Digital Health Transformation: A Practical Guide for Life Sciences Companies

In 2022, many if not most pharmaceutical, medical device, and other life sciences companies established strategies to innovate digital health technology complementary to their existing strategic focus. The digital transformation of the life sciences industry is still widely unfolding across the marketplace. In 2023 and beyond, the race is on to launch the next generation of digital health technologies to innovate the delivery of therapies to patients.

Finding the optimal digital health focus will be a challenge for many life sciences companies, as they accelerate into digital health through this evolving regulated space. To be sure, life sciences companies that do find ways to adeptly unleash the power of digital health will gain a competitive advantage by providing improved patient access and quality of experience. In this fast-moving environment, in-house counsel, C-suites and investors of life sciences companies in the midst of strategic digital transformations or product development should do the following:

  1. understand the breadth of digital health
  2. identify strategic goals in digital health
  3. identify resources, partners, collaborators, and targets
  4. consider digital health as a path to environmental, social, and governance (ESG) and diversity, equity, and inclusion (DEI)
  5. unleash the power of digital health

Acceleration will be a key driver of success in digital health transformation initiatives in 2023, particularly given the pace necessary to iterate second- and third-generation efforts following the launch of any successful digital health pilots or products.

#1 Understanding the Breadth of Digital Health
The breadth of digital health itself is daunting, and the first challenge for life sciences companies looking to launch or reboot their digital health transformations is to understand the universe of activities that now fall under digital health. The following four categories are among the most relevant for life sciences companies today:

  • U.S. Food and Drug Administration (FDA)-approved/cleared products and medical devices such as digital pills, software as a medical device (SaMD), artificial intelligence–driven medical devices, and innovative augmented reality and virtual reality medical devices. Many of these FDA-approved digital products are accompanied by supporting hardware and use machine learning models to diagnose patients, track and manage chronic diseases, or deliver a therapeutic intervention.
  • Telemedicine and other telehealth services that offer either direct-to-consumer or physician-referral healthcare services such as remote patient monitoring (RPM) and remote therapeutic monitoring (RTM), laboratory test orders, online pharmacies, behavioral health counseling, and concierge medicine.
  • Direct-to-consumer mobile apps that focus on consumer health tracking, patient/provider communication tools, adherence reminders and other tools, or healthcare community building, among others.
  • Clinical trial and related life sciences services companies that assist life sciences companies in digitalizing and enabling efficient participation or administration of decentralized clinical trials or other research efforts. Examples include (1) mobile technology that allows the patient to record their various vitals in lieu of an in-person visit to the site of care and (2) machine learning models that can be used to identify research sites that are more likely to have a local concentration of patients that qualify for the trial.

Naturally there can be some overlap among these four categories, such as direct-to-consumer apps used in clinical trials. In all events, obtaining a clear understanding of the breadth of digital health can significantly assist management and business leaders in nimbly assessing their areas of strategic focus in digital health and set the course for acceleration in those areas.

#2 Identifying Strategic Goals in Digital Health

Once company in-house counsel, executives and investors understand what digital health is and how the company defines it, the next step is to identify the company’s digital health goals based on the resources available to advance the endeavor. Some examples of strategic goals could include:

  • establishing a new product line (e.g., with an FDA-approved or cleared SaMD accompanied by ancillary hardware or other equipment that might serve as a digitalized companion diagnostic for a pipeline asset under development)
  • increasing a company’s patient-centric focus, for example, through patient access to an online talk therapy or concierge medicine service or a psychosocial support online platform to help a patient community dealing with a chronic or terminal illness
  • reducing the cost of clinical trials and increasing diversity by increasing clinical trial enrollment and retention through digital tools such as text reminders, participation trackers that send positive messages to reinforce adherence to study protocols, and digitalized ride-share conveniences to assist in study subject transportation to the study site when required by the protocol

Life sciences companies wishing to emphasize their areas of therapeutic focus might seek to develop multiple digital health innovations centered around a particular therapeutic area, for example, femtech and other women’s health initiatives, behavioral or other mental health disease areas, or early cancer detection screening.

# 3 Identifying Resources, Partners, Collaborators, and Targets

Strategy and resources to support identified digital health goals are often a proverbial chicken-or-egg problem. Assessing to what extent company resources will be put to use toward digital health transformation initiatives is another key driver of unleashing measurable success for a digital health initiative. “Low-hanging fruit” initiatives often include mobile app development or chatbots for direct-to-consumer use, such as patient community apps where users can post their thoughts, ask questions, and access educational resources. Machine learning models and software development require significant expertise and sufficient budget to see the product to completion.

Importantly, companies must also consider the regulatory burdens of their initiatives, including under FDA laws regarding, for example, regulation of medical devices and clinical trials and healthcare laws such as the federal Anti-Kickback Statute and coverage and reimbursement rules for digital products and services. Understanding the regulatory characteristics and associated timelines of each of the categories of digital health can significantly accelerate internal decision-making regarding resource commitment and investment.

As part of this effort, identifying partners, collaborators, and targets can also often be beneficial to ensuring a successful digital health strategy. Life sciences companies looking to make a pivot into digital health sometimes possess the internal knowhow and strategy outlook to advance the transformation. Other times, the transformation can benefit from a partnership or collaboration with those who have already developed the types of digital solutions that a life sciences company seeks to pilot or scale. Finally, it may be that acquiring a target company with the knowhow and potential to scale up is just the type of transformation the life sciences company needs to accelerate into the digital health frontier.

#4 Considering Digital Health as a Path to ESG and DEI

Many life sciences companies focused on digital health transformation are fairly attuned to how their initiatives might serve the greater good. And why not? Digital health initiatives frequently lend themselves to promoting access to care, access to community, and access to technology. Companies can strategically cultivate these characteristics of digital health transformations to complement their ESG initiatives as well as their commitments to DEI in clinical trial research and access to medicines and other treatments. These synergies thus transform digital health initiatives themselves from a product development objective to a board-level objective, one for which investors will also have a keen interest in demonstrated and measurable success.

#5 Unleashing the Power of Digital Health

There are many implementation steps necessary for a successful digital health launch. Assessing regulatory burdens; determining user need through market research; and understanding internal resources, expertise, and time involved to get to market or go live are among the many, many factors companies must consider. Some initiatives will have relatively low regulatory burdens, but those may also tend to have relatively low practical impact for patients. Other transformation projects may be as substantial as a pipeline program, with the payoff being an approved or cleared product that results in reimbursement. Unleashing the power of a sophisticated digital health project will require, much like traditional product development itself, a cross-functional team of subject matter experts across information technology, data privacy and cybersecurity, regulatory, research and development, clinical operations, safety, legal, compliance, and many others. Many clients are having success creating their own Digital Health Center of Excellence or working group and processes to identify, vet, and nurture digital health opportunities.