Money Flows Into Addiction Tech, But Will It Curb Soaring Opioid Overdose Deaths?

David Sarabia had already sold two startups by age 26 and was sitting on enough money to never have to work another day in his life. He moved from Southern California to New York City and began to indulge in all the luxuries his newly minted millionaire status conveyed. Then it all went sideways, and his life quickly unraveled.

“I became a massive cocaine addict,” Sarabia said. “It started off just casual partying, but that escalated to pretty much anything I could get my hands on.”

At one particularly low point, Sarabia was homeless for three months, sleeping on public transportation to stay warm. Even with plenty of money in the bank, Sarabia said, he’d lost the will to live. “I’d given up,” he said.

He got back on his feet, sort of, and for the next three years lived as a “functional cocaine addict” until his best friend, Jay Greenwald, died after a night of partying. Finally, Sarabia checked himself into a rehab in Southern California — ostensibly a luxurious one, although Sarabia didn’t find it to be so.

Still, the place saved his life. The clinicians really cared, he recalled, although their efforts were hampered by clunky technology and poor management. He had the feeling that the owners were more interested in profits than in helping people recover.

Just days off cocaine, the tech entrepreneur was scribbling designs for his next startup idea: a digital platform that would make clinician paperwork easier, combined with a mobile app to guide patients through recovery. After he left treatment in 2017, Sarabia tapped his remaining wealth — about $400,000 — to fund an addiction tech company he named inRecovery.

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With the nation’s opioid overdose epidemic hitting a record high of more than 100,000 deaths in 2021, effective ways to fight addiction and expand treatment access are desperately needed. Sarabia and other entrepreneurs in the realm they call addiction tech see a $42 billion U.S. market for their products and an addiction treatment field that is, in techspeak, ripe for disruption.

It has long been torn by opposing ideologies and approaches: medication-assisted treatment versus cold-turkey detox; residential treatment versus outpatient; abstinence versus harm reduction; peer support versus professional help. And most people who report struggling with substance use never manage to access treatment at all.

Tech is already offering help to some. Those who can pay out-of-pocket, or have treatment covered by an employer or insurer, can access one of a dozen addiction telemedicine startups that allow them to consult with a physician and have a medication like buprenorphine mailed directly to their home. Some of the virtual rehabs provide digital cognitive behavior treatment, with connected devices and even mail-in urine tests to monitor compliance with sobriety.

Plentiful apps offer peer support and coaching, and entrepreneurs are developing software for treatment centers that handle patient records, personalize the client’s time in rehab, and connect them to a network of peers.

But while the founders of for-profit companies may want to end suffering, said Fred Muench, clinical psychologist and president of the nonprofit Partnership to End Addiction, it all comes down to revenue.

Startup experts and clinicians working on the front lines of the drug and overdose epidemic doubt the flashy Silicon Valley technology will ever reach people in the throes of addiction who are unstably housed, financially challenged, and on the wrong side of the digital divide.

“The people who are really struggling, who really need access to substance use treatment, don’t have 5G and a smartphone,” said Dr. Aimee Moulin, a professor and behavioral health director for the Emergency Medicine Department at UC Davis Health. “I just worry that as we start to rely on these tech-heavy therapy options, we’re just creating a structure where we really leave behind the people who actually need the most help.”

The investors willing to feed millions of dollars on startups generally aren’t investing in efforts to expand treatment to the less privileged, Moulin said.

Besides, making money in the addiction tech business is tough, because addiction is a stubborn beast.

Conducting clinical trials to validate digital treatments is challenging because of users’ frequent lapses in medication adherence and follow-up, said Richard Hanbury, founder and CEO of Sana Health, a startup that uses audiovisual stimulation to relax the mind as an alternative to opioids.

There are thousands of private, nonprofit, and government-run programs and drug rehabilitation centers across the country. With so many bit players and disparate programs, startups face an uphill battle to land enough customers to generate significant revenue, he added.

After conducting a small study to ease anxiety for people detoxing off opioids, Hanbury postponed the next step, a larger study. To sell his product to the country’s sprawling array of addiction treatment providers, Hanbury decided, he would need to hire a much larger sales team than his budding company could afford.

Still, the immense need is feeding enthusiasm for addiction tech.

In San Francisco alone, more than twice as many people died from drug overdoses as from covid over the past two years. Employers, insurers, providers, families, and those suffering addiction themselves are all demanding better and affordable access to treatment, said Unity Stoakes, president and managing partner of StartUp Health.

The investment firm has launched a portfolio of seed-stage startups that aim to use technology to end addiction and the opioid epidemic. Stoakes hopes the wave of new treatment options will reduce the stigma of addiction and increase awareness and education. The emerging tools aren’t trying to remove human care for addiction, but rather “supercharge the doctor or the clinician,” he said.

While acknowledging that underserved populations are hard to reach, Stoakes said tech can expand access and enhance targeted efforts to help them. With enough startups experimenting with different types of treatment and delivery methods, hopefully one or more will succeed, he said.

Addiction telehealth startups have gained the most traction. Quit Genius, a virtual addiction treatment provider for alcohol, opioid, and nicotine dependence, raised $64 million from investors last summer, and in October, $118 million went to Workit Health, a virtual prescriber of medication-assisted treatment. Several other startups — Boulder Care, Groups Recover Together, Ophelia, Bicycle Health, and Wayspring, most of which have nearly identical telehealth and prescribing models — have landed sizable funding since the pandemic started.

Some of the startups already sell to self-insured employers, providers, and payers. Some market directly to consumers, while others are conducting clinical trials to get FDA approval they hope to parlay into steadier reimbursement. But that route involves a lot of competition, regulatory hurdles, and the need to convince payers that adding another treatment will drive down costs.

Sarabia’s inRecovery plans to use its software to help treatment centers run more efficiently and improve their patient outcomes. The startup is piloting an aftercare program, aimed at keeping patients connected to prevent relapse after treatment, with Caron Treatment Centers, a high-end nonprofit treatment provider based in Pennsylvania.

His long-term goal is to drive down costs enough to offer his service to county-run treatment centers in hopes of expanding care to the neediest. But for now, implementing the tech doesn’t come cheap, with treatment providers paying anywhere from $50,000 to $100,000 a year to license the software.

“Bottom line, for the treatment centers that don’t have consistent revenue, those on the lower end, they will probably not be able to afford something like this,” he said.