Risks and rewards of digital therapeutics in treating mental disorders

More Americans than ever before are suffering from mental and emotional distress. In the U.S., the mental health problem is exacerbated by issues across infrastructure, government, and culture. However, because the resources for those living with mental health issues are constrained, startups could have a big impact.

In particular, we believe that digital therapeutic-approaches offer great promise in overcoming the problems inherent in traditional approaches to mental and behavioral therapy. Such problems relate to stigma, cost, and general inaccessibility of cost-effective treatments for the general population.

We are starting to see new energy behind innovators in the mental health space. Examples include Enlyte (discussed in greater detail below); Talkspace, an online therapy app that connects users with licensed therapists; Calm, a sleep and meditation app; and Feel, a wearable designed to monitor the user’s emotional state. Other examples are listed in the Appendix at the back.

Each of these companies—whether they aim to provide easy access to mental health professionals, to promote overall mental wellness, or to better monitor the user’s mental state—has the potential to be highly impactful as well as profitable.

In our view, the time is right to invest in mental health and digital therapeutics. In this paper, we provide an overview of the field of digital therapeutics for mental health, as well as the legal, regulatory and ethical issues that should be considered by entrepreneurs and investors.


Table of Contents


The big four mental health afflictions: Stress, anxiety, addiction, depression

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The mental health crisis costs companies around the world over $1 Trillion in lost productivity and increased health care insurance premiums annually. The productivity losses are primarily caused by absenteeism, and turnover and replacement costs.

In addition, the costs attributable to the family members and loved ones of employees (employee ecosystem) cost employers approximately 250% more in lost productivity than their direct employees. According to a report from the World Health Organization (WHO), 450 million people are currently suffering from mental health disorders leading to illness and disability.

The Lancet Commission on mental health predicts that by 2030, mental illness will cost the world USD 16 trillion. If we look at the US alone, 40.3 million people are affected by the disease of addiction. Twenty percent of US deaths are attributed to addiction to tobacco, alcohol, drugs and other substances.

Stress

The National Institute for Health (NIH) defines stress as a “physiological response to challenge or demand”. There are two forms of stress: acute and chronic. Acute stress is frequently referred to as your body’s fight-or-flight response.

Presenting physical signs such as muscle tension, increased heart rate, sweating, and decreased circulation to extremities. In moderate amounts stress can help an individual accomplish tasks, make changes, and reach peak performance. Chronic stress can lead to long-term health problems.

The NIH states that chronic stress can result in health conditions: such as high blood pressure, heart disease, and obesity. Along with chronic symptoms such as headaches, digestive problems, difficulty focusing, sexual problems, and chronic pain. Chronic stress can also result in emotional disturbances such as depression and anxiety.

Anxiety

The Diagnostic and Statistical Manual of Mental Disorders, 5th Edition (DSM-V) has five major types of anxiety disorders: generalized anxiety disorder, obsessive-compulsive disorder, panic disorder, post-traumatic stress disorder, and social phobia (or social anxiety) disorder.

The diagnosis of Generalized Anxiety Disorder is characterized by excessive anxiety or worry which is difficult to control accompanied by physical symptoms such as restlessness, sleep disturbances, and muscle tension. As of 2003 the National Institute for Mental Health (NIHM) reports that 19.1% of US adults have experienced an anxiety disorder.

Addiction

The American Society of Addiction Medicine (ASAM) defines addiction as “a primary, chronic disease of brain reward, motivation, memory and related circuitry. Dysfunction in these circuits leads to characteristic biological, psychological, social and spiritual manifestations.

This is reflected in an individual pathologically pursuing reward and/or relief by substance use and other behaviors”. This definition of addiction does not limit the scope of addictive behavior to drugs and alcohol. Addiction, as defined by the ASAM, is any behavior which one does not have control over, “negatively impacts interpersonal relationships, and is a dysfunctional emotional response”.

Depression

The DSM-V defines depression as a mood disorder characterized by low mood, loss of interest, suicidal ideation, and hopelessness. The emotional symptoms of depression can also present with physical symptoms such as weight gain or loss, lethargy, and insomnia or hypersomnia.

As of 2018, the World Health Organization (WHO) estimates that approximately 300 million people worldwide suffer from depression. In 2017, the National Institute of Mental Health (NIHM) estimated that approximately 17.3 million adults in the US experience depression.

While many companies have Employee Assistance Programs in place that cover mental health issues for their employees and close family members, there is a strong reluctance amongst those covered to use the available benefits because of the stigma attached to mental health issues and the fear that the employee’s sensitive personal information may be accessed by the employer. Stigma is the key reason preventing many people that urgently need help from receiving it.

In addition, treatment facility capacity is another reason that people are not getting the help they need. There needs to be increased access to evidence-based treatment options for the public. The emerging field of digital therapeutics offers promising solutions.

The promise of digital therapeutics

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According to Wikipedia, digital therapeutics can be defined as a treatment or therapy that utilizes digital health technologies to spur changes in patient behavior. The first mention of the term in a peer-reviewed research publication was in 2015, in which Dr. Sepah et al. defined the “digital therapeutics” as “evidence-based behavioral treatments delivered online that can increase accessibility and effectiveness of health care.” (See Long-Term Outcomes of a Web-Based Diabetes Prevention Program: 2-Year Results of a Single-Arm Longitudinal Study, J Med Internet Res 2015 | vol. 17 | iss. 4 | e92.)

The methods employed by digital therapeutics can be used as a standalone therapy or in conjunction with more conventional treatments, such as pharmacological or in-person therapy. Such methods use various digital devices (e.g., smart phones, apps, sensors, computers, etc.) to help manage, monitor, and prevent illnesses in at-risk patients.

These devices are used to collect data from different sources. Such data may include personalized physiological parameters; behavior, social and geographical patterns; and even data indicative of the user’s mood or feelings.

In the mental health area, we believe that digital therapeutic approaches can overcome three of the biggest problems with conventional therapies: lack of access, lack of affordability, and stigma. The problems with access and affordability are mainly caused by the relative scarcity of trained counselors as compared to the number of people in need of counseling.

Stigma, on the other hand, is a psychological impediment to seeking help based on a person’s feeling of shame about his or her mental afflictions. The field of digital therapeutics offers the promise of delivering behavior therapies safely and effectively via a digital device, and thereby largely overcome the problems of access, affordability, and stigma. For this reason, we believe that now is good time to invest in the digital therapeutics space.

FDA regulatory environment: Software as a medical device

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Software has become an important part of all products, integrated widely into digital platforms that serve both medical and non-medical purposes. Software, which on its own is a medical device, called Software as a Medical Device (SaMD), is one of three types of software related to medical devices.

The other two types are software that is integral to a medical device (software in a medical device) and software used in the manufacture or maintenance of a medical device. (See also Software as a Medical Device (SAMD): Clinical Evaluation – Guidance for Industry and Food and Drug Administration Staff.)

The term Software as a Medical Device is defined by the International Medical Device Regulators Forum (IMDRF) as “software intended to be used for one or more medical purposes that perform these purposes without being part of a hardware medical device.” Examples of SaMD include:

  • Software that allows a smartphone to view images obtained from an MRI medical device for diagnostic purposes;
  • Computer-aided detection (CAD) software that performs image post-processing to help detect breast cancer;
  • Software with a medical purpose that operates on a general purpose computing platform, e.g., software intended for diagnosis of a condition using the tri-axial accelerometer that operates on the embedded processor on a consumer digital camera.

In addition, the FDA have recognized that artificial intelligence (AI) and machine learning (ML) technologies have the potential to transform health care by deriving important insights from the data generated during the delivery of health care. Medical device manufacturers are using these technologies to innovate their products.

The FDA is considering a total product lifecycle-based regulatory framework for these technologies that would allow for modifications to be made from real-world learning and adaptation, while still ensuring that the safety and effectiveness of the software as a medical device is maintained. Adaptive AI/ML technologies differ from other SaMD in that they have the potential to adapt and optimize device performance in real-time to continuously improve health care for patients.

Traditionally, the FDA reviews medical devices through an appropriate premarket pathway, such as premarket clearance (510(k)), De Novo classification, or premarket approval. The FDA may also review and clear modifications to medical devices, including SaMD, depending on the significance or risk posed to patients of that modification.

The FDA’s traditional paradigm of medical device regulation was not designed for adaptive artificial intelligence and machine learning technologies. Under the FDA’s current approach to software modifications, artificial intelligence and machine learning-driven software changes to a device may need a premarket review.

On April 2, 2019, the FDA published a discussion paper Proposed Regulatory Framework for Modifications to Artificial Intelligence/Machine Learning (AI/ML)-Based Software as a Medical Device (SaMD) – Discussion Paper and Request for Feedback that describes the FDA’s foundation for a potential approach to premarket review for AI- and ML-driven software modifications.

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The ideas presented leverage practices from current premarket programs and rely on IMDRF’s risk categorization principles. The FDA introduces a “predetermined change control plan” in premarket submissions, which would include the types of anticipated modifications—referred to as the “Software as a Medical Device Pre-Specifications”—and the associated methodology being used to implement those changes in a controlled manner that manages risks to patients —referred to as the “Algorithm Change Protocol.”

In this approach, the FDA would expect a commitment from manufacturers on transparency and real-world performance monitoring for AI and ML-based software as a medical device, as well as periodic updates to the FDA on what changes were implemented as part of the approved pre-specifications and the algorithm change protocol. The proposed regulatory framework could enable the FDA and manufacturers to evaluate and monitor a software product from its premarket development to post-market performance.

To summarize, SaMD is software used for one or more medical purposes without being part of a hardware medical device. Examples include software that allows commercially available devices to view and process images or other data for diagnostic purposes. SaMD does not include software that drives or controls a medical device, embedded software (firmware), non-medical software that just encrypts data (medical records), and software that enables clinical communication and workflow such as patient registration, scheduling visits, voice calls, and video calling.

Legislative exclusions of software (21st Century Cures Act)

The 21st Century Cures Act (Cures Act), signed into law on December 13, 2016, was designed to accelerate medical product development and bring new innovations to patients who need them faster and more efficiently. Interesting aspects of the Cures Act include:

  • Streamlines FDA procedures to prioritize Breakthrough Devices;
  • Reduces or eliminates review of medical devices deemed to be low risk; and
  • Removes five categories of software from FDA review.

Under the Cures Act, the categories of software excluded from FDA review include:

  • Category A: Software for administrative support of healthcare facilities, e.g., processing and maintaining financial records, claims and billing information, appointment schedules;
  • Category B: “Healthy lifestyle” software that provides no diagnostic, prevention or treatment function;
  • Category C: Electronic patients records, but not intended to interpret or analyze patient records;
  • Category D: Software for transferring, storing, converting formats, or displaying test data lab tests or med device data, but not intended to interpret or analyze patient records;
  • Category E: Clinical Decision Support Software (CDSS), i.e., software that provides recommendations based on medical information (e.g., peer-review). The software must enable independent review of the basis of the recommendations and does not include medical imaging or in vitro testing.

It should be noted that the FDA is authorized to bring Categories C, D, and E back under regulation with a showing of likelihood and severity of patient harm, the extent to which the software function is intended to support clinical judgement, a reasonable opportunity for a health care professional to review the basis of the information, and the intended user and use environment.

Mobile apps

The FDA website includes a page concerning Mobile Medical Applications, which notes that mobile apps can help people manage their own health and wellness, promote healthy living, and gain access to useful information when and where they need it. The FDA issued the Mobile Medical Applications Guidance for Industry and Food and Drug Administration Staff on September 25, 2013, which explains the agency’s oversight of mobile medical apps.

The FDA defines 3 broad categories that are regulated:

  1. App controls a medical device – FDA considers it an accessory. Example: Software that controls an insulin pump.
  2. App that transforms the mobile device into a regulated device. May include attachment for standard mobile device. App may be labeled for medical specific uses. Example: App that allows for control of attached transducer that converts a smartphone into a glucose meter.
  3. App that performs patient-specific analysis and provides patient-specific diagnosis or treatment recommendations. Example: App that calculates dosage or creates a dosage plan for radiation therapy.

The above discussion is intended to be a useful guide in helping entrepreneurs and investors understand whether a given digital therapeutic approach is likely to require FDA review and approval. For obvious reasons, legal counsel should be consulted when needed.

Intellectual property protection

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In the United States, a medical device invention (including a software-based medical device) can be protected by patent provided the invention is novel and non-obvious (the conditions for patentability) and does not fall within an excluded category of subject matter. The excluded categories include natural phenomena and abstract ideas.

A full discussion of the topic of patent-eligibility is beyond the scope of this paper. For our purposes, it suffices to say that software-based inventions that simply diagnose but do not treat a patient are more difficult to patent.

On the other hand, devices that include a treatment function are more clearly eligible for protection. The interested reader is invited to review the articles cited in the margin below.

Example startup: Enlyte

Enlyte (which is being rebranded as WithHope) provides a HIPPA-compliant platform for delivering digital behavior therapies to patients suffering from any one of a variety of maladies, including stress, anxiety, smoking cessation, eating disorders, addiction, depression, self-harm, suicidal ideation and PTSD. A mobile app delivers selected behavior therapies to a patient, including a binaural beat designed to induce a selected brain wave in the patient in combination with a set of subliminal affirmations.

The binaural beats are created by presenting one tone to each ear separately with slightly different frequencies, resulting in a “binaural beat” that induces a certain brain state. The binaural beats are produced within the brain, and the beat frequency equals the difference between the frequencies of the two tones.

For example, when 410 Hz is presented to the right ear and 400 Hz is presented to the left year, a binaural beat of 10 Hz is perceived. If sustained, the binaural beats can be measured in the cerebral cortex via EEG measurements.

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The frequency of binaural beats could therefore be selected to produce EEG-associated states. For example, cerebral activity recorded by EEG is divided into the following categories: Delta waves (0.5-3 Hz, deepest meditation and dreamless sleep), Theta waves (3-8 Hz, Occurs in sleep, deep meditation), Alpha waves (8-12 Hz, power of now, being in the present, aids in mental coordination, calmness, mind/body integration), Beta waves (12-38 Hz, Waking state of consciousness when attention is directed to the outside world and cognitive thoughts), and Gamma waves (38-42 Hz, Cognitive functioning, tasks that require higher processing, learning information, memory).

There is growing research and support suggesting that binaural beats affect cognition and psychophysiological states. Binaural beats have been used to induce brain wave states in the past to decrease anxiety.

Binaural beats have also been used to reduce depression and recidivism rates in alcoholics. The company claims that the effectiveness of creating binaural beats has been proven with a body of scientific research.

The binaural beats are supplemented with subliminal affirmations to help with specific behavioral health challenges. These subliminal affirmations are delivered as spoken audio signals shifted up in frequency and overlaid on the binaural beats.

Because of the frequency shift, the user cannot consciously perceive what is said. However, the working hypothesis is that the messages are perceived subconsciously and thus can be effective in creating positive emotions in the user. Although there’s a lack of scientific evidence to prove the effectiveness of subliminal affirmations, the company claims that the placebo effect with subliminal affirmations is quite powerful in its own right.

With the Enlyte app, patients have the option of listening to selected combinations of binaural beats and subliminal messages. First, the binaural beats are selected to induce a brain state conducive to what the user needs at the time.

For example, the user may listen to Theta to meditate upon waking up in the morning, Gamma during the day when working, and Delta when going to sleep. A set of subliminal affirmations may then be selected and layered with the binaural beats to help the user better cope with the issues he or she is struggling with at the time.

The Enlyte platform includes a library of subliminal messages to help with a corresponding malady (stress, anxiety, depression, addiction, eating disorder, smoking, and self-harm coupled with suicidal ideation). Each set of affirmations is available with each of the brains states in the platform’s media library. In other words, users can mix and match the brain state and subliminal affirmations to provide them exactly what they need at the time.

The approach taken by Enlyte, if proven to be effective, is highly scalable and could help to dramatically improve mental health and well-being of millions of users. There are other exciting companies in this space. See the attached Appendix for a list of some of these.

Reasons to invest in digital therapeutics

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The mental healthcare market is huge, and growing. It’s not an exaggeration to say that the market is proportional to the human population worldwide. Moreover, in the US and other developed countries, it is becoming more common for mental health treatments to be reimbursed through employer-based health plans.

At the same time, there is significant friction in the market, making it overly difficult and expensive for individuals to get the help they need. And the stigma associated with mental health issues acts as a further barrier to treatment.

Digital therapeutic approaches offer the promise to overcome all of these problems in a highly scalable and profitable way. In addition, the FDA regulatory hurdles are relatively low compared to other medical device and pharmaceutical-based therapies.

In today’s highly mobile society, digital therapies are more efficient than in-person or telephone counseling, and they offer opportunities for therapists to efficiently manage patients and gain insights from big data analytics and AI. The authors can envision a future (in the next 5-10 years) where hundreds of millions of users worldwide will have ready access to effective mental health therapies wherever and whenever they need them, through their smart phones.


Appendix: Example startups

Here are some other examples of emerging companies in the digital therapeutics space.

Pear Therapeutics

Developer of a software-based digital therapeutics platform designed to treat disease and enhance the efficacy of pharmaceuticals. The company’s platform combines novel digital interventions with drugs to enhance efficacy well beyond anything that is commercially available or in clinical development, enabling clients to get better outcomes for patients, smarter engagement and tracking tools for clinicians and cost-effective services for payors.

The company raised $64 million of Series C venture funding in a deal led by Temasek Holdings on January 4, 2019, putting the company’s pre-money valuation at $430 million. Novartis, Trustbridge Partners, EDBI, 5AM Ventures, Arboretum Ventures, JAZZ Venture Partners, Bridge Builders Collaborative and Blue Water Life Science Fund also participated in the round.

Stop, Breathe & Think

Provider of an emotional wellness platform designed to find peace of mind everyday. The company’s platform offers personalized approach prompts for users to check how they are feeling and provide recommendations for short activities like meditations tuned to those particular emotions, guiding people of all ages and backgrounds through meditations for mindfulness and compassion.

Pzizz

Provider of a mobile application intended for sleep and naps. The company’s application uses effective psychoacoustic principles to create beautiful dreamscapes, hybrid music system, variable voice cover and personalized features, enabling users to get proper sleep by falling asleep fast, staying asleep and waking up feeling refreshed.

Simple Habit

Developer of a meditation and anxiety management application intended to drive a healthy lifestyle. The company’s application offers short meditations and audio therapy sessions which has more than 1,500 sessions based on situations like sleeping, morning anxiety and lack of focus, enabling users to reduce daily stress.

Aura Health

Developer of a health application designed to relieve stress and anxiety. The company’s health application provides audio content that is guided meditations from a network of therapists and wellness coaches and uses machine learning to personalize an audio wellness program based on people’s goals or mood, enabling users to form a habit of meditation and reduce stress sitting at home.

Pacifica

Developer of a mental health application designed to help users to manage their stress and anxiety. The company’s application is based on cognitive behavioral therapy and mindfulness meditation, enabling users to reduce stress.

2Morrow

Provider of an online digital health platform intended to focus on health, wellness, safety and personal development. The company’s platform uses the Acceptance and Commitment Therapy (ACT) approach, and research-based algorithms and big data to personalize programs to the individual, enabling users to teach how to deal with their unhelpful thoughts, feelings and urges while still working toward valued goals.