Ep23: Brian Dolan, Exits & Outcomes

Transcript

0:03 Eugene Borukhovich    

Welcome to Digital Therapeutics Edition of Digital Health Today, and I’m your host, Eugene Borukhovich. All good things must come to an end. And unfortunately, it is also the case with this limited series of Digital Therapeutics. Thanks to all the brilliant guests for making the time, but more importantly for innovating and trailblazing for all of us– health consumers and patients.

I also want to thank you, our thousands of listeners, for providing valuable feedback and encouragement. While this limited series is over, there’s a lot of hard work ahead for the industry, and a lot of experience has to be shared. So I will be continuing these discussions at the HealthXL DTx community from here on out. Just go to healthxl.com/dtx. 

In this final episode of DTx limited series, we’re back with Brian Dolan, the founder and lead editor of Exits & Outcomes, and my journalistic partner on this podcast. We rewind back the last five months of the industry in a very succinct, about 20 minutes or so, [episode]. But before we dive in, I got to know Brian even better in the last five months. His dedication to real journalism, meticulous attention to detail, and his digital health detective skills left me, well, sort of speechless. And now we jump to my conversation with Brian. 

Brian Dolan, welcome back. We recorded our first episode together on January 5, now it’s five months [later]. For our listeners, I’m here with Brian Dolan, founder and lead writer at Exits & Outcomes. Also my journalistic partner on this podcast and, as I think I coined the term, digital health detective, which I preface it that I coined it and you don’t call yourself that.

1:58 Brian Dolan    

Yeah, I’ve gotten a few emails of people referencing that. I appreciate what it’s done for the brand. But yeah, that’s very much a Eugene creation and not self-described, but it’s accurate. I’m gonna embrace it. Happy to be back, Eugene. Thanks for having me on for the last podcast episode here.

2:14 Eugene Borukhovich    

Yeah, I know. It’s a little bit bittersweet. When we set this out, to my surprise, you agreed to Zoom in with one very pointed question to every guest that we’ve had so far. I do have to say on some of them, you took it a little easier than others, probably not on purpose, but just a comment. I appreciate you joining me on this journey, and now 21 other guests, I think. But for our listeners that might just be tuning into this particular episode, [let’s start with] a little bit of the storyline that we came up [with for] Digital Therapeutics.

Initially, we kicked this off with, broadly, what it is, where it is, and some of the happenings up until January 5. We went into the definition with Digital Therapeutic Alliance [with] both Megan and Jessica, who has now moved on. We then jumped to early trailblazers, people like Eddie and Ed Cox, and many others. We hopped over to Berlin, Germany, to talk about the regulatory status there. We had some of the early trailblazers on that side of the pond, from Munich, to London, to Dublin. Then we finished off with an overview from an investment perspective, to awesome investors in that space (granted, from only the European side of it). And then finally, with just a little taste of Southeast Asia with Wellthy Therapeutics at the end. 

Here we are wrapping up five months. If I had to describe me waiting for the Exits & Outcomes newsletter or news that keeps popping up, I feel like we can be doing a podcast a day and still not keep up with all of the digital therapeutics news.

4:03 Brian Dolan    

I think it’s been an eventful five months, but I would say on the prescription digital therapeutics side of things, it’s been a bit of a slower burn in terms of progress. I think there’s been a couple of developments that have been simmering, and we’ve been tracking. On the other side of the coin, as I said in our original episode two, I believe it was– which I listened to this morning, by the way, and I think it stands. I don’t disagree with anything I said five months ago.

4:26 Eugene Borukhovich    

That’s good.

4:27 Brian Dolan    

It’s all still true for me today. And my perspective is still as it was back then. But I think in those five months, where much of the change has been is on the enrollment side. So digital health companies that are selling into self-insured employers in the US, as well as working through health plans to get to some of those smaller employers. But that side of things, obviously, there’s just been so much action, whether it’s big funding rounds, some SPAC mergers, some IPO talks, but the most really big consolidation between other health insurers snapping up telehealth companies, or other large players buying similar peers.

4:59 Eugene Borukhovich    

Or telehealth companies also buying up, right?

5:02 Brian Dolan    

Yeah. To me, that’s where most of the action has been, and less so on this prescription digital therapeutics side. I think a lot of the issues we were talking about back in January are still there today; not a ton of progress around reimbursement, for example, distribution. None of the companies that we’ve been tracking have really seen substantial leaps and bounds in adoption in the past five months. It still feels like they’re all just getting started, even though that’s kind of the same conversation we had in January, and we probably could have the conversation in the fall of last year as well. 

One final point on that. The fact that there’s been all this action– all this financial activity, mergers, acquisitions, consolidation– on the employer side, I do think that has an impact on everything else going on in digital health. Because I think philosophically, a lot of these prescription digital therapeutic companies got started, years and years ago, with the idea that nobody’s really figured out how to make digital health work. So maybe we need to rely on the traditional healthcare system, and move these interventions through, just as if they were pharmaceuticals. We know that’s a tried and true path for the pharmaceutical for the molecule. Let’s try it with software. I don’t think that’s true 100% across the board, but I think a lot of these companies had this idea. Maybe that’s the way, since no one else has figured it out, let’s focus on interventions that make sense for that and get it to market that way. 

What’s changed in 2021, is that there are now many companies that are worth a billion or more dollars. There are public companies– clearly some companies have at least found a way to scale. So it’s a very different picture. I think most companies starting up today are probably not thinking about prescription as the way to market because all the investors see these giant valuations for these companies that are on the enrollment side, which of course has its own group of problems. 

But I think my point is, we’re seeing this huge amount of gravity on the enrollment side, and I think that’s going to suck in some of these prescription companies to maybe bend or break their business models and become more like the companies that we’re seeing IPO and succeed in other ways today.

6:57 Eugene Borukhovich    

I would love to disagree, just so we have a good banter. I’ll just highlight a couple of things. I look at, just as an example, Voluntis; they’re just aiming for $10 to $15 million in revenue. Pear Therapeutics maybe will also become a platform for other DTxs and CBTs. There’s a bunch of stuff that happened with Akili; Mymee raised $8 million. The interesting part that you allude to, and this is where I agree, [is] there are funding rounds, and some announcements, but from an adoption perspective, we’ve seen much more adoption (maybe not fully “engagement”) in the employer market. Maybe we can unpack a little bit there. 

If I look at somebody like Peter Haynes from Big Health, the premise from the beginning was, we can make something better than a drug. And it doesn’t need to be prescribed through normal channels. This is our channel. Somebody like Eddie and Akili said, you know what, something that will ultimately, biologically impact your brain needs to go to the prescription channel. I think those are two [very] different hypotheses and different technologies with the go-to-market. Let’s stick with the employer side and a little bit of what you’re seeing, because it sounds like you’ve seen a lot of traction there. Maybe “a lot” is an overstatement, but [what are] some nuggets you can unpack for our listeners, on the employer side?

 8:34 Brian Dolan    

Some things I was saying before, I think they’re just indications. Obviously, it’s not just about IPO-ing, it’s not just about raising tons of money and finding a SPAC merger. All those are versions of financial exits maybe, but they’re also indications– hopefully true indications– that these companies have scaled up. So they’ve found traction with customers, they’ve gotten this out to a much larger group of people, consumers and patients. And I think that it’s hard to say that that’s true for the prescription digital therapeutics group. I don’t disagree that there hasn’t been news; as you said [we’ve] put out 23– probably 20, 23– weekly issues every Friday, focused on the digital therapeutic side, the pharma side, of digital health. So there’s plenty going on. But I really think it’s behind the scenes, trying to get reimbursement, trying to spin up new CPT codes to help buffer some of these business models on the provider side to add some service revenue. There is incremental progress, but there’s no company that has risen up or scaled up in any meaningful way, as of mid-2021. 

Whereas that’s clearly not the case on the employer side– there’s plenty of examples. I think your point about some of these– now, I wouldn’t call it a pivot– I think Pear Therapeutics has always said they want to be a platform company, but for sure, they’re now really touting that more than they probably have in recent years. But if you think about that company, it was kind of a roll up. They started by acquiring and licensing all these interventions, mostly from small companies and academics. And so they’ve always had this platform mindset. But yeah, some of this recent press that they’ve gotten, it looks like they’re trying to partner with other digital therapeutics companies to become a distribution player as well.

10:10 Eugene Borukhovich 

But in the prescription market in general, things take longer, obviously. In the DTx space, one would argue, it’s been eight to 10 years, depending on the company. One would argue the old adage about pharma and pills taking 10 to 12 years and $1 billion+, it’s almost coming true– maybe not from an investment perspective, but in the prescription DTx. We had a big push from the FDA [for] straight to market during the pandemic, so do you feel that will help these companies to get there faster, quicker? Or are there other challenges ahead of the prescription DTxs?

10:57 Brian Dolan    

That’s a great question. I think when the FDA made that announcement, put that waiver in place, I was really curious to see how many companies would take advantage of it. Everyone I talked to said this should be a layup for Aikili, and of course, within a couple weeks, it seemed like they were on the market. Really soon after they actually won their FDA [approval for] De Novo. So I think it really worked out for that group. And there’s been a couple others, as I’ve written, and it’s been very quiet. I think about half the companies that have done it haven’t made any announcement about it. And so Pear has a product, Akili has a product, there’s a couple of others. But I think the others, you know, I just happened upon it. 

It’s not really easy to figure out who took advantage of the FDA waiver and who didn’t, because most of these companies are keeping it quiet. And I think it probably is because they recognize there’s some risk. I think this is sort of an experiment. And this is all really outside of my scope of full understanding. But there’s clear risks, if they don’t do well, under this waiver, if they don’t drive adoption of their product. if they have any issues on the adverse events side, they are inviting a lot of risk by launching [inaudible] FDA. And yeah, I’m curious if some of those products get pulled off, or if the FDA just grants a full waiver in perpetuity to the ones that took advantage of it. I don’t know. As far as I can tell, they’re just not a whole lot of those products that went to market. It’s not like a particularly rich data set that we’re gonna be able to learn a ton from, but it may just be four or five products that we can take a look at in six months to a year from now.

But it’s a great question. I don’t think anything much has changed since those companies have put their products to market, with the exception of Akili getting De Novo clearance. Everything else is just sort of out there, and there’s no real easy way to tell if you’re doing well or not.

12:34 Eugene Borukhovich    

It’s time for a question from– oh wait, it’s a question takeover by none other than Jessica DeMassa, health innovation reporter, host, and executive producer of WTF Health (What’s The Future Health?). Let’s see what question Jessica has for Brian today.

12:52 Jessica DeMassa    

All right, Brian Dolan, I’m a big fan of your digital health detective work and Exits & Outcomes. But what I really love is when you lay out all the clues and start theorizing about what will happen next. So based on what we know about the market, regulatory and reimbursement sentiment for DTx, and what we know about the love big healthcare has for blockbuster drugs (drugs that generate a billion dollars in annual revenue), predict the future for us. What does the first blockbuster DTx look like? When do you think we’ll see it? Do you think any of today’s players already have it in market? And if not, we’ll give you an out here Brian, what do you think the hallmarks of a blockbuster DTx will be? Is it a prescription DTx or not? Does it come out of a pharma partnership or an independent DTx company? Is it standalone or wrapped around a pill? What does it treat? Brian Dolan, give us your best guess about the first blockbuster DTx.

13:55 Brian Dolan 

Okay, man, that is a huge question from Jessica DeMassa who is the executive producer and host of WTF Health. It makes sense, because her YouTube show, WTF Health, stands for “what’s the future?”

So, you know, I’m a skeptic. I haven’t seen anything yet that has led me to believe there is a blockbuster drug like opportunity for a digital therapeutic company yet. I mean, have we seen a single commercialized prescription digital therapeutic intervention that has managed to post even $10 million in annual revenue yet? I don’t know for sure, but I don’t believe we have. So it’s still way too early for me. 

I’d want to be on the other side of Medicare reimbursement. So whatever CMS does with, say, a new benefit category, or something, I’d also want to see, you know, what are the PBMs going to do with their digital health formularies, which currently are very much just employer-focused digital health programs. What are they going to do with prescription digital therapeutics? How are they going to add those? And then what effect will that have on the price of those interventions? That’s just two examples. I think there’s a long list of things that would probably need to be resolved. And we’d have to have a little bit more clarity on before I would feel comfortable thinking about what a blockbuster digital therapeutic would look like. But you know, from where I sit today, I just don’t see it.

15:25 Eugene Borukhovich 

So the next is probably one of my favorite. And I’ve actually gotten comments on the question that I asked of DTx eats the pill or the pharma companies buy DTx. We touched on the employer pure play (direct, on their own). Now I would love to get your thoughts [on] what you’ve seen transpired in the last five months and what your thoughts are on this pharma “frenemy” type of relationship. We have some examples of somebody like David Klein with Click Therapeutics is marching together with pharma, [inaudible]? But there’s others that are toying [with that idea], so I’d love to unpack that from where you stand.

16:03 Brian Dolan    

Yeah, I think that’s an example of at least from what I’ve been tracking an area of DTx, where I haven’t really seen much happen in the last five months. I know a few smaller pharmaceutical companies have done Click-like deals with other DTx companies, I think I’ve tracked maybe half a dozen in the last five months. And there’s nothing particularly unusual that any of them. They all look I’d say very Click-like. Inasmuch as we can learn about the agreement from the press releases, they look to be pretty similar. 

But I think the other pieces that I track each week [are] some of the clinical trials, how are they progressing? We’re seeing some that are getting delayed. I think maybe that is something that has changed is [that] some of these trials don’t seem to be affected by the pandemic, and other ones, they’re pushing them off for a year or more. I know one of Apple’s trials got pushed way back. No reasons are usually given in clinicaltrials.gov for delays like that, but I think that’s pretty notable. I’ve noticed that fairly frequently. 

Again, I don’t really have much a frame of reference, because I’ve only been tracking these for a year, but it seems like there’s a lot of that going on. It just means a lot of that evidence data, we’re not going to see it until 2023, 2024, and we were expecting it later this year early next. That certainly stretches out timelines. As you were saying before, I mean, prescription digital therapeutics are in the end, it seems like they’re taking almost as much time as some pharmaceuticals to get to market. You have to hope maybe that’s just the early pioneering versions of this, and the future ones will be much quicker. But so far, they haven’t been much quicker than pharmaceuticals, it seems like.

17:31 Eugene Borukhovich    

I know you’re tracking some of that somewhat across the globe where the data is truly available, like in Germany with DiGA. But let’s talk a little bit about pricing. Any more insights in the last five months on pricing? I guess you can look at both sides, both employer, which are usually very private contracts, but also the more public prescription pricing?

17:52 Brian Dolan    

Yeah, I would say I’ve done more work on the prescription side of it in the last five months. And as you say, mostly that’s because DiGA has– not sure what the word they use– accepted more prescribable interventions into, I don’t know if they call it a formulary.

18:05 Eugene Borukhovich    

I think it’s up to 15 or so.

18:08 Brian Dolan    

Yep. Last I checked, and as of Friday, so as of three days ago, it was 15. So that’s the bulk of the dataset that I have. I think there’s another four or five that are US-based that I’ve managed to track pricing for. So out of that 20, call it 20 interventions– and again, these are all prescription prices– the average price of those 20 is around $635. Again, I think this is true for the vast majority. Most of them price it on a 90-day dosage since this is more of a time dosage, not an amount dosage. In DiGA, you can kind of see that, but there’s a few exceptions. Some companies actually are longer doses than 90 days. And that’s a little bit of noise in the data. But you know I think if you compare the average– I don’t know the numbers– but if you compare the average price of the German government-listed prescription digital therapeutics to the four or five in the US, the price in the US is much higher. I think it’s probably between $700 and $1,000 in the US, just based on those five or six commercialized prescription digital therapeutics.

19:09 Eugene Borukhovich    

Which is interesting. We had a whole discussion, I think with Matthew [inaudible], saying the pricing is still crazy. But if you look at, let’s say Akili and an ADHD molecule drug, it is still cheaper in theory. And again, based on the use cases, as a parent, I would probably want my child to try a game before I get them on Ritalin. I think we’ll see some interesting plays on some of those models and comparisons.

19:36 Brian Dolan    

Akili is, in the US, I believe it is the least expensive of the prescription digital therapeutics with pricing that I’ve been able to track down. And so they advertise the price as $450. I think that’s for three months, but they also have a little parenthetical aside that says, oh, but if you get it now, it’s less than that. So I think it’s probably around $400, but I’m kind of guessing. But you’re right. One thing that I think is important– the attention piece of it. ADHD also includes hyperactivity. And so EndeavorRx doesn’t cover the entire ADHD spectrum. It’s really just focused on attention. How do you parse that? Is that half the price of a drug? I don’t know. But it’s worth pointing out.

20:13 Eugene Borukhovich    

Yeah, how do you put a value on that part of it? So we can continue rewinding, and digging in, and probably spend hours but neither one of us have time. This is part of the reason why this whole podcast was set up as a limited series. I’ll be frank. I underestimated the amount of time that I would need to spend– and you probably also underestimated the time. So again, I want to thank you for joining. But one of the guests, and I’m referring to Chris Bergstrom, said digital therapeutics as a term needs to disappear. You and I always joke around that “digital health” is just health in a digital world. Your thoughts on, are we very far away from the word “digital” actually disappearing from this digital therapeutics term? Or does it really matter?

20:57 Brian Dolan    

I think ultimately, it doesn’t really matter. I think it’s a fun talking point, I think most keynotes at digital health conferences will include a line about that term changing or “digital” being dropped probably for the next decade. But we still call it “email,” we make a distinction between email and the mail we get in our physical mailboxes. So I don’t know. I mean, this is just a cultural thing, right? It’s just pieces of our language that we allow to stick around. It’s probably going to be generational, and maybe my grandkids aren’t going to call these digital therapeutics if they still exist. But I think you and I probably will continue to because they’re going to always feel a little foreign to us, even 15 years from now, it’s going to be weird that medicine is practiced this way. 

But I don’t know. This is a linguistics question. For me as a journalist, I write for the industry, I don’t write for general consumers. I think these words, they can be called jargon and that’s fine. I think it’s important not to use jargon when your audience is not in the industry. But casting it in a more positive light, I think it’s important to use precise terms if you can. I think if we just start talking about therapeutics, we need better reimbursement for therapeutics, and we need parity for visits; it’s how do you have that conversation if you don’t make distinctions? It’s silly. So I think the conversation is kind of a silly one, because we obviously need these words until, or if, these become an accepted part of healthcare. So I think we’re a long way off on a lot of these fronts. As we’ve said a few times here, progress is slow. I don’t think this is already such a mainstay of healthcare that we’re just going to start referring to it and lumping it in with every other therapeutic. That doesn’t make sense to me. But I’m happy to be wrong.

22:32 Eugene Borukhovich    

I’m just hearing a lot of, “if it’s still around.” Again, I think it’s the combination of the terminology, the evolution of these products or channels, how they become part of something else. We’ve alluded to lots of acquisitions, and I do see that in the pharma world, I think many DTxs may become the new patient support programs. That’s just my two cents on it. In standalone, I think they will ultimately end up competing, especially in the neurodegenerative diseases, because those have been proven very hard from a molecular perspective. So I think those things will evolve as you’re tracking week to week. I’m looking forward to it. I know that we also made a little bit of a marriage for at least one portion of it with Health XL. We’re still talking about the Health XL/Exits & Outcomes report, which also covers a lot of the PDTs. And you’ve been sending folks my way as well, Brian, thank you. There are just so many amazing entrepreneurs out there; people from [inaudible], Bioforum, MedRhythms, Mahana, Sidekick, I can keep going and going. And this is not to mention the amazing stuff that’s going around the world. I just spoke to an entrepreneur out of Poland, who is trying to build almost like a Somryst-like product for Eastern Europe. So lots to do. But with all of that, I just want to again, thank you for joining me on this journey of now 23 episodes. It is a limited series, and who knows what’s gonna happen afterwards. As of now, I need to take a break.

24:11 Brian Dolan

Yeah, thanks for having me along for the ride, Eugene, it’s been great. I know I’ve learned a lot. I think these episodes are typically not a full hour, so it’s not quite 24 hours worth of content. Maybe it’s half that. But I think there’s a real– there’s just– it’s a incredible resource for those interested in digital therapeutics to go back and to listen through these interviews. I think people will continue to learn a lot and it’s evergreen. I think they’re gonna listen in on these interviews for at least the next couple years. So congratulations on putting it together, that’s a great library.

24:37 Eugene Borukhovich Thank you very much, Brian. Thanks for tuning into Digital Therapeutics Edition of Digital Health Today, a production of Mission Based Media. Be sure to hit subscribe to this podcast on your favorite podcast player, so you’re automatically notified if we launch season two of this series, where I may or may not speak with dozens of leaders and trailblazers who are forging the path for digital therapeutics. If you’d like to learn more about YourCoach Health, or Brian Dolan’s Exits & Outcomes, you can find the links to this and more in the show notes for this episode. You can also join the HealthXL DTx community at healthxl.com/dtx, where I will be continuing these discussions. You can connect with me personally on Twitter @HealthEugene.

I’m Eugene Borukhovich. Maybe catch you next time.