Sandoz, the generics division of Novartis, is altering commercial course, returning marketing duties for two prescription digital therapeutics back to Pear Therapeutics. The move, which some had anticipated, comes 18 months after the two signed a co-promotion deal.
Since the Sandoz/Pear pact was widely seen as a litmus test of sorts for pharma’s role in helping distribute this nascent technology, the commercial break-up raises questions about the viability of such partnerships going forward. It also highlights the parties’ sometimes conflicting priorities: pharma’s concern about its core business versus digital therapeutics firms’ worries about funding and investment.
“There is no serious senior leadership expectation within pharma that digital therapeutics will significantly bend topline upwards in the next one or two years,” explained Larry Brooks, principal and digital health practice leader at marketing innovation consultancy Evolution Road and a former director of business innovation in the realm of digital health for Boehringer Ingelheim. “Instead, this is a longer-term play for pharma as they think about the broader changing business model and gain experience building the right capabilities for this future state.”
Digital therapeutics (DTx) players, meanwhile, are building “grandiose plans and are seeking to use new pharma collaborations as their ticket to scale, by leveraging large pharma sales teams and mature marketing programs,” Brooks added.
Moreover, what’s driving these alliances is pharma’s desire to bolster the value of its underlying offering to its customers. But it remains an open question whether providers will be more likely to prescribe a drug with a companion digital therapeutic compared to the pharma product alone.
“I can share first-hand that defining the strategy is easy, but pulling through the execution is difficult,” Brooks noted. “DTx and pharma companies live in separate worlds with distinct risk tolerances, short- and long-term strategic priorities and investment needs.”
Despite the Sandoz/Pear news, he and others foresee such collaborations continuing. DTx still represents a “huge opportunity” for pharma, wrote Alessio Brunello, senior pharma analyst with GlobalData, in a note Thursday. DTx, he said, should see continued partnership activity in R&D and therapeutics, due in part to pressure on health systems from the aging population and increasing costs and in part to the potential of improved adherence.
DTx can be prescribed as monotherapy or together with other therapies to prevent, manage or treat diseases across diverse indications, particularly chronic diseases and neurological disorders. Pear’s reSET product, approved by the FDA in 2017, was the first software application sanctioned for clinical use to treat substance use disorder (SUD) related to stimulants, cannabis, cocaine and alcohol.
Launched last November, reSET provides a 12-week program of cognitive behavioral therapy to patients via mobile and desktop applications. Pear’s reSET-O program to treat opioid use disorder (OUD), approved by the agency last December, pairs cognitive behavioral therapy with buprenorphine. Both digital therapeutics work in conjunction with outpatient care.
Now Sandoz is relinquishing commercialization responsibilities for the two addiction-focused prescription digital therapeutics, according to their joint announcement, after a transition period. The commercial break-up did not come as a complete surprise; there were inklings that their co-promote arrangement had run into choppy waters.
DTx companies are taking divergent routes to bringing their wares to market. Proteus Digital Health last year signed a five-year, $88 million deal with Otsuka Pharma to continue to develop and commercialize the Abilify MyCite ingestible sensor-pill platform. On the other hand, Akili Interactive said it is building its own distribution platform, including the end-to-end prescription and procurement process, distribution, medical affairs, technical support and patient data management, for its video game-like digital therapeutic. (Although, Akili has an agreement with Shionogi covering Asian markets.)
Pear, too, has been ramping up to commercialize on its own. “As part of the existing co-promotion, Pear currently has a commercial and medical field force in the place that is actively calling on physicians and payers,” CEO Corey McCann, Pear president and CEO, said in response to emailed questions. “Our focus in the short-term is to expand this field force to address the significant unmet need in SUD and OUD.”
Pear has put other commercial leadership in place this year, including Brian Prunier as VP of patient services and Michael Pace as VP of market access, according to their LinkedIn profiles. Its chief commercial officer, Julia Stransberg, is another 2019 hire. McCann declined to divulge exact sales figures but said that, to date, Pear has generated over 4,000 reSET and reSET-O prescriptions.
Sandoz, for its part, attributed the split to a leadership change at the generics company. It recently tapped Richard Saynor, a GlaxoSmithKline veteran, for the CEO position, replacing former CEO Richard Francis. It also pointed to the division’s ongoing transformation, which has resulted in “a reinforced focus on and capital allocation for Sandoz core business,” the press release noted.
The two organizations aren’t fully parting ways. They’ll continue to develop future prescription digital therapeutics in schizophrenia and reducing the mental health burden of multiple sclerosis, two areas in which the firms had agreed to collaborate, through the Novartis Institutes for BioMedical Research (NIBR), spokesperson Leslie Pott told MM&M.
“Novartis remains committed to digital therapeutics and the role they can play in delivering better outcomes for patients worldwide,” Pott added. “Novartis is an active member of the Digital Therapeutics Alliance. Novartis has already invested in the Series A, B and C financings, and is committed to the success of these investments in the future.”
Given that the Sandoz-Pear co-promote was one of the earliest deals between a pharma and a DTx player, its dissolution raises questions about such partnerships moving forward. Have the mutual benefits that attracted such partners 18 months ago changed, especially given the move among some DTx firms to add pharma and payer expertise?
As analysts from Rock Health and ZS Associates noted in a 2019 report on pharma-DTx alliances, pharma generally lacks technical know-how, expertise in UX (user experience), agility or one-to-one relationships with patients. What the corporate partners lack in those areas, they offer to make up for in their extensive R&D ability, established provider and health system sales channels, and knowledge of regulatory pathways, they wrote.
“The benefit in general for either of these companies is that you take the best skill set from each side,” said Lisa Flaiz, director of multichannel marketing and worldwide digital hub lead for Bristol-Myers Squibb.
Indeed, pharma, she said, understands well the formula for selling into HCPs and how to forge new markets—skills from which the DTx companies may benefit. The DTxs, in turn, can deliver insights in the form of data, from biomarkers to patient-reported outcomes, that can help pharma better understand its customer segments, as well as diversity of skill set in the form of execs with tech and product development experience.
Moreover, the bigger companies often view a DTx as a way to bundle benefits and add value to an existing product line, assuming it complements the pharma’s suite of products.
“Adding, say, patient support onto an existing product line could really benefit [the pharma company] because it can help get better access to doctors,” she said. “It could be differentiating in the market or add value in a way that helps increase [market] access for that product.”
Yet, the parties’ diversity of experience and cultures can sometimes spell operational risk. “The challenge,” said Flaiz, “is that people who sell drugs don’t know how to sell software.
“We’re used to doing these hard launches, where we go out to a sales meeting in Dallas, and day one of approval we’re out there in the market with our IVAs [interactive visual aids] and our websites and our search campaigns and all of that. Putting software out in the market requires a totally different way of thinking. We have to think about soft launches and constant improvement and updates to the newer OSs.”
However, as long as incentives align, partnering remains a viable option. That’s because, even assuming a DTx player has the investors and the right staff to go it alone, they still need to convince payers and physicians to come around to the software-as-therapy concept.
Have the DTx companies sufficiently made their case to the insurer and HCP communities? “The short answer for me is no,” said Flaiz. “What we’ve seen so far in uptake is that they are not getting reimbursement yet.”
Payers think of these solutions as different, she said. “But in my opinion, it shouldn’t matter whether it’s a pill or an app. If the outcomes are the same, the payers should be paying for the outcome.”
And for HCPs, this is new territory, as well. Clinicians are less likely to use it in settings where they’re not getting reimbursed, she said. “They’re not getting paid for the extra coaching; they’re not going to get paid if somebody calls their office and has complaints about Bluetooth connectivity issues.”
So too, the right way to measure the success of a co-promote deal has yet to be determined. And, thus, whether DTx firms are better off going it alone or in cahoots with their biopharma cousins remains an open question. “I think the jury is out,” said Flaiz. “We’ll really only get to know the answer to whether co-promote deals are successful when we look back in 15 years.”
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