Digital therapeutics (DTx) are revolutionizing healthcare — from smart inhalers to virtual therapy avatars. As more patients turn to DTx apps, companies rush to deliver innovative features. But in the race to innovate, many developers neglect vital elements of success, leading to major setbacks, especially when seeking FDA approval. It’s time to find a practical path forward to mitigate risk and scale smarter.
The Digital Therapeutics Trifecta: Revenue, Efficiency & Data
The foundation of any successful DTx product rests on three pillars: revenue, efficiency, and data security. Think of them as the trifecta. If one’s missing, the whole structure becomes unstable.
Revenue is the obvious one. It’s about having a solid monetization strategy and a product people actually want. Marketability matters — without it, there’s no traction.
Efficiency goes deeper. A DTx tool needs to deliver measurable clinical outcomes and fit into healthcare workflows without causing friction. If doctors and patients can’t use it easily, they won’t.
Then there’s data security. This isn’t just about checking the HIPAA box. It’s about building trust with users, ensuring their health data is protected, and staying ahead of regulatory expectations.
Why does this trifecta matter? Because these three areas shape how well your product fits the market, how likely it is to pass regulatory review, and whether it will last beyond its first funding round.
The problem is that many DTx companies obsess over revenue. They focus on flashy features and fast growth, but ignore efficiency or security until they’re forced to go back and fix it — often at great cost. Don’t wait until it’s too late to build a balanced foundation.
The Problem: Overbuilding Features Too Early
In the race to stand out, DTx startups often fall into the trap of building too much, too soon. It’s tempting to pack in AI tools, gamification, advanced tracking, and sleek UI elements to impress users and investors. These features look great on a pitch deck — but they can cause real problems down the line.
This kind of overdevelopment, often called feature creep, stretches both budgets and timelines. It also clashes with regulatory standards. The more you build, the more you have to validate, document, and defend during FDA submission. That complexity can overwhelm teams fast.
What happens next is what risk experts call “the swerve.” Companies get deep into the approval process, only to realize they’re out of step with FDA expectations. Suddenly, teams are forced to remove or scale back features they spent months building — costing time, money, and credibility.
We see this far too often, where overbuilding is one of the top reasons FDA submissions stall or fail outright. The solution? Start with what’s clinically essential, prove it works, and build out from there. Don’t let shiny features bury your core value.
What the FDA Actually Cares About in DTx
When it comes to Digital Therapeutics, the FDA isn’t interested in bells and whistles. They care about whether your product is safe, effective, and secure — period.
Here’s what matters most:
- Clinical validity: Can you prove your product works?
- Safety: Could it potentially harm a user?
- Data protection: Is patient information handled securely and in line with regulations?
- Intended use: Is the product’s purpose clear, and does its functionality match that purpose?
Now, here’s what the FDA doesn’t prioritize: flashy user interfaces, fancy engagement tools, or clever ways to monetize. While these might impress investors or users, they don’t move the needle in regulatory review.
Too many teams learn this the hard way. They spend months building features that don’t support clinical claims, only to realize they’re irrelevant — or worse, distracting — when it’s time to submit to the FDA.
A simple mindset shift can help: build your product like you’re already being audited. That means staying focused on what the FDA will actually evaluate. If a feature doesn’t contribute to safety, effectiveness, or clarity of use, it’s probably not worth the risk — at least not early on. Get the fundamentals right first. Everything else can follow.
How to Avoid the “Swerve”: Risk Planning Best Practices
Avoiding the “swerve” starts with changing how you approach product development. Instead of waiting until you’re prepping for FDA review, you need to bring a regulatory-first mindset from the very beginning — even at the MVP stage. This shift helps you avoid wasted effort and expensive rework later.
One of the smartest moves a DTx company can make is aligning its product roadmap with compliance milestones. In other words, build your solution in phases. First, validate the core features that directly support your therapeutic claims. Once those are proven, you can start layering in enhancements.
Cross-functional collaboration is key. Bring regulatory, legal, product, and cybersecurity teams into the process early. Waiting until the end to get buy-in from compliance slows everything down. When these teams work together from the start, you’ll catch risks before they become setbacks.
There are also a few risk management must-haves:
- Run threat modeling to understand how data might be exposed or mishandled.
- Start building out your documentation as early as possible — auditors will want to see it.
- Get external experts to review your plans and flag issues you may not see.
Put simply: investing in risk planning up front may feel like a slower path, but it actually reduces cost and speeds up your time to market. It’s cheaper to build it right the first time than to redo it under pressure. Keep risk management at the core, and you’ll stay on track while others swerve.
Insurance as a Strategic Enabler for DTx
Even with careful planning, things can still go sideways — and that’s where insurance steps in. For Digital Therapeutics companies, insurance isn’t just a safety net. It’s a strategic tool that protects your progress and reputation when setbacks happen.
The key is getting coverage tailored to DTx-specific risks. Cyber liability helps if patient data is exposed. Tech E&O covers you if a feature fails or misfires. Product liability protects against clinical harm tied to your app’s use. D&O coverage protects company leaders from lawsuits alleging wrongful acts or decisions.
Insurance can also help absorb the impact of FDA rejections or data loss. It’s not just protection — it’s smart risk planning that keeps you moving forward.
Conclusion
Digital Therapeutics holds huge potential — but only if innovation is built on a foundation of risk discipline. Too many startups stumble by ignoring compliance until it’s too late. The smarter move? Embed risk planning and regulatory alignment early in your roadmap.
That’s how you avoid costly detours and build something that lasts. Because in digital health, what you build matters — but how you build it matters even more.
About Justin Kozak
Justin Kozak is the Executive VP at Founder Shield, a tech-enabled commercial insurance brokerage. He leads the Life Sciences practice, having 10+ years of experience in risk management with Hub International, PBC, and now Founder Shield. He launched his career with a BS in History from the University of Delaware, where his keen understanding of the past informs his intuition in the insurance world. It’s no surprise that Justin’s specialty is customizing insurance programs for emerging markets with little historical data. He enjoys spending time with his young family and can’t get enough of the Phillies.
