Cracking the commercial code in digital health
Pharma must internalise some hard lessons if its future digital health solutions are to have a significant commercial impact
Examining pharma’s track record in digital health recalls that famous BBC nature documentary in which hatchling marine iguanas must make it from their eggs to the safety of the ocean across a beach writhing with hungry snakes.
One after another, the hapless creatures suffer a serpent’s strike. Finally, thrillingly, one nimble iguana having dodged death a dozen times, makes it to the surf.
Similarly, failure in digital health is the norm, the successes few. And it is no wonder. Innovating in this space is hard on multiple levels. Even if a solution survives internal incubation, its demise too often comes in the ‘wild’ thanks to a range of issues that might include patient apathy, health system inflexibility, payer indifference or physician overload.
We can almost hear the documentary narrator’s hushed regret as he reports the demise of the latest solution. “With so much systemic complexity to contend with, alas, the new digital health solution never had a chance.”
Stuck in pilotitis
Beyond general healthcare ecosystem complexity (a topic we will explore later), the proximal reasons for this lack of success to date are worth exploring before we examine the way forward.
Pharma set, and in some cases retains, unrealistic expectations – Digital evangelists rushed to make promises that health technology would be revenue generating. While few now expect that digital health solutions will now be significant stand-alone revenue generators, the belief that they might serve to shore up mature or declining franchises dies hard.
“Pharma has made progress, but executives still believe that digital health is a growth relay that will offset the struggles with the old blockbuster model”, says Cécile Tardy-Srinivasan, who leads the DayOne Health 4.0 accelerator.
Pharma needs to re-calibrate time scales, she adds “Pharma needs to integrate Digital health solutions into new molecules to remain relevant in 5-10 years, rather than seeking immediate results.”
It took the wrong approach to pilots and partnerships - Tardy-Srinivasan believes that big pharma struggled to adopt the fail-fast tech culture of digital native tech firms in their early experiments.
“Most big pharma companies now realize they don’t need to build everything by themselves. Pharma has matured and now recognizes the opportunities to partner with startups, with academia, with the external ecosystem”.
‘Pilotitis’ has also been a scourge, adds Tardy-Srinivasan “We had too many pilots with health tech startups, and very few successful outcomes because both sides had to learn by trial and error.”
Digital hires didn’t fit culturally – Developing successful digital health solutions typically requires colleagues with very different cultures and mindsets to collaborate effectively and share a common approach but this often didn’t happen, says Elizabeth Lee, managing consultant - digital, healthcare & life sciences at PA Consulting and former digital lead at Johnson & Johnson.
Pharma executives or regulatory colleagues used to developing a strategy for molecules typically have had very different world views to those tasked with developing medical devices or digital colleagues developing app interfaces. “We had very different mindsets involved, which was tough for pharma,” says Lee.
If this all sounds overly negative towards the industry, it is not meant to be. Pharma shares the scars of battle with dozens of failed digital health startups. Large-scale independent successes have also been few to date, despite significant venture backing in the sector. Digital health solutions often require deep changes in the way care is delivered, with benefits that take time, often years, to demonstrate.
Even apparently successful pioneers have foundered for want of a sustainable business model. Just look at Pear Therapeutics, which filed for bankruptcy earlier this year despite having three FDA-cleared prescription digital therapeutics (DTx) apps.
As Shwen Gwee, digital health consultant and former VP and Head of Global Digital Strategy at BMS puts it: “If they can’t do it, what can pharma companies do?”
Despite the failures, opportunity abounds
Pharma is emerging from a period of reflection and disillusionment about its effort/reward ratio in digital health.
After the initial phase of hope that digital would transform healthcare and comprise valuable new income streams, pharma is now evaluating all that has been learned so far, acknowledging the challenges, examining the successes while also weighing the very significant opportunities ahead, says Emre Ozcan, Global Head of Digital Health, in the Healthcare business sector of Darmstadt, Germany’s headquartered Merck. “We are in the third stage of pharma’s relationship with digital health where we are working to define, measure, and extract the value from it.”
Despite the scarcity of solutions that have achieved large-scale commercial impact so far, digital solutions are in use to great effect across a range of therapy areas and there is much useful experience to be learned from here.
Examples include digital/drug combinations such as Propeller Health’s asthma inhaler companion or connected pill bottles.
Digital solutions and add-ons have also established clear use cases across a range of therapy areas including diabetes, oncology, cardiovascular, mental health and neurology, says Dr Yacine Hadjiat, global head of Biogen Digital Health Solutions.
The use cases across a range of applications is also maturing fast, he adds. “Pharma is using tech in R&D more and more, for screening trials and for data asset management. We have traction there. A second pillar is in solutions serving patients. There are good use cases there.”
Pharma’s c-suite is also now highly aware of the strategic importance of digital, adds Ozcan. “Digital health is a key topic for all CMOs, CFOs and CCOs and CEOs.”
It’s encouraging to see how the most advanced Pharma players have been changing and adapting their structures over the past two to three years, to learn from their experiments and adapt, says Tardy-Srinivasan.
Patient demand is a further source of optimism and opportunity. As consumers they are used to and expect products that add value for them and they bring these expectations to healthcare, says Ozcan. “It is clear from the patient persecutive that people want innovation in the way therapy is delivered, not just a supply of pills.”
In order to build on these opportunities, however, pharma will need to ingest and apply the lessons learned so far from attempts to develop and deploy digital health solutions.
The industry is closer to mastering data gathering skills and defining how to choose appropriate biomarkers and endpoints. It has learned much about gathering data from wearables, working with patients, using AI and harnessing real-world data but there is more to do.
A path to success
Be more selective – Rather than developing dozens of solutions indiscriminately in an internal incubator, choose ones that will fit with the existing portfolio. In this respect the industry is maturing fast, says Ozcan. “We are having more granular, business-rooted discussions now about which products, molecules and therapeutic areas can best benefit from digital health offerings.”
Focus closely on evidence – “In the first two stages of development in digital health we did not look that much at the evidence despite the fact that this is an evidence-based industry,” says Ozcan.
Consider European markets – The US might be the obvious first choice to pursue commercial scale but Europe’s usually national-level health provision offers, at least in theory, a chance for digital health solutions to become accepted and used at scale faster than in the US where it is necessary to secure adoption one health provider at a time.
Initiatives in several European nations to speed digital health adoption offer a further incentive. Germany’s Digital Health Apps program (DiGA) is the often-cited model that others are now emulating.
Foster close cross-functional team development – Building teams that cross functional silos and who clearly communicate what they each need for a solution to work is key, says Lee. “At J&J, we launched a digital companion within 12 months because every person on that core team shared a mindset - including legal, clinical and regulatory counterparts – to do what we needed to do to get the product over the line. Everyone was aligned on the vision.”
Develop and cultivate new metrics - Trying to make the internal case for a digital solution based on a calculation of its inferred dollar value is likely to fail. Other measures are required. “Understand and accept that a lot of improvements brought by digital health solutions don’t impact your traditional metrics,” says Tardy-Srinivasan. “You need to define new metrics that will need to be refined.”
A range of measures might include: adherence improvements; real-world data (RWD) enabling better pricing and reimbursement; quality of life improvements; other care cost savings made; reduction in hospitalisations or the number of follow-up visits or both.
Empower middle managers – Both top-down and bottom-up digital health initiatives can get stifled if the leaders tasked with managing the development programme are not given the resources to do so or the data they need to drive results. “It’s a question of how we empower middle managers to embrace these opportunities and how we incentivize them to take calculated risks about innovation.” In many cases it is about getting into habit of using the data and decision making driven from the data generation,” says Ozcan.
Manage digital talent more strategically – Pharma’s approach to managing digital talent leave much to be desired for and giving it a desirable career path within the organization”, adds Ozcan. “We need to get some [externally hired] digital talents into the high level of pharma and put pharma leaders into these digital roles for them to see how to approach it differently.”
From patient centred to ecosystem focused
Pharma’s evolution towards putting the patient at the centre of its mission, as important as that is for future success, is necessary but not sufficient when it comes to digital health.
In digital health it’s not just about the patient. The complexity of the healthcare ecosystem and the need to gain buy in from multiple stakeholders with varying and even clashing incentives is perhaps the chief barrier to pharma’s attempts to achieve commercial impact.
This demands that new development programmes are now built with the entire healthcare system in mind, says Lee. Incentivising patients to engage over time must also be matched with incentives for physicians and payers.
What reward do they get in return for the time taken in engaging and for providing the data required of them? Are they being asked to download yet another app or login to a new portal? “No physician wants a new workflow or a higher workload,” says Lee. “Payers are looking for ways to lower costs but this has to be integrated into healthcare workflows. If a solution is not integrated in this way, it will have adoption issues.
“As well as being efficacious, a digital health solution has to lower the total cost of care and it will be necessary to quantify the value of delivery very closely - now as well as down the road. Payers will be looking for an immediate ROI.”
One template for how to develop such an ecosystem-first approach is the DTA’s DTx Value Assessment & Integration Guide, suggests Lee. Although this is specific to digital therapeutics, it may serve as a useful template for a wider array of digital health solutions.
“It has a useful checklist of evaluation considerations, such as clinical impact, usability, economic assessments and so on that you can use to help cover off on blind spots. Few companies can hit all those marks first off, and this offers a way to be more rigorous.”
Demonstrating commercial impact will remain tough but pharma is already building on lessons learned. There is much to hope for from the second generation of ‘pill-plus’ solutions, currently under development, that have been built together and integrated into the launch offering rather than as add-ons to a molecule long after launch, as was case for the first generation of solutions, says Ozcan.
He adds that over time the benefits of digital health products will become clearer as the solutions begin to move the dial at a population level causing a solution’s primary effects and secondary effects over time to get multiplied, leading to healthier populations who manage their health better. “The wheels of history are turning in the right direction.”