How to avoid things going Pear shaped…

Written by Staff Article — 2023-05-25.

A case study for careful commercial model planning.

Innovative companies are constantly emerging to revolutionise patient care within the dynamic healthcare landscape. However, not all ventures find success. One such example is Pear Therapeutics, a pioneering digital therapeutics (DTx) company that unfortunately experienced a downfall. This article explores the reasons behind Pear Therapeutics' failure, emphasising the importance of careful commercial modelling when scaling a business. Additionally, it delves into the realm of DTx companies and the growing significance of software prescriptions in the health sector.

The Rise and Fall of Pear Therapeutics

Pear Therapeutics, founded in 2013, aimed to develop prescription digital therapeutics that combine software applications with clinical interventions to improve patient outcomes. The company gained recognition for its innovative approach, creating digital therapies for conditions such as substance abuse disorder, insomnia, and depression. Pear's flagship product, reSET, was the first FDA-approved prescription digital therapeutic for substance use disorder.

Despite initial successes, Pear Therapeutics faced numerous challenges that ultimately led to its demise. One of the key factors was the complexity of commercial modelling in the healthcare industry. Scaling a business requires careful consideration of market dynamics, pricing strategies, reimbursement models, and regulatory requirements. Unfortunately, pear Therapeutics struggled to navigate these complexities effectively, hindering its ability to expand its customer base and generate sustainable revenue. That is not to say the venture was not without promise. Pear was once valued at 1.6 billion. The company recently sold all its assets for just 6 million.

Understanding Digital Therapeutics (DTx) Companies

Digital therapeutics companies like Pear Therapeutics aim to leverage software applications, data analytics, and clinical interventions to deliver evidence-based therapeutic interventions to patients. Developers design DTx products to be prescribed by healthcare providers and used as part of a comprehensive treatment plan. These software-based interventions have the potential to improve patient outcomes, increase accessibility, and reduce healthcare costs.

DTx products differ from general health and wellness apps as they undergo rigorous clinical trials and regulatory evaluation to demonstrate safety and efficacy. These digital interventions often complement traditional therapies or can be positioned as standalone treatments for various conditions. Despite Pear's challenges, the digital therapeutics industry continues to gain momentum as healthcare providers and regulators recognise their potential to augment traditional care models.

The Growing Area of Software Prescription in Healthcare

Software prescription refers to the practice of healthcare providers prescribing software-based interventions as part of a patient's treatment plan. This emerging trend holds great promise in addressing the unmet needs of patients and expanding the reach of healthcare services. By integrating software prescriptions into clinical practice, healthcare professionals can utilise the power of technology to improve patient engagement, monitor progress, and deliver personalised care.

In recent years, software prescriptions have gained traction in various therapeutic areas, including mental health, chronic disease management, and behavioural interventions. Digital therapeutics offer the advantage of scalability, allowing healthcare providers to extend care beyond the clinic and into patients' everyday lives. The COVID-19 situation further accelerated the adoption of telehealth, both within the industry and among service users, by emphasising the importance of accessible and effective remote care options. Digital therapeutics are the high-tech extension of telehealth practices.

Using software prescriptions in healthcare offers several advantages that contribute to improving patient care and enhancing overall healthcare delivery. Here are four key advantages:

Personalised and Targeted Interventions: Software prescriptions enable healthcare providers to tailor treatment plans according to each patient's specific needs. By leveraging digital therapeutics, healthcare professionals can deliver personalised interventions that address individual symptoms, behaviours, and treatment goals. This level of customisation enhances treatment efficacy and patient engagement, leading to better health outcomes.

Increased Accessibility and Convenience: Software prescriptions provide patients with greater access to healthcare services. Patients can conveniently access digital interventions through mobile applications, web platforms, or wearable devices. This accessibility is particularly beneficial for individuals who face barriers to traditional in-person care, such as geographic limitations, transportation challenges, or physical disabilities. Software prescriptions extend the reach of healthcare beyond the confines of a clinical setting.

Continuous Monitoring and Feedback: Digital therapeutics enable real-time monitoring of patients' progress and adherence to treatment plans. Through software prescriptions, healthcare providers can remotely track patients' engagement, collect data on their health parameters, and receive feedback on treatment efficacy. This continuous monitoring facilitates early intervention, allows for timely adjustments in treatment plans, and fosters a collaborative patient-provider relationship.

Cost-Effectiveness and Efficiency: Incorporating software prescriptions into healthcare can contribute to cost savings and improved operational efficiency. Digital interventions can reduce the need for frequent in-person visits, especially for chronic disease management or behavioural interventions. By leveraging technology, healthcare providers can deliver care remotely, streamline administrative tasks, and optimise resource allocation. Adoption of Dtx not only reduces healthcare costs but also improves the overall efficiency of healthcare delivery systems.

These advantages collectively empower patients, enhance the quality of care, and promote proactive management of health conditions. As software prescriptions continue to evolve and gain acceptance, they can transform the healthcare landscape, making care more accessible, personalised, and efficient. However, while software prescriptions offer significant benefits, certain disadvantages and challenges are associated with their implementation. Here are four key disadvantages to consider:

Limited Patient Access to Technology: Software prescriptions rely on patients accessing the necessary technology, such as smartphones, computers, or wearable devices. However, not all patients may have the means or technical proficiency to utilise these technologies effectively. This can create disparities in access, particularly among vulnerable populations or individuals with limited resources, potentially exacerbating existing healthcare inequalities.

Digital Literacy and Technological Barriers: Software prescriptions require patients to be comfortable and proficient in using digital platforms or applications. Some patients, particularly older adults or those with limited digital literacy, may struggle to navigate and utilise these technologies effectively. This can hinder their ability to engage with the prescribed interventions fully and benefit from them optimally.

Data Privacy and Security Concerns: With software prescriptions, patient data is collected, stored, and transmitted electronically. Naturally, concerns about data privacy and security are present. Healthcare organisations and digital therapeutics providers must adhere to strict data protection regulations and implement robust security measures to safeguard patient information. However, breaches or unauthorised access to sensitive health data can compromise patient privacy and erode trust in digital healthcare solutions.

Integration with Existing Healthcare Systems: Integrating software prescriptions into existing healthcare systems can be challenging. Healthcare providers must seamlessly incorporate digital interventions into their workflows, electronic health records, and care coordination processes. Achieving compatibility between software platforms and ensuring smooth information exchange can be complex, requiring standardisation and integration efforts. Without proper integration, scalability of software prescriptions is challenging.

When scaling up a commercial project or developing a new product, it is vital to proactively recognise and address such disadvantages. Any commercial model should be thoroughly assessed for its weakest points before a large-scale rollout. By focusing on digital inclusion, data security, technological support, and system integration, healthcare organisations can mitigate these challenges and maximise the benefits of software prescriptions for patient care.

How to avoid things going Pear Shaped

Commercial modelling involves a comprehensive understanding of a company's target market and aligning business strategies accordingly. For healthcare startups like Pear Therapeutics, it is crucial to assess reimbursement mechanisms, market adoption rates, and regulatory hurdles before launching a product. Failure to do so can lead to poor market penetration, inadequate revenue generation, and, ultimately, business failure.

In Pear's case, the company encountered significant hurdles in terms of reimbursement. Despite obtaining FDA approval for reSET, the journey towards obtaining insurance coverage and reimbursement proved to be incredibly challenging. Furthermore, payers and providers exhibited a sense of caution when it came to embracing new technologies, particularly in the rapidly evolving realm of digital therapeutics. Individuals who privately paid for treatments often look to CMS (the agency overseeing Medicare and Medicaid in the US) for guidance. Most importantly, regulations for DTx coverage were never fully updated to support full reimbursement of these solutions - payers will often wait to see what CMS (overseeing Medicare and Medicaid) is doing before following suit.

Unfortunately, CMS's regulations concerning DTx were slow and failed to fully acknowledge the necessity of reimbursing DTx treatment, resulting in an unfavourable reimbursement landscape across many states. The Medicaid program's failure to recognize these treatments as eligible for reimbursement undoubtedly played a role in contributing to PEAR's downfall. The company's inability to navigate these reimbursement challenges ultimately restricted its market reach and undermined its financial viability.


The demise of Pear Therapeutics serves as a valuable lesson in the challenges of scaling a digital therapeutics company and the critical importance of careful commercial modelling in the wider field of product development. In addition, it highlights the need for thorough market assessment, reimbursement strategies, and regulatory navigation to ensure sustainable growth and market penetration. Pear may likely have been a victim of being ahead of its time. In some respects, it is similar to the dot-com boom in the late 1990s when tech companies accelerated ahead of the general population's adoption and use of the internet.

However, despite Pear's setback, the field of digital therapeutics continues to expand, with software prescriptions playing a pivotal role in transforming the healthcare landscape by delivering evidence-based interventions and improving patient outcomes. There may be a significant role for software prescriptions in the future, and the Dtx market is certainly worth monitoring. But, for now, patient perceptions, the abundance of self-directed health apps and the Pharmaceutical Industries' reliance on revenues from prescription medicines may all play a part in tempering widespread adoption. As the industry evolves, the lessons learned from Pear's journey will help guide future entrepreneurs and innovators in the pursuit of revolutionising healthcare through technology-enabled solutions.

Through studying examples like this case study as running a range of DTx projects across multiple assets and therapy areas, IDEA Pharma has become an expert in the field of strategic decisioning for DTx.

If you have a DTx asset that you wish to discuss with us, get in contact:

IDEA Pharma

We work with clients early in lifecycle, crafting a compelling product story and building a best-in-class strategy that helps every molecule reach its potential. It’s what we do best. And there’s nobody that does it quite like us IDEA Pharma

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