\n<\/p>\n
Pear Therapeutics was one of the most notable companies in digital therapeutics and its downfall could be an ominous sign for other industry players.<\/p>\n
\u201cI worry it\u2019s a signal for the immediate future of digital therapeutics,\u201d said Dr. Rishad Usmani, founder of Healthtech Investors.\u00a0\u00a0Usmani has mentored and consulted founders in the digital therapeutics industry on getting physicians to adopt these tools.<\/p>\n
Not a Modern Healthcare subscriber? Sign up today.<\/em><\/p>\n While most industry observers, including Usmani, are bullish on the long-term potential of digital therapeutics technology, there is a growing acknowledgment that the business model\u00a0needs improvements. There’s also a consensus that those improvements need to happen quickly\u00a0as the challenges come at a time when the digital health industry is dealing with less friendly funding conditions.\u00a0<\/p>\n Companies that develop prescription digital therapeutics, software applications that must be prescribed by clinicians, sometimes mirror the route pharmaceutical companies take to reimbursement, Usmani said. The problem is biotech companies have more leeway for development before the expectation of revenue generation, he said.<\/p>\n DarioHealth president Rick Anderson agreed with this assessment and said it\u2019s hard for companies in digital health to go this route.\u00a0<\/p>\n \u201cBiotech startups spend hundreds of millions of dollars developing a product and then if it’s successful, they essentially sell it to a pharmaceutical company in order to commercialize,\u201d Anderson said. \u201cThere is a massive lift to go to market.\u201d\u00a0<\/p>\n Pear Therapeutics, which developed applications for opioid use and substance use disorders, was emblematic of this challenge. Last Friday, the Boston-based company filed for Chapter 11 bankruptcy protection and eliminated most of its workforce. In the bankruptcy petition, the company listed $65.6 million in assets and $51 million in debt.\u00a0<\/p>\n The company, founded in 2013, made strides that few others in the industry have been\u00a0able to achieve. Three of its prescription digital prescription tools were approved by the Food and Drug Administration. It was one of the first prescription digital therapeutics companies to get FDA clearance and take its product to market. Its therapeutics were\u00a0covered by 15 Blues carriers and multiple state Medicaid plans, according to founder and former CEO Corey\u00a0McCann.<\/p>\n Download Modern Healthcare\u2019s app to stay informed when industry news breaks.<\/em><\/p>\n Nevertheless, Pear struggled financially. The company earned just under $13 million in revenue in 2022 while suffering losses of around $123 million.\u00a0<\/p>\n In a post on LinkedIn last Friday, McCann said the company failed because of denials from payers and market conditions. McCann stepped down as CEO before the Chapter 11 filing but will serve as a paid consultant during the company\u2019s dismantling. He did not respond to an interview request.<\/p>\n Andy Molnar, CEO of industry trade group the Digital Therapeutics Alliance, said\u00a0payer reimbursement is the biggest challenge the companies in his association face along with an environment of reduced funding. He said Pear’s demise is already having an effect.\u00a0\u00a0<\/p>\n \u201cEveryone is getting the question right now, \u2018How are you not like Pear?\u2019\u201d Molnar said. \u00a0<\/p>\n Arun Gupta, CEO of digital therapeutics company Big Health, said he wouldn\u2019t want to have to raise money right now. He said his company is well funded and has been diligent about lowering its spending.\u00a0<\/p>\n \u201cInvestors are gun shy, appropriately, because they\u2019re losing money on one of the biggest platforms in the space,\u201d Gupta said.\u00a0<\/p>\n<\/div>\n