Why Is Addiction Tech One Of The Most Underfunded Categories In Digital Health?

Substance use and behavioural addiction disorders affect tens of millions of people globally, carry economic costs running into the hundreds of billions annually, and have well-established clinical pathways for treatment. Even with a comparable burden, they capture only a marginal share of the investment flowing into diabetes and mental health technology.

The mismatch is not about a lack of evidence for what works. It’s about something more systemic: how investors price risk in categories they find difficult to measure, how health systems commission services for conditions they still partly treat as social problems rather than medical ones, and how addiction has historically sat in a regulatory and reimbursement grey zone that makes returns harder to model.

The Systemic Hurdles Holding This Category Back

Emily Bargabos, Co-Founder and CEO of Steady, a platform focused on reducing stigma and building recovery support networks, frames the investment gap in part as a measurement problem. The sector lacks the kind of clear technological breakthrough that has transformed other chronic conditions – there’s no single intervention that works reliably across populations. There’s no equivalent of insulin here – recovery tends to involve different combinations of treatment, medication, peer networks and social support for different people, and what works for one person may not work for another.

“This complexity may be one reason the category has attracted less investment than it deserves,” she says. “Addiction is difficult to measure, difficult to study and difficult to fit into traditional healthcare models – but that should be viewed as an argument for more innovation, not less.”

The economic case is straightforward even if the clinical picture is nuanced. Untreated substance use disorders in the US alone cost more than $400 billion annually, according to Bargabos, citing published research. Substance use disorder treatment saves an estimated $7 for every $1 spent by reducing healthcare utilisation, legal costs and lost productivity. “Reducing stigma is not simply a social good,” she says. “It is an economic imperative.”

Mark Astor, founder of Astor Simovitch Law and a specialist in behavioural health legal practice, sees the same dynamic from a different angle. “Addiction is still treated as a social problem rather than a chronic medical condition. Stigma continues to influence investment decisions, healthcare commissioning, reimbursement models and public policy.” He offers a more candid assessment of why this gap exists: “Addiction is one of the few healthcare conditions where failure to invest costs more than investment itself.”

What Effective Digital Addiction Support Looks Like

The conversation about addiction technology is frequently conflated with consumer wellness apps, which is part of why the investment case has been poorly understood. The tools with credible evidence behind them look different.

Saravanan Thangarajan, Visiting Scientist at Harvard T.H. Chan School of Public Health and Ariadne Labs, draws a clear line between what works and what doesn’t. “Clinically useful addiction technology should not look like another wellness app,” he says. “The credible models are those that extend evidence-based care: cognitive behavioural therapy, contingency management, medication-assisted treatment support, motivational engagement, peer recovery coaching and rapid follow-up during high-risk periods. The technology matters only when it keeps the person connected to treatment, trust and timely human support.”

His most important observation is about where the care pathway breaks down. “The biggest risk is not relapse. It’s disappearance – the moment a person leaves detox, an emergency department, a counselling session or a crisis call and falls out of the care pathway.” He argues the real investment gap isn’t at the front door of treatment, but in everything that happens afterward.

Astor echoes this from his work with families in treatment. “One of the greatest misconceptions in addiction care is that access to treatment is the problem. Retention, accountability and long-term engagement are the real challenges. Technology is uniquely positioned to address those gaps.” The most effective platforms he’s seen combine telehealth, recovery coaching, family engagement, medication adherence tools, relapse monitoring, digital cognitive behavioural therapy and predictive analytics that identify individuals at risk before a crisis occurs.

What Investors And Health Systems Are Getting Wrong

Thangarajan’s critique of how addiction technology gets funded is the most direct. “Addiction tech doesn’t create value only through app engagement or short-term symptom scores. Its real value is in avoided emergency visits, fewer readmissions, better medication continuity, lower justice-system contact, improved employment stability and families staying intact. Those outcomes are harder to capture in a 12-week pilot, but they are exactly where health systems lose money and lives.”

He is arguing for a fundamental redesign: “Fund addiction technology as recovery infrastructure, not consumer mental health software. The winning companies won’t be the ones with the slickest interface. They’ll be the ones that prevent people from disappearing between crisis and recovery.”

Astor reframes the debate through an investor’s lens. “Investors and healthcare commissioners must evaluate addiction technology based on lifetime cost avoidance rather than short-term reimbursement. Every prevented overdose, hospitalisation, incarceration, emergency room visit or child welfare intervention generates substantial savings across multiple systems. The question is not whether addiction technology works. It is whether we are willing to measure success over years instead of quarters.”

That sentence perfectly captures the reality of the sector: the evidence for digital addiction support isn’t the problem – the timeline is. The technology exists, but the industry’s foundations haven’t caught up. The health systems and investment cycles haven’t caught up yet, and that’s what the category is still waiting on.