As digital therapeutics move to cross boundaries of regulatory approval and efficacy data, the healthcare industry will begin to move to a bifurcated world of digital health apps in the same way that drugs are now divided up into largely unregulated supplements and heavily regulated pharmaceuticals.

At the Digital Health Innovation Summit last week in Boston, Sanofi Ventures Senior Director of Investments Ruchita Sinta moderated a panel that discussed the future of digital therapeutics.

“What is the difference between 300 apps on the app store versus a digital therapeutic? It’s this question of evidence and it’s the risk surrounding the use case,” Pear Therapeutics CEO Corey McCann said. “I think ultimately as you look at the evolution of the space, you’ll see a drugs versus supplements dichotomy, where there will be lots of things around health and wellness … and then you’ll have a set of things that have been demonstrated in a rigorous, scientific way to directly produce these effects.”

The emergence of distinct categories in the space will make currently confusing questions about regulation and reimbursement more clear.

“I think where we will get in the not too distant future, the more digital is being used in mainstream medicine, by doctors trying to treat a condition who needs it, they’re going to use treatments. And treatments require treatment plans, which require FDA,” Akili Labs CEO Eddie Martucci said. “With drugs, it’s very obvious and clear because we’ve gotten to know the difference between supplements and approved therapeutics. And I think you’re going to see the exact thing here. We’re just on the doorstep of essentially trying to get that into mainstream practice.”

The earliest digital therapeutic companies are in the unusual position of having to create their own market norms, speakers said.

“We believe companies that are building these tools need to be investing in not just validation, but also trying to own the business model because we’re the most incentivized to make sure we get it right in those early days when you’re starting to get use and demand and drive that demand up," Martucci said. "Name your tech company behemoth today. What they invested in was deeply engaging with their users to understand the model. This is brand new and I think that type of investment is warranted if it’s really going to grow.”

This could create an opportunity to leapfrog some of the problems other aspects of digital health have faced.

“This may be an area where you can actually crack the value formula for pricing,” Dr. Seth Feuerstein, chief medical officer at Magellan Healthcare, said. “Everyone’s had a hard time figuring out how to do real, value-based contracting. These are products that track real outcome data. It’s an interesting, seemingly narrow area, where you can actually start to reward people for the outcomes their products are directly producing in an individual patient. That’s kind of remarkable.”

All the panelists agreed that the space was going to move fast from here on out.

“I think five years from now you will see digital therapeutics as first line standard of care in behavioral health, i.e. psychiatry, and you’ll see a pipeline of these things making their way into neurology,” McCann said. “You’ll see early thinking in other therapeutic areas, and you’ll see pharma jumping on board to the point where it’s ridiculous to launch a drug without a software overlay.”