South Korea is the only country to officially recognize digital therapeutics as a category. Nevertheless, the concept of software-based tools designed to manage or treat medical conditions has received enormous attention in the U.S. as proponents tout their potential to both widen access to care and improve patient outcomes. This optimism has driven significant financial investment in the sector, which ballooned to $3.4 billion in 2021.
However, recent setbacks and billions of dollars in bankruptcies in 2023 indicate that the field is stagnating. Though industry voices point to regulatory hurdles as the culprit, deeper structural challenges threaten the future of “software as a medical device” and other digital health technologies, as categorized by the Food and Drug Administration.
On the surface, the main impediment to digital therapeutics is the law. For an item or service to be covered by the Centers for Medicare and Medicaid Services, the Social Security Act requires it to have a benefit category. The act further mandates that items and services with a Medicare benefit category may only be covered if they are “reasonable and necessary for the diagnosis or treatment of illness or injury.” This criterion, though not explicitly defined, is considered to be more rigorous than the “safe and effective” standard that the FDA is required to use for a drug or device to be marketed.
This article is exclusive to STAT+ subscribers
Unlock this article — plus in-depth analysis, newsletters, premium events, and networking platform access.
Already have an account? Log in
Already have an account? Log in
To submit a correction request, please visit our Contact Us page.
STAT encourages you to share your voice. We welcome your commentary, criticism, and expertise on our subscriber-only platform, STAT+ Connect