How digital therapeutic company Omada Health has taken a cue from life sciences

CEO Sean Duffy discusses clinical validation, digital therapeutics and the new opportunity for a digital provider.
By Laura Lovett
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Omada CEO Sean Duffy. Photo credit: Omada

Omada Health, the digital health company that recently raised $73 million, came on to the digital health scene in 2011 with a focus on diabetes and chronic conditions. As the company continues to carve out its legacy in the digital health world, it is taking a cue from a more established industry.

“We’re one of the most life sciences-like digital health companies. We don’t fit perfectly into any box,” CEO of Omada Sean Duffy told MobiHealthNews. 

Duffy said that he’s always seen Omada’s product as a therapeutic — not a solely a piece of software. Initially this was met with confusion from potential partner organizations who would try to connect him with the software department.

“And I started saying, ‘Actually, as strange as it sounds, this looks like a therapeutic, like a digital therapeutic,’” he said. 

The term "digital therapeutic" has become common parlance in both the pharma and digital health spaces. However, what that term means exactly is still a point of contention in the industry

For Duffy, it means a software intervention that is targeted as a “hyper-specific clinical outcome,” that is reproducible and is targeted at a reimbursement pathway aligned with therapies. 

Much like a life sciences company developing a therapeutic, the product needs to be validated, he said. 

“In the history of healthcare innovation — usually it wouldn’t matter if it was a drug, device or procedure, what you would want to do is publish studies that would show that what you are doing and what you are collecting payment for delivers a clinical outcome that matters,” Duffy said.  “That, historically, is the underpinning of the life sciences world. You have to publish studies, you have to make sure the drug is effective.”

The validation question has been a popular topic of debate in the digital health spherewith many calling for more guidelines and regulations. The healthcare establishment has begun to move in this direction. Nonprofits like the World Health Organization and the American Medical Association have released guidelines and rulebooks; however, there is yet to be one industry standard. 

Duffy said he thinks any young company that believes their product can bring about outcomes should go the validation route. 

“When we founded the company, we were in the process of generating evidence,” Duffy said. “The revenue conversations we could have once we could have sufficient trial data is very different. I personally think it should be a mandate. If you have something that you believe could contribute to an outcome it is very hard to be successful without it.”

Those outcomes are clutch Omada’s business model. In fact, Omada bills on these outcomes. 

“To our knowledge Omada is the largest scale example of outcomes-based billing, with real materials of clinical data. You find with healthcare outcomes-based billing models tend to be based on overall spend. So, like, at the end of the year we’ll figure out if we increased spending less or more than we expected and that will be the outcome. But there are almost no examples of outcomes-based billing on a clinical measurement. But because we have an [outcomes] scale we can pull in, we charge on the actual clinical outcomes. So that tends to be very interesting to pharma companies who are being asked to do that.”

Now Duffy said his company is beginning to move beyond digital therapeutic to digital provider role — encompassing more health topics. 

“That is just a reflection of us evolving in all of our core capabilities and our focus and approaches,” he said. 

For example, in January Omada Health launched new programs for customers with depression and anxiety, after it announced that it had entered into a perpetual licensing agreement with Lantern Health, a digital mental health company that shut down its commercial operations last August, and will integrate Lantern’s software into its existing infrastructure. 

While Omada may be an early adopter of this term, Duffy predicts digital providers are the way of the future. 

“I would wager that in 10 to 20 years one of the largest providers, if not the largest provider in the country will be a digital provider,” he said. “And there are so many things you can tell people with chronic diseases without needing them to come into an office.”