In 2020, the FDA cleared the first video game as a medical treatment. EndeavorRx, developed by neuroscientists at UC San Francisco, was proven in five clinical trials to improve attention in children with ADHD without the side effects of stimulant medication. Parents could download it to a tablet. Their children could play for twenty-five minutes a day. It worked.
Six years later, adoption remains limited and reimbursement inconsistent. Most American families have never heard of it.
The scale of America’s pediatric mental health crisis is staggering. One in five American children now lives with a mental health condition. Teenage depression rates have nearly doubled since 2009. Suicide is the second leading cause of death among adolescents. And four years after pediatricians declared a national emergency, emergency departments are still flooded with children in psychiatric crisis.
The default response has been to medicate our children if they show the least amount of neurodivergence. American children take more psychiatric drugs than children in any other developed nation.
The MAHA Commission’s recent report identified this as a “crisis of overdiagnosis and overtreatment” – a rare point of bipartisan agreement. Stimulants, antidepressants, and antipsychotics are prescribed not because they’re the best option, but because they’re the only option our reimbursement system recognizes.
Except that’s no longer true.
The Veterans Health Administration has become one of the most advanced adopters of medical virtual reality in the world. Across 165 VA medical centers in all fifty states, VR headsets are now treating veterans for PTSD, chronic pain, anxiety, physical rehabilitation, and over thirty other conditions.
If VR therapy is good enough for American veterans, why isn’t it available to American children?
Digital therapeutics – software-based treatments that have been clinically validated and FDA-cleared – are a rapidly developing form of non-pharmaceutical treatment. Virtual reality neurotherapy, for example, places children in distraction-free environments where they practice sustained attention, working memory, and impulse control through exercises designed by neuropsychologists. Clinical trials show significant improvements in cognitive function, without the adherence problems that plague both medication and traditional therapy.
But virtual reality neurotherapy is just one application. Unlike a drug approved for a single condition, a single headset can deliver therapies for ADHD, anxiety, autism, and dozens of other indications. Newer systems layer in artificial intelligence, adapting each session to the child’s symptoms, responses, and social circumstances while keeping treatment standardized enough for insurers to cover.
A 2025 systematic review of fourteen studies found that VR interventions improve social skills in children with autism. Separate research shows VR-based interventions improve sustained attention in ADHD, increasing correct responses and reducing errors. The FDA has cleared nearly twenty prescription digital therapeutics.
We’ve got the infrastructure for this. It’s just that we built it for veterans, not children. The VA’s success demonstrates that immersive therapy can be integrated into existing healthcare systems. It proves that clinicians can be trained, that patients engage, and ultimately that outcomes improve.
Medicare and Medicaid don’t cover prescription digital therapeutics. Consequently, neither do private insurers. The Congressional Budget Office couldn’t even score the Access to Prescription Digital Therapeutics Act because it didn’t know how to estimate costs for treatments it had never reimbursed. Meanwhile, Germany has been reimbursing digital therapeutics since 2020. They’ve spent €234 million and now cover more than fifty products.
Things may be starting to change. Last month, CMS announced the $50 billion Rural Health Transformation Program, the largest federal investment in rural healthcare in decades. The program explicitly prioritizes “innovative technologies that promote efficient care delivery” and “access to digital health tools by rural facilities, providers, and patients.” It funds remote care models designed to reach the sixty million Americans living in rural communities where mental health providers are scarce and travel distances make traditional therapy impossible.
Similarly, the Access to Prescription Digital Therapeutics Act, reintroduced in the Senate last year with bipartisan support, would create Medicare and Medicaid coverage for FDA-cleared software treatments. Advocates are bringing Germany’s spending data to CMS, hoping to overcome the budgetary objections that killed earlier versions of the bill.
I’ve spent years investing in healthcare technology, watching promising interventions die not from lack of evidence but from lack of infrastructure. The pattern is always the same: the science advances, the regulations lag, and patients suffer in the gap.
Children are still waiting in emergency rooms. Families are still navigating a system that offers them pills or waitlists, often both. The treatments that could help them exist – validated, cleared, ready to deploy. The question is whether we’ll build the systems to deliver them.
What makes this moment different is that we can finally point to the VA and ask: if VR therapy is good enough for American veterans, why isn’t it good enough for American children?
About Allan Gobbs
Allan Gobbs is a Venture Capitalist and Deeptech Entrepreneur. He is a Co-Founder and Managing Partner of New York-based Life Sciences venture firm ATEM Capital. In recent years, Allan has seen five of his portfolio companies go public on NASDAQ, including notable names like Atea Pharmaceuticals,Marinus Pharmaceuticals, and Syndax Pharmaceuticals.
