Insomnia is a $5 billion business — and this former sleep doctor thinks it's time for a new approach

Daniel Erichsen spent about a decade as a sleep doctor, primarily seeing patients who were struggling with sleep apnea and insomnia.

His career took a dramatic turn early last year, when he was fired from his hospital job in Oregon. Erichsen, 42, had stopped prescribing sleeping pills to patients and for the most part refused to refer them for expensive and time-consuming tests that he deemed pointless.

Erichsen didn't suddenly turn anti-medicine. Growing up in Sweden, the son of a doctor and a nurse, he knew what he wanted to do from a very early age. He studied at the Karolinska Institute, a medical school in Stockholm, moved to New York for his residency in 2007 and then did a fellowship in sleep medicine at the University of Chicago.

But after years spent listening to patients describe their struggles with sleeplessness and their desperate efforts to find the supplement, essential oil, herbal tea, yoga practice or prescription pill that would fix their issue, Erichsen concluded that the patients weren't the problem. Rather, the problem was the ways they were being treated.

"This wasn't working for people," Erichsen said in an interview from his home in Eugene, Oregon. "I was not a fit anymore. The system was not a fit for me."

Insomnia is a big business. According to market research firm Imarc, the global insomnia market will hit $5.1 billion this year and climb to $6.1 billion by 2028. That includes spending on prescription drugs, over-the-counter sleep aids, medical devices and various types of therapy.

Imarc said in its report that the Covid-19 pandemic, which hit the U.S. in early 2020, "generated unprecedented changes in lives, including social isolation and innumerable work challenges and family obligations" and acted "as a major stressful event that impacted the sleep patterns of millions and strengthened the market growth."

Even before the pandemic, the tech industry had found plenty of ways to capitalize on sleep and humans' desire to optimize it. Sleep trackers are everywhere, embedded in the Apple Watch and Fitbit devices. There's the smart ring from Oura, which said in April that it raised a funding round at a $2.55 billion valuation, less than a month after selling its 1 millionth ring.

Numerous meditation apps like Calm, Headspace and Breethe contain content designed to help people sleep.

Other apps, including some backed by venture capital firms, promote cognitive behavioral therapy for insomnia, or CBT-I. That therapy is meant to change the way people think about sleep and incorporates behavior changes like sleep restriction and stimulus control. Participants are urged to get out of bed after being awake for a certain amount of time.

CBT-I apps include Sleep Reset, developed by Simple Habit, and Dawn Health, which announced this month that it raised "strategic funding" from early stage firm Kindred Ventures.

Dawn said in its press release that insomnia affects 49 million Americans and results in $84 billion in health-care costs and $100 billion in "safety incidents and lost productivity." CBT-I programs usually last two to three months. Dawn charges $249 for the first three months, while Sleep Reset currently costs $225 for the same amount of time.

Erichsen said he had tried CBT-I with patients during his years as a physician, and it would sometimes work. Other times a patient would start the program and he'd never hear from the person again. For some people, strict sleep restriction imposed an important element of structure in their lives. For others, it created added anxiety and worry — another failed effort to find a cure.

After listening to hundreds of stories from people with sleep struggles, Erichsen came to believe that the medical industry was misclassifying insomnia as a sleep disorder, grouping it with depression, anxiety and psychotic disorders.

Erichsen had come to see it differently. People who showed up in his clinic were scared. They'd experienced a few bad nights of sleep from a sickness or stressful event. When normal sleep didn't return, they fell into full-blown panic mode. They thought something was deeply wrong and that they'd forgotten how to sleep. The dark abyss of the internet contained limitless stories about the long-term health problems awaiting them if normal sleep didn't return.

Fear was the common denominator. So instead of calling insomnia a disorder, Erichsen prefers to describe it as a phobia, thus reframing how it should be addressed.

"Think of the implications," Erichsen said. "When we say, 'Oh you have to take medications to sleep or exercise or do all these things,' you're actually worsening the phobia."

After being removed from his medical practice, last year Erichsen became a full-time sleep coach and evangelist for changing the way people think about sleep. He loads up his YouTube channel, The Sleep Coach School, with educational content several days a week and releases the same discussions in podcast form. He also has an app called BedTyme, which combines educational lessons with personalized coaching.

Apart from the free content he puts out to the public, none of this comes cheap. A group-oriented program called "Insomnia Immunity" costs $259 a month. A 45-minute call with Erichsen runs for $289 (or $169 for a call with another coach) and BedTyme costs $330 a month.

Erichsen hasn't raised any outside funding, and said the business is hard to run profitably because it doesn't scale like a tech company. There's a lot of one-on-one coaching for each client.

"It's very involved work," Erichsen said.

The objective, Erichsen said, is to help people find their way without needing month after month of costly assistance. Within two to four months, most clients are ready to go it alone, he said.

"We celebrate when somebody graduates, and says 'I don't need you anymore, I can be my own coach,'" Erichsen said. "From a business perspective, that's not a problem. They become an ambassador and we find somebody else to work with."

Erichsen acknowledges that his approach is quite nascent. His YouTube channel has a modest following of 7,000, up from 4,000 at the start of the year, and his coaching practice is small enough that he doesn't think the sleep medicine world is aware he exists.

"My friends who are doctors think it's nice, but they don't fully understand it," Erichsen said. "We're so far off the radar, that nobody in the medical establishment knows what we're doing."

CNBC reached out to another sleep expert to get an industry perspective on Erichsen's approach. Michael Breus is a clinical psychologist and fellow of the American Academy of Sleep Medicine. He runs The Sleep Doctor website, which was launched in 2008 and describes itself as "a leading authority in the field of sleep health."

Breus took a look at Erichsen's website and offered his thoughts via email.

"This sounds like a disaster," he wrote, adding that Erichsen's methods "will give many people false hope." Breus said he gives "little to no merit" to the idea that insomnia can be best understood as a phobia. After reviewing the site, Breus said Erichsen offers no data on the effectiveness of his approach, yet he "seems to feel just fine about now marketing himself with a new method, and new theory."

Erichsen responded by saying that while he doesn't provide data, his YouTube channel has an "abundance of interviews with people who have found benefits with the way we approach insomnia." He said he avoids most of the industry metrics, because they "lead to the idea that sleep can be controlled and that we should achieve a certain sleep score or number after putting in a certain amount of work."

Some controversy has emerged in public.

In May, Saniya Warwaruk, who's studying to be a dietician at the University of Alberta in Canada, gave a TEDx talk at her college. The topic of the event was "Finding light in the darkness."

Warwaruk, 33, was coming off a year of debilitating insomnia, which she chronicled recently in a first-person story for the CBC (Canadian Broadcasting Corp.) website. In May 2021, Warwaruk had a few bad nights, waking up at 3 a.m., and was unable to get back to sleep. As the struggle persisted, she started using supplements.

"Then came the appointments — the blood work checking for tumours and hormones, the electrocardiogram, the sleep study," she wrote. "Aggravatingly, the results showed I was perfectly healthy. Yet the more I chased after sleep, the less I slept." 

As she described it in her TEDx talk, when she would try a new thing and it would fail, "you crank up the anxiety and the fear, which leads to more insomnia and so on and so on and so on." She also tried CBT-I, which resulted in "the darkest days of my life," she told CNBC in an interview.

After several months of near sleeplessness, constant anxiety and brain fog, Warwaruk, who's married, briefly went to live with her parents in Calgary because she needed extra care. Soon after her return home, her husband stumbled upon Erichsen's ideas online.

Watching Erichsen's videos, Warwaruk said she quickly understood this was different. Whereas CBT-I forced her to practice sleep restriction, get out of bed if she was awake for 15 minutes in the middle of the night and avoid daytime naps, Erichsen was advocating gentler methods, designed to reduce the intensity level along the path to recovery.

She established a sleep window for herself, providing a finite period for sleep each night but without having to limit it to six or fewer hours at the start.

Warwaruk quickly started to learn that if she could train her brain that there was nothing to fear, the cycle could reverse. Instead of constantly seeking solutions, she woke up every day and lived as if she didn't have insomnia. She exercised, hung out with friends and concentrated on her studies even if her sleep wasn't great. She stopped trying to make sleep happen.

"No pills, no treatments, no therapies, no teas, no sleep hygiene, nothing," she said at the TEDx event. "I was no longer to chase after sleep." She would even watch TV shows during her middle-of-the-night wakefulness, "breaking the cardinal rule of no blue screens." Her preference was "Seinfeld."

That's when she started to sleep. It wasn't all at once, and there were speed bumps throughout her progress, but her sleep challenges were no longer paired with obsessive anxiety about not sleeping. She told her story over the course of 15 minutes to the small crowd in Alberta.

But unless you have the YouTube link for Warwaruk's talk, you can't find it. TED marked it as "unlisted," so it doesn't show up in search results. Here's TED's explanation, which shows up below the video:

NOTE FROM TED: Please consult a health professional and do not look to this talk for mental health advice. This talk reflects the speaker's personal experiences and understanding of anxiety and insomnia. Therapies discussed in this talk require further scientific investigation. We've flagged this talk because it falls outside the content guidelines TED gives TEDx organizers.

TED didn't respond to a request for comment.

Erichsen said TED's action is "the first sign of friction" he's seen in public involving his approach. While he'd prefer to have the material readily available for anyone to see, Erichsen said he understands why there would be resistance. The medical establishment has defined insomnia in particular ways, he said, and organizations like TED don't want to risk promoting viewpoints that could be seen as anti-science.

One of his regular podcast segments is called "Talking Insomnia," featuring people who made it through the struggle, whether using his program or another one. Earlier this year, he published a book titled, "Tales of Courage: Twenty-six first hand accounts of how insomnia ends."

Warwaruk is one of the case studies in the book. Another is Beth Kendall, a 54-year-old Minneapolis native, who says she struggled with insomnia for 42 years, starting when she was 8 and her parents moved her bedroom upstairs to the attic.

Kendall's insomnia was sporadic for decades. Through college and then her working life as a ballet dancer and flight attendant, sleep would come and go for extended spells, leaving Kendall exhausted, confused and desperate for answers. She describes the "medication merry-go-round" and how she ended up with a drawer full of every sleeping pill imaginable. Before that, there were all the teas, so many that "I could smell them right now," she told Erichsen.

Kendall also tried CBT-I. In a blog post about why sleep restriction doesn't work for everybody, she said the feelings of guilt and failure that followed her initial efforts made sleep even more elusive and turned her into a "walking zombie."

"It was a bit of torture," she said in an interview.

Before stumbling upon Erichsen a few years ago on social media, Kendall's condition had started to improve. She was working in the mind and body space and was certified in tapping, a practice that draws on acupuncture. She started to see insomnia as a mental program, and that the coding just had to be changed.

Kendall began blogging about sleep. People would contact her because her ideas were resonating. That turned into casual coaching, and then real coaching, including work for some of the newer apps. (Kendall was my coach on an app earlier this year.)

In October, Kendall launched her own eight-week program — Mind. Body. Sleep. Every week, clients receive several short videos with lessons demystifying why insomnia happens, how our responses can perpetuate it or minimize it, and how people can learn to be OK with wakefulness, even in the middle of the night. She also includes individual coaching sessions and sends out regular emails, reminding clients that feelings of anxiousness are normal, progress is not linear and that thing that suddenly makes you jumpy at bedtime is called hyperarousal.

"The beginning of the journey is very educational, laying down the accurate knowledge," Kendall said. "At the end of the program, I also talk about what leaving insomnia looks like and some of the patterns."

Kendall's message, which mirrors much of Erichsen's teachings, is that sleep is simple, but insomnia makes it seem complex. We try to fix it by doing more and then follow failure by doing even more. But what we should do is less.

Attention is the oxygen that insomnia needs to survive. Starve it, she says, and see what begins to change.

"Sleep is a passive process that happens in the absence of effort," she writes in one of her emails to clients. "There is nothing you need to do for it to happen."

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