Pear Therapeutics’ Failure: Paying the Trailblazer Tax

By Kevin Schulman, James Tai, Ethan Goh, Margaret Wenzlau, Shikha Avancha
2023 | Case No. SM369 | Length 19 pgs.

Pear Therapeutics seemed off to a promising start as a young digital therapeutics (DTx) company, taking a focused approach to demonstrate the efficacy of new software therapies, generate value for prescribers and patients, and secure reimbursement from insurance companies. Investors were also excited about the potential for evidence-based, software-driven therapeutic interventions — instead of going to a pharmacy for a bottle of pills, patients would get a prescription to download a software app designed to help treat their disease. And new DTx companies like Pear Therapeutics saw great promise in packing the power of a pharmaceutical products into a software products.

The case study provides background on the rapid growth and challenges in the new DTx field, and details of Pear’s early successes with digital therapies designed to treat insomnia and substance use disorders. But for Pear, continuing investment in the development of a robust produce portfolio proved difficult, in light of the difficulties navigating the insurance reimbursement minefield, while managing investor expectations. Were Pear’s troubles — and eventual failure — an ominous cloud over the future of the DTx sector?

Learning Objective

This case is designed to introduce a new health care field: digital therapeutics (DTx). By examining the steps Pear Therapeutics took to bring its products to market — and the challenges the company faced, students will learn about the first-to-market benefits and burdens in a new and promising sector.
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