The digital transformation of healthcare will see significant growth in the next 12 months fueled by institutional interest in driving down costs and improving patient engagement. Expect increased pharma investment, improving regulatory status, payer engagement with digital tools and better telemedicine connectivity through consolidation.
Digital health will build on the major events of the past year. Amazon made headlines at the beginning of 2018 with its announcement of collaborating with Berkshire Hathaway and JP Morgan to create a new entity to improve care options for their employees. Towards the end of the year Amazon got attention again with its expansion into software to digitize and mine patient medical records to improve treatment and cut costs. It joins the ranks of IBM and UnitedHealthcare’s Optum, as well as Apple and Google’s efforts to mobilize, organize and analyze health records. The anticipated buyer for all these services are health systems that have historically lagged in fully embracing the potential of electronic record analytics.
How should pharmaceutical companies commit resources to the growing number of digital offerings for product development and commercialization?Last year the influential executive and investor Fred Hassan prophesied that pharma will finally embrace digital once they have created dedicated C-suite positions to manage it. Soon afterwards Pfizer announced that Lidia Fonseca will become Chief Digital and Technology Officer and Merck named Jim Scholefield as Chief Information and Digital Officer. Novartis appointed Bertrand Bodson as Chief Digital Officer. These bellwether hires join the ranks of people like Karenann Terrell, the Chief Digital & Technology Officer at GSK, who represent the new class of digital chiefs at top pharma companies.
Pharma leaders will be looking to create impact and make deals in coming months. Examples of companies that have already generated partnerships are Pear Therapeutics with Sandoz in digital therapeutics as well as Proteus Digital Health with Otsuka Pharmaceutical in digital medicine tracking. Science 37 has received significant investment for virtual clinical trials. The new year should see continued partnership activity in R&D and therapeutics.
The US Food and Drug Administration (FDA) has cautiously moved to embrace digital therapeutics, mobile trial platforms and expanded use of real world evidence (RWE) mining for clinical development. This progress will continue to drive sponsor investment. FDA Commissioner Scott Gottlieb, M.D. issued a statement in September encouraging efforts to spur innovation in digital health. He supported the “new technological paradigm of digital health tools .... that allow consumers and providers to supersede the traditional, physical constraints of health care delivery.” Substantively, the agency has issued landmark approvals of digital products including Pear’s reSET, Proteus/Otsuka’s Abilify MyCite, and earlier WellDoc’s BlueStar. The list of companies with digital products in development that will be seeking approval is growing. Click Therapeutics is working with Otsuka on a digital approach for major depression, Dthera Sciences is developing a product for Alzheimer's and Akili Interactive is in trials to treat pediatric ADHD.
Regulators are working with industry and academia in advisory partnerships such as the Clinical Trial Transformation Initiative (CTTI), which has been actively issuing recommendations in areas such as mobile technologies and use of RWE. It has been over year since the FDA issued its Digital Health Action Plan with the goal to develop a precertification program that would reduce the need for standard authorization requirements for certain types of software and apps. Expect to see further modernization of a digital regulatory pathway and frameworks for use of artificial intelligence (AI), digital safety reporting and RWE in clinical development.
Health insurers will seek to improve customer engagement and build loyalty using novel digital tools as they continue to explore value-based healthcare. Payers have been working to control costs and expand their footprint through mergers such as Aetna with CVS or Cigna with Express Scripts and these activities will be balanced by efforts to build closer relationships with customers.
The industry has been investing in AI directly or through relationships with startups. UnitedHealth Group’s Optum Ventures is an investor in Buoy Health which offers a gateway into treatment using a chatbot described as an AI-powered digital health assistant. Anthem has partnered with Doc.ai with the goal of helping empower consumers using digital engagement tools such as healthy predictions around lifestyle, environment and activity.
The industry’s interest in value-based care and population health is helping drive adoption of AI as insurers use data and analytics to manage healthcare costs and help patients receive appropriate care in the effort to facilitate quality and cost-effective medicine.
Health systems will continue to expand in telemedicine leading to more industry consolidation. Telemedicine offerings - which include about 80 specialties such as neurology, dermatology and pediatrics - will be optimized for increased patient use and adoption. Employers expect to save about $100 per visit when virtual care is used. Over half of health plans are now offering telemedicine according to Garner andDirectPath and these numbers are expected to increase.
Policy makers are embracing telemedicine and have passed the SUPPORT for Patients and Communities Act which improves access for Medicare patients, especially those with chronic conditions or who benefit from early interventions. The law also helps remove some barriers for patients with substance abuse and mental health issues as well as for underserved populations.
Healthcare has taken center stage in the political debate about rising coat of care and drugs. Smart leaders at leading tech companies have recognized the opportunity and are carefully investing in areas such as data mining and recognizing where AI analytics are useful and who will actually pay (it's not the doctors).
The digital transformation of healthcare will continue to gain momentum in 2019 based on growing interest from big players in pharma and insurance as well as technology giants. Note that investor returns are not quite a driver as of yet. Geoff Meyerson, Managing Partner atLocust Walk who helped negotiate some of the bigger pharma digital partnerships says, “we have still not seen significant ROI [return on investment] in digital health.” Therefore over the short term the digital transformation will be driven by big companies looking for consumer engagement and cost efficiencies. Plus don't underestimate the importance of stodgy companies demonstrating their ability to be nimble and relevant by embracing new technologies. Last year the Reputation Institute (RI) survey of pharma reported continued erosion of trust among consumers. Getting closer to patients using digital enablers could help.
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