Issue 197

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.

Here are a few quick happenings in FDA-regulated and pharma-focused digital health…

• At The Digital Therapeutics Alliance Summit in Washington D.C. this week, Jay Ahlman, the AMA’s VP of Coding and Reimbursement Policy and Strategy, divulged that the CPT Editorial Panel is looking at modifying the coding for RPM/RTM that require at least 16 days of monitoring before those bills can be used. Many have argued that 16 days is too many — not all remote monitoring programs need to be so long, especially in acute care. Ahlman acknowledged that this is an issue that he has received a lot of pushback on and it seems like a change is almost certainly in the cards now. (Worth noting that during the PHE the 16-day requirement was shortened to two days to allow billing for remote monitoring of acute care, so the expiration of the PHE is likely what is driving the AMA’s sudden interest in making a more permanent change.)
• During the panel I moderated at the Summit, I asked Oklahoma Health Care Authority’s Senior Pharmacy Director Terry Cothran, who helped Pear Therapeutics get its value-based agreement for reSET-O with the state’s Medicaid plan back in early 2022, whether his plan was still receptive to working with companies developing other prescription digital therapeutics given the Pear bankruptcy. Cothran said that while he wouldn’t characterize his plan as “unreceptive” to those kinds of conversations, he also said he wasn’t sure how he would convince his leadership to agree to another deal like the one they inked with Pear.
• Scoop: The FDA cleared Huma’s remote patient monitoring platform via a 510(k). The official name of the device is Huma RPM and based on its medical device category coding it appears to include heart monitoring (probably even ECG) but without arrhythmia detection or alarms. In the US, it looks like Huma has been offering its RPM platform as a Class 1 (MDDS probably?) that aggregated data from various third-party vital sign monitors. The new Class II medical device clearance shows the company has evolved beyond MDDS. (I asked the company for more details after noticing the clearance in the FDA’s database, but it doesn’t plan to officially announce the clearance until Monday morning. So, expect more details then.)
• The FDA issued a warning letter to wearable heart monitor company iRhythm Technologies for making changes to its device and its underlying algorithms without clearing the changes with the agency ahead of time. M. Jason Brooke of Brooke & Associates summed up the situation nicely in a recent LinkedIn post: “The FDA found that the manufacturer had changed its intended use and the algorithm design without obtaining a new market authorization. Further, the FDA found the instructions for use to be inadequate because it failed to provide important information about the functionality of the product (particularly related to limits on data collection/transmission for review) to the clinician and patient. Finally, the Agency identified several deficiencies in the Quality Management System, particularly related to CAPAs, complaint handling, adverse event reporting (specifically related to two deaths and significant cardiac events). This should be a major warning to medical device manufacturers, especially SaMD and digital therapeutics developers (including those who rely on AI and ML technologies). It would be foolish to be lulled into the thinking that, because it’s so easy to make changes to software, a new market authorization is not required. Simplicity and speed of a change have no bearing on the legal requirement to obtain market authorization from the FDA *prior to* implementing the change.”
• New definition: This morning the Digital Therapeutics Alliance announced a number of new reports, resources, and other toolkits. It also announced that the International Organization for Standardization (ISO) had developed a new official definition of a digital therapeutic: “health software intended to treat or alleviate a disease, disorder, condition, or injury by generating and delivering a medical intervention that has a demonstrable positive therapeutic impact on a patient’s health.” The DTA is adopting this definition too. (Personally, I like this definition better than the last one which included a wide-ranging spectrum of verbs like treat, prevent, and manage — but these definitions are never perfect.) The DTA also published a number of reports and other resources on various DTx-related topics. One is part of a series of DTx Policy Reports the alliance is creating with Health Advances that analyzes the various and evolving policy frameworks for digital therapeutics in Europe.
• At the Digital Therapeutics Alliance Summit this week, Parth Desai, Principal at Flare Capital talked a bit about Oui Therapeutics/Vita Health’s strategy (without name-checking either company). He also explained why Flare likes the virtual clinic wrapper for digital therapeutics. Here are two comments he made at the event: “One is around solving an access problem. We have seen this actually get companies in-network with payers sooner outside of the digital therapeutics market — even on the services side of things. But if you are solving a huge access problem where there is huge cost growth and limited solutions… One of our portfolio companies is actually focused on suicidal ideation and it got an accelerated pathway with a couple of payers because it is a top-of-mind issue, [a] huge cost but also [an] optical problem, and there are no good solutions out there. They have been willing to take more risk to get the company in-network and have started working with them because they are solving a huge access problem.” Desai also said that at Flare — and he wondered if this was true for other investors today — they prefer to see digital therapeutics embedded within a broader services model. So, a virtual clinic wrapped around a digital therapeutic — like what Swing is doing. Flare likes this model because: “You can follow the patient longitudinally. If they drop off and are non-adherent, services help. But it also aligns much better with the reimbursement pathway. Obviously, reimbursement is a challenging issue across the sector, but there are established CPT codes — RPM codes. There are established codes for the services themselves. It is a good way to start collecting revenue while also proving that the clinical model works.”

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Akili launches EndeavorOTC its ADHD digital therapeutic direct-to-consumer for adults

In its first major deviation from the traditional prescription digital therapeutic go-to-market, Akili announced this week that it had commercially launched a version of its ADHD digital therapeutic, EndeavorOTC, available direct-to-consumer (no prescription required) for adults. Up until now, Akili’s EndeavorRx has only been available (via prescription) to children aged 8 through 12. The company also recently submitted a version of EndeavorRx to the FDA for adolescents aged 13 through 17, but it is waiting for a 510(k) before releasing that into the market.

EndeavorOTC is available right now to adults aged 18 and up via Apple’s AppStore. (Sorry Android users.)

Even though EndeavorOTC does not require a prescription, the app’s description in the AppStore suggests that potential users talk to their doctor before starting EndeavorOTC treatment or making any medical decisions. After the app is downloaded, users need to create an account with Akili. As part of that process, users have to click a box to acknowledge that they should talk to a healthcare provider before proceeding.

Akili offers EndeavorOTC patients three pricing options, which it describes as “early access pricing” and available only for a limited time:

• $29 a month (billed monthly)
• $50 billed every two months ($25/month)
• $99 billed once a year ($8.25/month)

Akili is launching EndeavorOTC pre-FDA market authorization thanks to the FDA’s public health emergency (PHE) enforcement policy for psychiatric digital health devices, which is set to expire the first week of November.

Have to say, I didn’t expect to see any more launches under that enforcement policy. I assumed every company that had taken advantage of it already was currently scrambling to transition to whichever regulatory status they are pursuing when it ends in five months.

This announcement from Akili comes after the company posted another quarter with low revenues — its most recent results showed just $113,000 in revenue generated during the first three months of 2023.

During a panel at the Digital Therapeutics Alliance Summit in Washington DC this week, Akili’s CFO Santosh Shanbhag talked a bit about the company’s decision to launch EndeavorOTC. Shanbhag also talked more generally about how digital health companies need to operate in the current macro environment:

While Shanbhag didn’t make the connection overtly, I think it’s safe to say EndeavorOTC is a clear attempt to generate revenue immediately and help extend Akili’s cash runway and maybe get it closer to profitability. Later in the panel Shanbhag talked about finding the right go-to-market and made clear that Akili is still iterating on its own commercial strategy:

While Shanbhag didn’t mention it, following Pear’s bankruptcy most payers are unwilling to engage in coverage discussions for prescription digital therapeutics. There’s a freeze and it’s unclear when it will thaw.

So, back to Shanbhag’s question: What happens while the industry waits on reimbursement? In Akili’s case, the answer is self-pay. Shanbhag argued that Akili is fortunate because self-pay works better in ADHD than in other markets in healthcare.

I’m curious to see what removing the prescription requirement does for Akili’s EndeavorOTC uptake.

Shanbhag characterized the launch as another step in the company’s iterative process to find a go-to-market it could lean into:

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