In this article, The Digital Insurer’s Andrew Dart discusses the emergence of Digital Therapeutics. He shows how, with its targeted disease focus and emphasis of clinically proven outcomes, it provides a strong return on investment for insurers. He argues, however, that while medical regulators and big pharmaceutical companies have already swung behind this trend, insurers are late. He believes this is due to the overwhelming noise created by their own digital wellness programmes and their failure to see the difference between Wellness Apps and Digital Therapeutic Apps.
There’s been a trend since the early 2010s for Life and Health insurers in Asia to introduce health and fitness, lifestyle, rewards programmes. One of the first in Asia was Great Eastern Life, who launched their “Live Great” wellness rewards program in Singapore in 2012. AIA launched its Vitality wellness rewards program in Singapore soon after in 2013 and have expanded across the rest of Asia in the years since. This played against the background of the rise of the quantified-self movement, and fitness tracker wearables craze which culminated with the much-anticipated launch of the Apple watch in early 2015.
From Payer to Partner
For these insurance first-movers, the underlying imperative was to change their relationship with their customers. Up to that point, life insurance was a once and done affair with the only regular contact being the annual statement. These Wellness programs strived to engage customers touching their lives on a daily or weekly basis. In addition, the health and fitness angle was intended to reduce claims and increase longevity. Indeed, the Vitality program touts some impressive statistics on these measures plus improved retention as one of the best “science-backed” programs available to insurers.
Many insurers now see wellness as an essential element of their customer engagement strategy. Probably the most notable of these later entrants is AXA. They launched their “Payer to Partner” strategy in 2016, which is much broader than pure wellness. Their aim is to transition their business over to this new customer-centric model by 2020.
Missing the target?
The downside of most of these programmes is that chronic diseases have largely been overlooked. These programmes have been designed to appeal to a broad range of people and don’t provide specialist intervention and support that is required for people coping with chronic disease.
The rise of chronic disease is now seen as a global epidemic. The risk factors for the chronic disease include smoking, physical inactivity, high levels of alcohol consumption and obesity. These are all driven by behaviour and are why these are often referred to as lifestyle diseases. Globally, chronic diseases such as diabetes, cardiovascular disease, chronic obstructive pulmonary disease, and cancer contribute to over 60% of the mortality rate and this is expected to rise to over 70% by 2020.
The situation has become so alarming, that many governments around the world are adopting new public health policies, such as “sugary drink taxes” to put a brake on this trend.
The growing Health Protection Gap
In Singapore, the government announced its “War on diabetes” in 2016. A year later it unveiled a multifaceted community programme to combat this chronic condition.
This demonstrates how seriously the Singapore government views the situation and highlights why the industry needs to evolve and develop products that address this growing need within the community.
This is further underlined by a recent study, published by Swiss Re. It describes a health protection gap of over US$1.8 trillion across Asia. It states that nearly 50% of the gap is caused by chronic conditions, with the top 3 being Hypertension, Diabetes and High Cholesterol. Interestingly, Swiss Re found that 63% of Asian households with chronic diseases were more likely to purchase insurance. Their takeaway was that insurance products that focus on lifestyle-related chronic conditions would fill a real need in Asia. Additionally, they advocate the use of data and technology to help reduce the chronic disease risk thereby improving the profitability of existing books and opening new customer segments that were previously too higher risk to touch.
A new approach: Digital Therapeutics
Over the last 18 months, a new category of App addressing the chronic disease management space has emerged. Known collectively as “Digital Therapeutics”, these Apps are specifically aimed at a range of conditions including mental health, opioid addiction, and diabetes to name just a few. Unlike the wellness and health & fitness Apps that came before, Digital Therapeutics Apps have the weight of clinical evidence that proves their effectiveness in dealing with disease and delivering positive outcomes for all stakeholders.
In many jurisdictions, these Apps are held to new evolving standards based on those applied to medical devices or medications. In 2017, the US Food and Drug Administration (FDA) introduced its Digital Health Pre-Cert program, to speed innovation within digital health technologies. The first batch of Digital Therapeutics Apps to have undergone certification have recently been launched, including reSET, and more Apps are on the way. In the UK, the NHS is also moving in a similar direction.
Here in Asia, we have not been left behind in this race. In 2017, a diabetes Therapeutic App created by Wellthy Therapeutics became the first in South Asia to be prescribed by doctors. This was only possible due to a series of published clinical studies that proved its effectiveness in combating the disease.
Digital Therapeutics emerge from the Wellness wilderness
The big pharmaceutical companies like Novartis and Merck have been quick to spot this trend. They are busy partnering with and investing in HealthTechs focused on the development of Digital Therapeutics.
Insurers, however, are still sitting on the sidelines.
McKinsey argues that Digital Therapeutic Apps have been held back from mainstream adoption due to the more than 300,000 commercial health & wellness Apps already on the market. This is one of the factors why insurers have been slow to move in this area. Many insurers already have companion Apps for their wellness programs. Why have another App?
So, what’s the difference?
Digital Therapeutics are a whole other proposition from the traditional Wellness App. Firstly, they are hyper-personalised. They look to understand the habits and preferences of the user and leverage those to make small but critical behaviour changes over time. Whereas Wellness Apps advocate quite generalised changes that may be very difficult for the user to implement. Secondly, Digital Therapeutics are very engaging (addictive) often using a blend of AI and human coaching to proactively intervene. Apps such as Wellthy, claim over 70% of users engage with the App on a weekly basis. The ability to chat with a coach “in the moment” allows behaviour change immediately. In my own case, the ability to take a photo of the nutrition label from my favourite wholemeal bread and share with my coach to get immediate feedback was fantastic.
Obviously, Therapeutics are laser-focused on the specific disease and comorbidities (associated diseases) which make each user unique. They help monitor readings (blood sugar, etc.) and are very persistent in following up. For people coming to grips with Type-2 diabetes, for example, this is critical in changing behaviours that have been ingrained for 40 years or more. What’s more, these Apps can provide proactive alerts when readings fall drastically out of the expected range, which can literally save lives.
With most Wellness Apps, the user is pretty much on their own. To contrast, Digital Therapeutics Apps identify the user’s personal support network – from family caregiver to their chosen healthcare professional and build appropriate data sharing and analytics to optimize their positive influence on the user. For the HCP, in particular, the data from the therapeutics App helps fill in the blanks as to what their patient has been doing between visits and allows for much more meaningful consultation with their patient.
It’s all in the clinical results
In the end, it all boils down to results. Results for the users and for the stakeholders. The ability to demonstrate clinically meaningful results is what qualifies an App to be a Therapeutic.
In this respect, we see a number of Apps in Asia racking up impressive results in combating diabetes and gaining industry kudos by having their results published by professional bodies such as the American Diabetes Association and the American Association of Clinical Endocrinology. These results show, at a population level, that the risk of complications from diabetes can be reduced by over 20% in just 16 weeks. For the insurer, this translates into avoiding claims that would be worth thousands of dollars each year for every patient. For the patient, the results can be life changing from an improved quality of life perspective.
The Bottom Line
For insurers that have yet to commit to the health & wellness/lifestyle bandwagon, Digital Therapeutics presents an opportunity to quickly and profitably tackle customer segments within their existing portfolio. This could be in the individual or group or employee benefits areas, where the general rise in chronic diseases will drag on profitability as chronic diseases emerge from previously healthy members. In addition, Digital Therapeutics can enable nimble insurers to open brand-new segments with products and companion programs that target impaired lives, providing real points of differentiation from the rest of the market.
For insurers that already have health & wellness programmes, Digital Therapeutics represents the logical next step to supercharge and broaden the appeal of their programmes. However, they better be quick!