Otsuka Holdings has won FDA approval for a version of its commonly prescribed Abilify that includes a digestible sensor made by Proteus. The first-of-its-kind approval will allow patients who are taking Abilify for schizophrenia or bipolar disorder to share information the sensor collects with their healthcare provider through a wearable patch and a smartphone application. Is this going to change outcomes for these patients?

In this clip from The Motley Fool's Industry Focus: Healthcare, contributor Todd Campbell joins Kristine Harjes to discuss the implications of this digital pill.

A full transcript follows the video.

This video was recorded on Nov. 15, 2017.

Kristine Harjes: On Monday night, the FDA approved what is being called a digital pill. It's a medicine that's a form of Abilify, which is a drug that's used to treat schizophrenia, bipolar disorder, and some other mental health conditions. This new version contains a digestible sensor that generates an electrical signal that, when it hits your stomach acids, it then talks to a patch that you're wearing on your chest that will send information to your phone via Bluetooth, and let you know -- and let your doctors know, more importantly -- that the pill has been ingested. This has, of course, generated a ton of chatter as people react to the news. Todd, what did you make of it?

Todd Campbell: It's pretty amazing, and I think kind of awesome, when pharmacology meets technology. Ideally, we would love to have one pill, one shot, whatever, and that cures us of disease. But until we get to that point, it's all going to be about incrementally improving our outcomes. In the case of schizophrenia, there's a massive need to improve outcomes. There are drugs out there that can help people control their disease, but there's a huge adherence problem to these medications. And if people aren't taking them the way they're prescribed, that's going to cause problems for them. Schizophrenia is one of the most common causes of disability, and it's a common disease. 21 million people throughout the world, according to the World Health Organization, suffer from schizophrenia. This is a major problem, because 75% of patients fail to take their medication on schedule. That's not good for these patients. So, the concept of being able to take this little pill and merge it together with a sensor that can say, "Hey, guess what, I can prove to you, or, I can track, or we can share information on whether or not I'm taking this medication as you want me to be taking it," that is potentially big. It's not going to work for everyone, but it will work for some people. And if it works for some people, it will dramatically improve their quality of life.

Harjes: Going forward, I could see insurers subsidizing versions of this medication that have this built-in method of checking compliance, because compliance drives cost down. It reduces relapses, it reduces drug resistance, hospital readmissions, all sorts of things. It will also be interesting to see how the drugmakers themselves price these versions of their medications that include technology like this. If they're priced too high, then the insurers aren't going to cover them at all. Of course, you have that continual balance between where the price should be set so that people actually do adopt it, and then we'll see how the insurers actually react and whether or not they want to incentivize using this high-tech version of different medicines.

Campbell: What I find really interesting about this, too, is that you look at Otsuka, who makes Abilify, they lost patent protection on Abilify back in 2015. They started facing off with some of the generic competitors to that drug. This was a move for them, an opportunity for them, to basically say, let's try and sure up our market share by coming up with something that's completely different, that can differentiate us away from some of these other medications that are used in these indications. This is really unique. And maybe it works. They've come out with a longer-lasting version of Abilify that they market with Lundbeck, and now they have Abilify MyCite. It's going to be interesting to see, if you're a psychiatrist and you're treating these patients, whether or not you're going to feel comfortable prescribing it. I think, if I had patients, I would prescribe it, because it's not like you're getting this information that the patient doesn't want you to have. You're seeking treatment, you're treating them, and they have to opt into sharing this information. To me, it's a lot like the blood glucose monitors, where you can get continuous insight into your blood sugar, and that helps inform your treatment decisions with you and your provider. And I think this is a good thing, because it's going to help doctors and patients with the issue of accountability. No longer will a patient be coming in and saying, "I think I took it when I was supposed to," or, not wanting to disappoint their doctor, saying, "Yeah, I've been taking it." Now you'll be able to look at it and say, "You missed three days here last week. Is there something else going on? Is it the time, is it the dose, is there a side effect that you want to discuss with me?" It opens the conversation. And doing that, maybe you improve outcomes for these patients.

Harjes: Yeah. And I don't want to say that it is 100% undeniably a good thing and there's been no push back at all, because there have been some points raised that dial back the optimism a little bit. For example, some are concerned that Abilify isn't a good choice of a drug for pioneering this technology because the patient population already has tendencies toward paranoia. So, then you introduce this technology which, to some, could feel like big brother is monitoring you, and that's really not going to help with the paranoia. But, for non-compliant patients, the other alternative, if you're not taking your Abilify correctly, is that you end up getting it injected. So, this is hopefully better than that. Or, maybe the threat of having big brother watching you is even scarier than the threat of injection, enough to naturally boost compliance. So, I do think, on the whole, this is a good thing. But, of course, there are concerns. There will also be concerns about the accuracy of the data, that the patch that you wear on your body needs to be replaced, and what if they don't comply with that, how do you keep this data private and ensure that there aren't any manipulations going on, security issues. But, I think, on the whole, it's undeniably a very interesting and good innovation.

Campbell: From an investing standpoint, there's not a lot of take away. It's very intriguing. This is a test case. People are going to watch and see how well it's received. If it's well received, maybe you see this popping up in future medicines and other indications as well. Proteus is a private company, so you can't invest in that. Otsuka and Lundbeck, they're big, multi-global companies, so it's not like this could necessarily move the needle one way or another. I think it's just something that we should all keep an eye on and seeing as a potential advance that could merge pharmacology with technology toward better outcomes.

Harjes: Yeah, absolutely. And as I mentioned earlier, whenever I see something hit major news outlets that's healthcare-related, I'm like, OK, we should at least mention this on the show. We've had listeners write in over the years asking where we do source our information and our story ideas, so I want to offer a couple of different healthcare news roundups that I read every day, in case anybody is looking for a way to stay even more in touch with the industry. If you want my personal list of what I read, please shoot me an email at, and I'll be happy to send you a list of my go-to sources.

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