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THE DIGITAL THERAPEUTICS EXPLAINER: How digital treatments could be a $9 billion opportunity by 2025

BY: Zoë LaRock

A new class of medicine — digital therapeutics (DTx) — has emerged, offering a novel means of treating the swelling number of patients with chronic diseases and keeping associated costs down.

Digital therapeutics deliver evidence-based therapies via software — often in the form of consumer-facing mobile health apps — that replace or complement the existing treatment of a disease. They diverge from the broader digital health market in that they must be approved by regulatory bodies — and displaying proof-of-concept is at the core of their model.

DTx vendors leverage their tech to treat chronic conditions, which gobble up the lion’s share of the US’ healthcare spending: Business Insider Intelligence estimates that the US shelled out up to $3.3 trillion on chronic disease in 2018. The surging prevalence of chronic conditions combined with their sky-high price tags is fueling fast growth in the global DTx market, which is poised to expand 21% annually to hit nearly $9 billion by 2025. 

The sea change sparked by the advent of digital medicines threatens to reshape the entire healthcare value chain. Because drugs interact with nearly every healthcare stakeholder, DTx solutions are leading a variety of players to carve out room for digital solutions: Pharmacy benefit managers (PBMs) are creating logs for DTx as they would drugs, insurers are linking their members up with digital solutions in an effort to mitigate spending, and entrenched pharma and medtech companies are tying up with DTx vendors to dip into new revenue streams.

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