Issue 205

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…

• That’s right — I wasn’t planning on publishing today, but I’m back from vacation and the CMS HCPCS committee posted their final decisions on coding applications from three prescription digital therapeutics companies…
• … and Bayer’s consumer health division inked a deal with Mahana Therapeutics.
• So, I decided to put an issue together. Read on for more on those two stories.

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Bayer’s consumer health unit inks deal with Mahana — non-Rx IBS offering in the works

By now you’ve likely read that Bayer’s consumer health business unit inked a “multi-million dollar” distribution and marketing partnership with Mahana Therapeutics. Neither Bayer nor Mahana has shared many details on the partnership, but here’s some speculation. While Mahana’s only commercially available product is an FDA-cleared prescription digital therapeutic named Mahana IBS, it would be surprising to find out that Bayer’s consumer division is helping to market and distribute an Rx-only product. Remember: This is the group at Bayer that handles the distribution and marketing of brands like Aspirin and Claritin.

DTC IBS DTx: E&O has learned that Mahana has been working on a non-prescription version of its Mahana IBS digital therapeutic. I’m guessing that will be one of the offerings that Bayer helps commercialize.

DTC migraine DTx: I’ve reported previously that Mahana had been working on a migraine-focused digital treatment, but it scrubbed most mentions of the project from its website after E&O’s reporting. That too would be a fitting direct-to-consumer digital program marketed in partnership with Bayer, a company perhaps best known for OTC pain medications Aspirin and Aleve.

Allergies next? Considering how important Claritin is to Bayer’s consumer division, I wonder if a seasonal allergies-related digital program is in the works too? Mahana Therapeutics is also increasingly referring to itself simply as Mahana. Did you notice the company’s website is no longer “mahanatx DOT com” it’s now simply “mahana DOT com” as of some time this summer. It also filed a trademark for “Mahana” after originally filing for one for “Mahana Therapeutics” in its early days — another sign it might move away from its original company name in favor of one that may be more fitting for a consumer health company. Now I’m curious about Mahana’s prescription digital therapeutic ambitions. Did the Pear bankruptcy and Akili traction struggles cause it to pivot fully into direct-to-consumer products? Or will Mahana still keep PDTs on the back burner? Can Series B health tech startups manage two go-to-markets in this economy? Thoughts?

CMS HCPCS rejects Akili (again), gives Luminopia a new code (expected), and determines pricing for AppliedVR’s RelieVRx

CMS published its final HCPCS coding decisions and final benefit category and payment determinations for its first 2023 biannual coding cycle. E&O has been tracking these decisions closely for a few years. In this round Akili, Luminopia and AppliedVR were the three digital health companies attempting to create new billing codes for their offerings. Here’s a quick rundown on the news:

• As expected, Luminopia convinced CMS to create a new HCPCS billing code for its digital amblyopia treatment. Since there is no current Medicare benefit category for software-only digital therapeutics, Luminopia was not seeking a payment determination — just a code. As usual, CMS did not create a code specifically tailored to Luminopia’s amblyopia-focus, but rather one that is a little more inclusive of visual therapies: HCPCS Level II code A9292, “Prescription digital visual therapy, software-only, FDA-cleared, per course of treatment”
• Once again Akili failed to convince CMS to create a new HCPCS code that better describes its prescription digital therapeutic, EndeavorRx. Akili has argued that the current HCPCS code for prescription digital CBT does not accurately describe EndeavorRx, which uses a different mechanism of action than cognitive behavioral therapy. Last year CMS tweaked the language of the existing A9291 code so that it included cognitive “and/or” behavioral therapies. While Akili tried a second time to make a case for a brand new code so it’s not lumped in with the CBT-powered prescription digital therapeutics, CMS ultimately decided that existing HCPCS Level II code A9291 “Prescription digital cognitive and/or behavioral therapy, FDA-cleared, per course of treatment” describes EndeavorRx. (One of the many reasons that Akili has been pursuing its recent OTC strategy.)
• The biggest win out of this round of coding decisions goes to AppliedVR. The company managed to convince CMS to reconsider its pricing determination of RelieVRx after coming up with a price based on a 2017 blog article by a medical futurist in Europe that included pricing information for an early VR wellness product that AppliedVR created in its early days. Remember: CMS previously created the HCPCS code for RelieVRx — E1905, “Virtual reality cognitive behavioral therapy device (CBT), including pre-programmed therapy software”. Importantly, CMS agreed with AppliedVR that its offering met the criteria for one of the benefit categories for durable medical equipment (DME), which is why it is one of the few digital therapeutics companies to secure a payment determination via this process. The news is that CMS agreed with AppliedVR that the agency should not have used the pricing information from the 2017 blog article, because that article described a different product. Since there was no publicly available pricing information for RelieVRx, CMS got creative and used the rental pricing that the VA had previously agreed to pay AppliedVR for RelieVRx. CMS wrote in its final decision: “The 2023 average capped rental fee schedule amount for E1905 would be approximately $629.66 for months 1 through 3.” That comes to $1,888.98 for the first three months of RelieVRx, which is the typically prescribed duration of treatment. (If CMS hadn’t corrected its mistake and gone with its preliminary pricing based on the 2017 futurist blog post, it would have only paid $613.98 for the first three months of RelieVRx. So, this is a big (~3x) jump.)

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