Following the digital therapeutics series report, this article is centered on the challenges and opportunities faced by the digital therapeutics industry and aims to provide insights on the two above aspects.
Challenges: invisible payer & data management
Benefiting from the development of digital therapeutics, the patient's condition and health can be effectively improved. From this perspective, it seems reasonable for patients to pay at their own expense, which is the stage where we are now. However, digital therapeutics can also gain positive influence from other stakeholders, such as health providers, big pharma, medical device enterprises and health insurance. Data plays a significant part in the digital therapeutics. The importance of data is more evident for stakeholders other than patients. But who are the beneficiaries of data sharing?
From the perspective of patients, in most cases, the beneficiaries of patient contribution data are not necessarily themselves or some individuals (such as terminally ill patients) but may be scientific research results or a group of other patients over a long period. In this case, is the current patient still willing to contribute data to others in the future?
From the perspective of medical institutions, all healthcare organizations recognize that data is an important asset, susceptible and highly regulated. Will medical institutions, especially those huge ones with large amounts of data, still be willing to share data? And except for clinical data, medical institutions cannot access the data recorded by patients' daily habits and wearable devices.
Another challenge related to data sharing is data protection, behind which there are a series of difficulties, such as data rights confirmation (legal issues), data fusion (multi-department collaboration), and data trading (incentive mechanisms).
First, who owns the data? Does the patient's data belong to the patient, the doctor or the country? What's the value of a person's data if it belongs to the patients themselves, and how can the patient's rights and interests be protected if it does not? Is there technology to ensure privacy and security? There are many laws related to data security and privacy protection, such as the Civil Code, the Cyber Security Law, the Personal Information Protection Law, and the Doctor's Law, among which the Doctor's Law specifies the preconditions for legal compliance of Internet diagnosis and treatment. But most laws are relatively a skeleton.
Second, how to realize data transactions? That is how to share data among many parties and realize collaboration and fusion of the data. Medical institutions have access to vast amounts of data but face technical difficulties. The current system-wide hospital participation rate is only 10%, so there is plenty of room for improvement.
Therefore, more transparent, and mature legal norms and standards are needed to promote the development of digital therapeutics under the condition of ensuring safety. Beijing has already carried out some data transactions, but they are not detailed enough. More targeted plans are urgently needed to provide clear guidance or carry out pilot data transactions.
In addition, compared with the financial and other commercial fields, the medical field has its unique public welfare nature. The relevant parties of medical data must balance social and commercial interests. Many complex issues need to be solved, and many interest relations need to be clarified.
If these challenges are addressed, or such controversial problems no longer exist, digital therapeutics will achieve unprecedented development.
Forecast: promising segments
Diseases suitable for digital therapeutics should have at least two of the following characteristics.
Firstly, there is a sufficient number of patients can ensure enough market share and sales.
Digital therapeutics is about winning at the end, not at the beginning; Sales and market share should mark the end. In a larger sense, market share is more important. In a niche market in orphan drugs, the global total sales amount is $1 billion a year. If a pharmaceutical company can account for 500 million in sales in this market, it will show that it is worth more than 1 billion in sales in the other 10 billion market sizes.
Secondly, consumers have a strong willingness to pay.
Drugs are in rigid demand for patients, and the effects can be perceived clearly. Consumers' willingness to pay will be significantly enhanced if it produces the same immediate effects as sleeping pills and melatonin. Conversely, patients' willingness to pay is dramatically reduced if it takes 1-2 months to perceive efficacy. In addition, some existing medical devices do not meet clinical needs, so devices with precise mechanisms, independent use and clinical impact will also increase the willingness to pay. Moreover, the savings in time costs will also enhance the consumer's desire to spend.
Insurance payments are critical, and the benefits each patient can derive from them are self-perpetuating. Insurance reflects the aggregate outcome, and the insurer can accurately feel the change in the probability of disease from 80% to 40%, while the consumer is insensitive to this change. The premise of this logic is that the patient pays for the insurance.
Pharmaceutical companies pay for most overseas drugs. When tumor-targeting drugs are available, the tumor becomes a chronic disease from an incurable disease, and many tumor patients can complete the entire course of the tumor onset. Therefore, pharmaceutical companies should aim to improve drug compliance, reduce adverse reactions, extend the duration of therapy, and generate differentiated advantages.
In conclusion, EqualOcean believes that the promising areas for the future will be disease areas where mechanisms such as CBT are evident or chronic disease areas.
It is difficult to change the size of patients in the above two characteristics, but pharmaceutical companies can work to increase their willingness to pay. Therefore, we use the model in the Appendix to assess the cost-effectiveness of digital therapeutics compared to no treatment, aiming to increase payer diversity and individuals' willingness to pay for digital therapeutics.