility of a tech company. Our product takes longer to develop than an unverified health app, but less time and with less clinical risk than a new molecular entity. This is still a work in progress and not a day goes by where we don't notice the difference between those disciplines.
WALSH: Who's going to pay for these treatments? Insurers are traditionally slow to accept new innovations in the therapeutic space.
MCCANN: This is just like any drug launch. We need to show medical quality and value, and we need to get clinician demand. We want to focus on demonstrating as many scripts as we can in 2019. And we know we'll need to be persistent—we live in a world where payers will say no to anything three times before they say yes. Demonstrating value is how you get there.
WALSH: Is part of that value the possibility that digital therapeutics could be much cheaper than paying someone for multiple face-to-face therapy sessions?
MCCANN: I believe the cost model is very compelling here, especially when you can treat diseases that were not treatable before. That is something that creates medical value. Then you have the data aspect, which makes our product fundamentally different from a drug. We know everything about every patient that uses our product. We know engagement, we can push patient self-reports to clinicians. We can measure efficiency out in the real world, not just in a measured clinical trial. That is the holy grail in the pharma world—to understand compliance in practice.
WALSH: What's the future of digital therapeutics?
MCCANN: In 10 years, what we think of as digital medicine will just be medicine. This is something that will absolutely become standard of care. We are working on education to help partners and payers figure out where go from here, and to incorporate digital therapeutics into standard care. It will start in 2019 and 2020 with addiction medicine, and then in three to five years you'll see treatments designed to address disorders of the brain. And then past the decade horizon you'll see plenty of products that aim at every facet of medicine.
Breakthrough therapies are breaking patients' banks. Key changes could improve access, experts say.
Single-treatment therapies are revolutionizing medicine. But insurers and patients wonder whether they can afford treatment and, if they can, whether the high costs are worthwhile.
CSL Behring’s new gene therapy for hemophilia, Hemgenix, costs $3.5 million for one treatment, but helps the body create substances that allow blood to clot. It appears to be a cure, eliminating the need for other treatments for many years at least.
Likewise, Novartis’s Kymriah mobilizes the body’s immune system to fight B-cell lymphoma, but at a cost $475,000. For patients who respond, it seems to offer years of life without the cancer progressing.
These single-treatment therapies are at the forefront of a new, bold era of medicine. Unfortunately, they also come with new, bold prices that leave insurers and patients wondering whether they can afford treatment and, if they can, whether the high costs are worthwhile.
“Most pharmaceutical leaders are there to improve and save people’s lives,” says Jeremy Levin, chairman and CEO of Ovid Therapeutics, and immediate past chairman of the Biotechnology Innovation Organization. If the therapeutics they develop are too expensive for payers to authorize, patients aren’t helped.
“The right to receive care and the right of pharmaceuticals developers to profit should never be at odds,” Levin stresses. And yet, sometimes they are.
Leigh Turner, executive director of the bioethics program, University of California, Irvine, notes this same tension between drug developers that are “seeking to maximize profits by charging as much as the market will bear for cell and gene therapy products and other medical interventions, and payers trying to control costs while also attempting to provide access to medical products with promising safety and efficacy profiles.”
Why Payers Balk
Health insurers can become skittish around extremely high prices, yet these therapies often accompany significant overall savings. For perspective, the estimated annual treatment cost for hemophilia exceeds $300,000. With Hemgenix, payers would break even after about 12 years.
But, in 12 years, will the patient still have that insurer? Therein lies the rub. U.S. payers, are used to a “pay-as-you-go” model, in which the lifetime costs of therapies typically are shared by multiple payers over many years, as patients change jobs. Single treatment therapeutics eliminate that cost-sharing ability.
"As long as formularies are based on profits to middlemen…Americans’ healthcare costs will continue to skyrocket,” says Patricia Goldsmith, the CEO of CancerCare.
“There is a phenomenally complex, bureaucratic reimbursement system that has grown, layer upon layer, during several decades,” Levin says. As medicine has innovated, payment systems haven’t kept up.
Therefore, biopharma companies begin working with insurance companies and their pharmacy benefit managers (PBMs), which act on an insurer’s behalf to decide which drugs to cover and by how much, early in the drug approval process. Their goal is to make sophisticated new drugs available while still earning a return on their investment.
New Payment Models
Pay-for-performance is one increasingly popular strategy, Turner says. “These models typically link payments to evidence generation and clinically significant outcomes.”
A biotech company called bluebird bio, for example, offers value-based pricing for Zynteglo, a $2.8 million possible cure for the rare blood disorder known as beta thalassaemia. It generally eliminates patients’ need for blood transfusions. The company is so sure it works that it will refund 80 percent of the cost of the therapy if patients need blood transfusions related to that condition within five years of being treated with Zynteglo.
In his February 2023 State of the Union speech, President Biden proposed three pilot programs to reduce drug costs. One of them, the Cell and Gene Therapy Access Model calls on the federal Centers for Medicare & Medicaid Services to establish outcomes-based agreements with manufacturers for certain cell and gene therapies.
A mortgage-style payment system is another, albeit rare, approach. Amortized payments spread the cost of treatments over decades, and let people change employers without losing their healthcare benefits.
Only about 14 percent of all drugs that enter clinical trials are approved by the FDA. Pharma companies, therefore, have an exigent need to earn a profit.
The new payment models that are being discussed aren’t solutions to high prices, says Bill Kramer, senior advisor for health policy at Purchaser Business Group on Health (PBGH), a nonprofit that seeks to lower health care costs. He points out that innovative pricing models, although well-intended, may distract from the real problem of high prices. They are attempts to “soften the blow. The best thing would be to charge a reasonable price to begin with,” he says.
Instead, he proposes making better use of research on cost and clinical effectiveness. The Institute for Clinical and Economic Review (ICER) conducts such research in the U.S., determining whether the benefits of specific drugs justify their proposed prices. ICER is an independent non-profit research institute. Its reports typically assess the degrees of improvement new therapies offer and suggest prices that would reflect that. “Publicizing that data is very important,” Kramer says. “Their results aren’t used to the extent they could and should be.” Pharmaceutical companies tend to price their therapies higher than ICER’s recommendations.
Drug Development Costs Soar
Drug developers have long pointed to the onerous costs of drug development as a reason for high prices.
A 2020 study found the average cost to bring a drug to market exceeded $1.1 billion, while other studies have estimated overall costs as high as $2.6 billion. The development timeframe is about 10 years. That’s because modern therapeutics target precise mechanisms to create better outcomes, but also have high failure rates. Only about 14 percent of all drugs that enter clinical trials are approved by the FDA. Pharma companies, therefore, have an exigent need to earn a profit.
Skewed Incentives Increase Costs
Pricing isn’t solely at the discretion of pharma companies, though. “What patients end up paying has much more to do with their PBMs than the actual price of the drug,” Patricia Goldsmith, CEO, CancerCare, says. Transparency is vital.
PBMs control patients’ access to therapies at three levels, through price negotiations, pricing tiers and pharmacy management.
When negotiating with drug manufacturers, Goldsmith says, “PBMs exchange a preferred spot on a formulary (the insurer’s or healthcare provider’s list of acceptable drugs) for cash-base rebates.” Unfortunately, 25 percent of the time, those rebates are not passed to insurers, according to the PBGH report.
Then, PBMs use pricing tiers to steer patients and physicians to certain drugs. For example, Kramer says, “Sometimes PBMs put a high-cost brand name drug in a preferred tier and a lower-cost competitor in a less preferred, higher-cost tier.” As the PBGH report elaborates, “(PBMs) are incentivized to include the highest-priced drugs…since both manufacturing rebates, as well as the administrative fees they charge…are calculated as a percentage of the drug’s price.
Finally, by steering patients to certain pharmacies, PBMs coordinate patients’ access to treatments, control patients’ out-of-pocket costs and receive management fees from the pharmacies.
Therefore, Goldsmith says, “As long as formularies are based on profits to middlemen…Americans’ healthcare costs will continue to skyrocket.”
Transparency into drug pricing will help curb costs, as will new payment strategies. What will make the most impact, however, may well be the development of a new reimbursement system designed to handle dramatic, breakthrough drugs. As Kramer says, “We need a better system to identify drugs that offer dramatic improvements in clinical care.”
In today's podcast episode, law professor Gaia Bernstein talks about the challenges of keeping control over our thoughts and actions, even when some powerful forces are pushing in the other direction.
Each afternoon, kids walk through my neighborhood, on their way back home from school, and almost all of them are walking alone, staring down at their phones. It's a troubling site. This daily parade of the zombie children just can’t bode well for the future.
That’s one reason I felt like Gaia Bernstein’s new book was talking directly to me. A law professor at Seton Hall, Gaia makes a strong argument that people are so addicted to tech at this point, we need some big, system level changes to social media platforms and other addictive technologies, instead of just blaming the individual and expecting them to fix these issues.
Gaia’s book is called Unwired: Gaining Control Over Addictive Technologies. It’s fascinating and I had a chance to talk with her about it for today’s podcast. At its heart, our conversation is really about how and whether we can maintain control over our thoughts and actions, even when some powerful forces are pushing in the other direction.
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We discuss the idea that, in certain situations, maybe it's not reasonable to expect that we’ll be able to enjoy personal freedom and autonomy. We also talk about how to be a good parent when it sometimes seems like our kids prefer to be raised by their iPads; so-called educational video games that actually don’t have anything to do with education; the root causes of tech addictions for people of all ages; and what kinds of changes we should be supporting.
Gaia is Seton’s Hall’s Technology, Privacy and Policy Professor of Law, as well as Co-Director of the Institute for Privacy Protection, and Co-Director of the Gibbons Institute of Law Science and Technology. She’s the founding director of the Institute for Privacy Protection. She created and spearheaded the Institute’s nationally recognized Outreach Program, which educated parents and students about technology overuse and privacy.
Professor Bernstein's scholarship has been published in leading law reviews including the law reviews of Vanderbilt, Boston College, Boston University, and U.C. Davis. Her work has been selected to the Stanford-Yale Junior Faculty Forum and received extensive media coverage. Gaia joined Seton Hall's faculty in 2004. Before that, she was a fellow at the Engelberg Center of Innovation Law & Policy and at the Information Law Institute of the New York University School of Law. She holds a J.S.D. from the New York University School of Law, an LL.M. from Harvard Law School, and a J.D. from Boston University.
Gaia’s work on this topic is groundbreaking I hope you’ll listen to the conversation and then consider pre-ordering her new book. It comes out on March 28.
