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Digital therapeutics – How to safely navigate a pharma/tech collaboration

In our latest expert insight piece from intellectual propery law firm Potter Clarkson, Ben Bell considers the question “Digital therapeutics: How can you safely navigate a pharma/tech collaboration and maximise your innovations’ commercial value?”

Digital therapeutics (DTs) are becoming increasingly prevalent in the medical space. They are rapidly moving far beyond the simple wellbeing and health apps so many of us have been downloading from the app store.

To leverage the near-universal ownership of mobile devices today, every size of company from small start-ups to pharmaceutical giants are looking to incorporate DTs into modern treatment methods for a wide range of medical conditions.

Pharmaceutical companies in particular have begun to forge strategic partnerships with tech companies to give them the technical capability they will need to significantly improve patient outcomes, whilst securing their share of what is predicted to be a $9 billion market by 2025.

Fully collaborative joint ventures between pharma and tech businesses offer the most straightforward and cost-efficient route to establishing a new DTs vehicle.

However, this is likely to be the first time that pharma companies have had to work this closely with digital or tech specialists. This means that a key objective must be to find a way to marry the very different expertise of the collaboration members to create a viable digital health business.

A successful collaboration will achieve a hybrid that combines healthcare expertise with digital technology. The collaboration partners will also need to ensure they have all the requisite understanding of disease, treatment, pharmacology, the regulatory environment and software development, as well as how best to manage, analyse and utilise the data that is collected.

Where are we today?

Investment in digital therapeutics companies in the US alone is growing by an average of 40% every year.

Predictably, this level of interest and investment is driving the speed at which the supporting technologies are being developed. As this development progresses, an ever-greater volume of data is being collected. This data allows digital therapeutics companies to derive even more accurate and wide-ranging insight.

More importantly, the increase in data has provided even more compelling evidence that these digital interventions really do work, particularly – according to studies – within the fields of cancer, asthma, drug addiction, schizophrenia and insomnia. DTs are often used in combination with existing or new drug protocols, resulting in an enhanced treatment effect when used in combination.

Key points to consider for the collaboration partners

Having had extensive involvement with a number of these types of collaborative ventures, we have identified six key points to consider when undertaking initial discussions with the relevant parties.

1 – Who owns what?

The first, and perhaps most important, point is to define clearly from day one who owns what and how each of the interested parties will be remunerated. In particular, agreements as to which parties will own any intellectual property that may be developed in the collaboration must be established.

Innovation goldmines are often present in the data generated during collaborations, particularly when the collaborations intersect the pharmaceutical and technology sectors.

Data generation is likely to become even more central to innovation development as artificial intelligence (AI) and machine learning (ML) become more involved. As demonstrated recently by the discussions surrounding potential copyright infringement and privacy issues in relation to the popular AI programs ChatGPT and Stable Diffusion (to name just two), the legal and regulatory framework surrounding AI and ML presently appears to be ill-equipped to address such issues.

Defining ownership and usage of the data is therefore paramount to a successful collaboration.

2 – Develop a viable business model

When conducting early discussions between collaboration partners, it is vital to create a business model that allows all partners to recognise the greatest return from all potential revenue sources.

3 – Personnel capacity

Ensure that you have the combined capacity to manage the increase in demand that the partnership will generate.

4 – Limit partnerships

While developing strategic partnerships can offer enormous value to the parties involved, it is important to try to keep the number of partnerships you enter into under control.

Working with too many parties can make progress difficult to manage, and can create major headaches in relation to ownership of any intellectual property and data developed between multiple partnerships.

5 – Keep focus!

While a partnership can be very helpful in driving your business, it is important to maintain focus on the end goal of the collaboration.

In particular, if you’re working with DTs and medical therapies in general, it is important to never lose sight of what is best for the end users (patients and clinicians). When working in this development space, it is vital to always address your end user’s needs.

6 – IP and legal advice

Irrespective of whether you are the pharmaceutical partner or the tech partner, there are two key legal areas you will need to address to protect your assets, market position and future revenues; intellectual property and legal.

Effective IP management must start as early as possible by identifying all the innovation present and then constructing the IP strategy you’ll need to deliver your business plan, always bearing in mind which partner owns what if a collaboration is involved. This is far from easy to action. If it is to be effective and enforceable, your strategy must be approached from both a pharmaceutical and technology point of view. It also needs to pay particular attention to the nuances of protecting software and clinical innovation.

It is highly likely that once you start to put your business plan into action, you will find that you need to add a stronger legal structure to protect your planned trading arrangements.

Depending on your proposed business model, this could require you to enter into a new set of domestic or cross-border legal agreements, contracts or licensing arrangements with your partners, suppliers and customers. Given the nature of today’s highly competitive healthcare industry, you could also find yourself in need of experienced representation, should your position or your IP be challenged.

We recommend consulting IP and legal professionals as early as possible when undertaking a new DTs venture, to help ensure that you develop an effective IP strategy and a robust legal structure.

Ben Bell is a member of Potter Clarkson’s patents team, and is experienced in European and UK patent law.

In particular, Ben has experience with drafting and prosecuting European and UK patent applications across a broad range of technical subject matter. Ben also has experience with managing large patent families, with instructing prosecution across a range of foreign jurisdictions, and with providing infringement and freedom to operate advice.



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