Welcome back to E&O Fridays, a paying subscribers-only weekly newsletter focused on the world of digital pharma products and FDA-regulated digital health.
E&O Fridays.
After listening to many big pharma presentations at JPM this week, I’m surprised how scarce digital health mentions were. (Biogen was a notable exception. More on that below.) Here’s what’s happening this week in the world of pharma digital products and FDA-regulated digital health:
- Like an aging hockey player, HIPAA might have had a few more of its precious teeth knocked out this morning: A court vacated a $4.3 million HIPAA violation penalty against MD Anderson. The ruling is unprecedented for a few reasons, but one interesting piece was that it found that even though the HIPAA encryption requirement calls for implementing a mechanism to encrypt PHI, an organization is not liable if its workforce fails to adhere to its internal policies on how to use the mechanism.
- The FTC and Flo Health arrived at a settlement after the (once?) popular period tracking app (peaked at more than 100 million users) was accused of sharing sensitive health data with third-party analytics services.
- Meanwhile, HHS suggested that 94 medical device product codes should be exempt from FDA’s 510(K) process moving forward: “With this Notice, the Department is immediately exempting 7 devices from the premarket notification requirement, and proposes to exempt an additional 84 devices from the requirement after public comment is closed… The exemptions provided for and proposed under this Notice for these 91 device classes could eliminate anywhere from $9.1 to $364 million in startup costs if there were one new entrant into each device market.” As of this writing, there are no public comments on the proposal.
- The FDA followed up on its April 2019 draft paper on AI/ML with its new “Artificial Intelligence/Machine Learning (AI/ML)-Based Software as a Medical Device (SaMD) Action Plan,” which you can read here.
- Abbott said it will soon make available a health app, called NeuroSphere myPath, that will help people “track and report on patient-perceived pain relief and general well-being associated with spinal cord stimulation (SCS) or dorsal root ganglion (DRG) therapy.” More: “During the device trial period required before the permanent implant, the app allows patients to record their outcomes on pain and well-being while trialing their neurostimulation therapy.”
- Belgian biopharma UCB created a new independent company, called Nile AI, that will offer a digital care management platform to people with epilepsy.
- Digital therapeutics startup Cognito Therapeutics, which recently appointed former Cognoa CEO Brent Vaughan as its CEO, announced that it received “breakthrough” status from the FDA. That happened the same day that CMS announced instant reimbursement for most breakthrough devices (more on that below). And Cognito tells me they do fit into an existing Medicare benefit category.
- AliveCor shared a few financial details this week at JPM. CEO Priya Abani told the audience: “In 2020 we delivered 85 percent year-on-year growth in revenue and 130 percent growth in monthly active users. Our subscriber business is growing even faster. Q4 2020 grew 260 percent from Q4 2019. We’re doing all of this at average margins of 65 percent, which will expand by several points in 2021 as we grow over service revenue mix.” The company also revealed that it currently has 70,000 subscribers to its ECG services.
- One more thing… Google finally acquired Fitbit in a $2.1 billion deal that has been hampered by antitrust and privacy concerns over the past 14.5 months. (Given the pandemic’s warping of time and space, I don’t remember a time when Google wasn’t trying to acquire Fitbit.)
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CMS: FDA-designated “breakthrough” devices get instant reimbursement, but there’s a caveat
The big news this week is that CMS published a final rule for the Medicare Coverage of Innovative Technology (MCIT) (CMS-3372-F) pathway, which basically assures instant reimbursement for medical devices that have received a “breakthrough” designation from the FDA once they receive market authorization from the agency.
Well, most of them.
Back in September (Issue 068), E&O wrote about how MCIT might be a missed opportunity for many digital health products since the proposed rule indicated the “breakthrough” status from the FDA was not enough. Devices also needed to fit into an existing Medicare benefit category, which is rare for digital health interventions that are software-only or run on off-the-shelf consumer devices. In November (Issue 077), E&O followed up on MCIT with a round-up of comments to CMS from digital therapeutics companies.
This one from Cognoa’s VP of Market Access Andy Molnar got to the heart of the issue:
“While this new coverage pathway would offer beneficiaries nation-wide predictable access to new, breakthrough devices to help improve their health outcomes, a major limitation of the proposed rule is that if an FDA-cleared technology does not have a benefit category, then it will not get coverage in the Medicare program under the MCIT initiative.”
Unfortunately, CMS did not make any changes to make it possible for “breakthrough” devices orphaned by the current Medicare benefit categories to take advantage of the new MCIT pathway. From the FAQ:
“Breakthrough devices must fit within a statutory Medicare benefit category to be covered. There are breakthrough devices that do not have a Medicare benefit category (e.g., some wearable health devices that are directly purchased by consumers), so not all breakthrough devices can be covered by Medicare due to this statutory requirement.”
If you’re not familiar with MCIT yet from the proposed rule, here’s the gist of the final rule from the CMS announcement:
“The MCIT rule will eliminate this lag time for both seniors and innovators. It will create a new, accelerated Medicare coverage pathway for innovative products that the FDA deems ‘breakthrough,’ which FDA approves on an expedited basis and could include devices harnessing new technologies like implants or gene-based tests to diagnose or treat life-threatening or irreversibly debilitating diseases or conditions like cancer and heart disease. Under the MCIT rule, Medicare can provide national coverage simultaneously with FDA approval, up to a period of four years. After the coverage period is over, CMS will reevaluate the device based on clinical and real-world evidence of improvement in health outcomes among Medicare beneficiaries to determine more permanent coverage. This four-year timeline may incentivize the manufacturers of these breakthrough devices to develop additional evidence regarding the applicability of their products to the Medicare population, so they might continue Medicare coverage beyond the initial four years.”
Pear asks CMS to modify DME, inks etectRx deal, and removes Novartis logo from pipeline.
Pear Therapeutics wrote a letter to CMS last week to ask the government agency to clarify its definition of durable medical equipment (DME) and to modify it so Medicare patients have access to software-only therapeutics like Pear’s.
Here’s part of what Pear wrote to CMS:
“Based on CMS’ discussion in the context of CGMs that do not have a ‘back-up’ durable receiver, Pear believes that [prescription digital therapeutics] PDTs like reSET and reSET-O cannot meet the statutory or regulatory definition for DME. PDTs like reSET and reSET-O are effectively ethereal in that their therapeutic application relies exclusively on software that is run by an individual’s smartphone or tablet. Moreover, the software of reSET and reSET-O itself provides the therapeutic benefit, which stands in contrast to telehealth technologies that facilitate the provision of a medical service by a medical professional remotely. Thus, because reSET and reSET-O do not have a physical and ‘durable’ component apart from the patient’s smartphone or tablet, reSET and reSET-O (and other similar technologies) cannot qualify as DME and therefore there is no other avenue for Medicare beneficiaries to access the technology. Pear urges CMS to confirm our understanding in the Final Rule so stakeholders have clarity on how to move forward – perhaps in the context of a legislative initiative – to ensure access to these innovative technologies.”
While this might seem related, at least in part, to the new MCIT pathway (article above) given that Pear’s reSET-O did receive “breakthrough” status from the FDA back in 2017, the MCIT final rule requires the device to have gotten the FDA OK for marketing within two years of MCIT going into effect (this week). Since reSET-O got its De Novo in December 2018, Pear just missed the cut-off.
Pear removed Novartis logos from its pipeline back in August 2020
As a follow-up to last week’s article about the disappointing results from the Novartis study on PEAR-004, a prescription digital therapeutic focused on schizophrenia, I noticed that Pear removed the two Novartis logos it used to have on its pipeline page. Novartis is no longer listed as a partner for PEAR-004 and PEAR-006 PDTs.
The logos were there in early August but not by the end of the month. Novartis, of course, remains an investor in Pear.
Finally: Pear inked an interesting new partnership this week with ingestible sensor company etectRx. etectRx’s CEO Valerie Sullivan, who took the helm back in August 2020, previously worked at Pear as the vice president and general manager of Pear’s patient service center.
Biogen-Apple to kick-off cognitive decline study in similar move to the 2019 Lilly-Apple deal
I was a little surprised to read that Biogen had inked a deal with Apple to conduct a “pioneering” multi-year study to explore the development of digital biomarkers for the detection and monitoring of cognitive decline at the earliest stage. They aim to start sometime later this year. Is it really “pioneering” though?
Apple’s go-to virtual study partner for this kind of thing is Evidation Health, but Biogen’s big rival in Alzheimer’s, Eli Lilly, forged a similar partnership with both Apple and Evidation Health back in 2019 to seek out a digital biomarker for early cognitive decline.
Evidation Health’s co-founder and president Christine Lemke explained the company’s work just this week on a podcast that’s well worth a listen (or read the transcript):
“One of the first collaborations that we did with Eli Lilly was with Apple on a study in Alzheimer’s disease, [where we were] really trying to understand could we use this massive digital data to understand the early signals of cognitive decline. Which, given all the recent news about Alzheimer’s, it’s no wonder that companies are chasing a way to identify these earliest stages of cognitive decline in a very sensitive way, because the therapies pretty much only work if they get there before the plaque gets there vs after the plaque gets there and builds up. So it’s incredibly important to find these sensitive, early signals. It’s also incredibly, it’s incredibly important to get to highly sensitive measures versus what I’ll characterize as the crude measures for measuring cognitive decline today.”
Lemke went on to explain:
“If I had all of your digital interaction data for years, I could start to see in a very sensitive way where your cognition was slowing. I could get incredibly sensitive. If I have your voice recordings over longitude of time, I could get incredibly sensitive. If I had, you know, the number of times that you had to ask for your password again, etc. That’s way more sensitive than what a cognition test is going to be as a slightly more crude measure.”
“In addition, now I can get to the holy grail of medicine, which is ‘n of one’. Now I can get, if I have several years of your interaction data like this, I can literally compare you against yourself vs. again, the crude way we do it today, which is you get thrown in a bucket of people. Everybody gets a score out of this cognition test. And you’re just compared to the mean, which, gosh, if you’re, I don’t know, rocket scientist, you shouldn’t be compared to the mean. You should be probably compared to other rocket scientists. Or even better, you should just be compared to yourself over time. So that’s what we’re trying to get to in cognition. And so the work was sort of kickstarted with Eli Lilly and Apple.”
I imagine the Biogen-Apple study is going to be somewhat similar to this Eli Lilly-Apple-Evidation study, right? In any case, I am curious to see how Apple’s study with Biogen comes together and whether or not Evidation is in the mix.
Just to give you a sense of how tight this rivalry is right now: Even just this week Biogen and Eli Lilly had a shift in valuation because of results from a clinical trial about one of their Alzheimer’s drug candidates.
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