Issue 185
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 two quick things happening in prescription digital therapeutics this past week…
- Germany’s national formulary of reimbursed prescription digital therapeutics (AKA its DiGA program) reduced the price of one of its already listed programs: Kranus Health’s digital program for ED. The app used to cost €656.88 but is now €441.61.
- Germany’s DiGA program also added a new one to the formulary in the past week. GAIA’s priovi, a digital treatment that uses cognitive behavioral therapy for unstable borderline personality disorder, is now provisionally listed. It costs €855.82.
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CMS argues that Cognoa’s CanvasDx doesn’t need a HCPCS code, but AppliedVR’s RelieVRx does as it is a unique DME
If you recall back in Issue 174 of this newsletter from December, CMS’ HCPCS committee has spent the past few months weighing whether or not to issue new HCPCS billing codes to two Software as a Medical Device (SaMD) products: Cognoa’s digital diagnostic for autism spectrum disorder, CanvasDX, and AppliedVR’s prescription digital therapeutic for the treatment of chronic lower back pain, RelieVRx. Well, this week CMS had good news and bad news. Cognoa got the bad news. AppliedVR has a new code set to go into effect in April. Let’s start with the good news:
E1905: A new HCPCS billing code for virtual reality-based medical devices that use cognitive behavioral therapy
CMS’ final decision summary included the following:
“Based on the information provided in the application and after consideration of the comments we received, CMS is revising its preliminary recommendation and finalizing the decision to: Establish a new HCPCS Level II code E1905, ‘Virtual reality cognitive behavioral therapy device (cbt), including pre-programmed therapy software/ to describe RelieVRx.”
Part of AppliedVR’s argument was that because its device includes hardware (a virtual reality headset and breathing sensor), the existing HCPCS code for software-only CBT-based PDTs didn’t apply to their device. After its deliberation, CMS agreed with this line of argument. It also agreed that RelieVRx met the definition of durable medical equipment (DME). This is important because it means that the new billing code will also lead to reimbursement for RelieVRx. DME is a benefit category. Software-only prescription digital therapeutics companies have been lobbying Congress to pass legislation to create a new Medicare benefit category for their interventions — so far, to no avail.
More details on RelieVRx as DME
This is a chunky excerpt but worth reading to understand all the nuances the committee considered in making its determination here:
“For the RelieVRx, the medical software and the device on which it is housed are so integral to each other that we consider them to be one whole device, not software and a separate device. We consider RelieVRx to be one whole device for a few reasons, including because the software is locked to the device. In addition, the software cannot be used on any personal devices and no other non-medical software can be added to the device. Also, the software relies on the VR/immersive features of the device to deliver the benefit to the patient, and the device in turn has features that drive the effectiveness of the software. Specifically, the breathing apparatus on the headset impacts the algorithms played by the software. There are no personal devices, like computers or laptops, that can: (1) achieve the same [effect] with this software; or (2) interact with both the patient and the software algorithms the way that the RelieVRx does. Further, we note that FDA identified a special control (88 FR 983, January 6, 2023) that ‘the patient-contacting components of the device must be demonstrated to be biocompatible,’ indicating that hardware and software are necessary components of the product. Because we consider RelieVRx to be a device, and because it meets the requirements for a device to be DME (see above table), we are issuing a final benefit category determination of DME.”
How CMS will price RelieVRx
“No determination. The payment determination for this item will be addressed at a subsequent HCPCS public meeting. We encourage AppliedVR to provide CMS with pricing information such as retail pricing information and invoices from commercial payers, the Veteran’s Administration, and State Medicaid Agencies.”
“If there are no items with existing fee schedule amounts that are comparable to the items and services under the new code, then we establish the fee schedule using supplier or commercial price lists. If the purchase price used in calculating the fee schedule amounts is greater than $150, then payment would be made on a capped rental basis in accordance with our regulations at 42 CFR 414.229. If the purchase price used in calculating the fee schedule amounts is $150 or less, then payment would be made on a rental or purchase basis in accordance with our regulations at 42 CFR 414.220.”
CMS explains why it decided that Cognoa’s CanvasDx does not need a new HCPCS code
If you’ve been following Cognoa’s efforts with CMS to obtain a new HCPCS code, the only real update this week is that CMS said “no” and standing by its original assessment. Here’s how CMS explained its final coding decision:
CMS’ final HCPCS coding decision for Canvas Dx: Not separately payable
“We appreciate the comments provided in response to CMS’ published preliminary recommendation. Based on the information provided in the application and after consideration of the comments we received, CMS is finalizing its preliminary recommendation. We continue to believe the Canvas Dx is not suitable for inclusion in the HCPCS Level II code set because it is used in or for a procedure and certain items are considered bundled into the facility payment. Even though the device is used in the home, it is a diagnostic tool used in conjunction with other diagnostic processes. We have not identified a specific need for this product to be separately paid, since we believe that a particular payer would pay for the service in which this product is used. For instance, Medicare would typically reflect the costs of the device in the payment for the procedure/professional service, if it is used, and as such it would not be separately payable.”
Akili almost doubles EndeavorRx product revenues year-over-year (but that’s still just $323K)
By now you’ve likely read through Akili’s Q4 and year-end earnings report. The headline above is the main takeaway. Akili’s dedicated salesforce was up and running in 15 sales territories during the fourth quarter of last year, so sales began to grow. Still, the product revenues for EndeavorRx only amounted to $323,000 for the fiscal year.
Technically, revenue was down y-o-y: In 2021 EndeavorRx product revenues topped just $186,000, but the company also brought in revenues from its partnership in Japan with Shionogi so total revenue that year was up over $500,000. For 2022 Akili only had product revenues coming in so it was technically a decrease in total revenues year-over-year. While I listened to the analyst call following the earnings report, the numbers and traction is still so small that many of the analysts’ questions were met with a “too early to tell” type of response.
Telemedicine may help drive adult ADHD revenue in the future: One interesting insight from Akili came from a question from an analyst who wanted to know what kind of an impact the telemedicine option on Akili’s site has had on product revenues to date. Akili didn’t give a specific answer to that, but the company did share that it expects that to contribute more significantly once it can offer EndeavorRx to the adult patient population.
Sales force strategy to date has been focused on re-engagement: Another interesting detail from the discussion on the call was that the initial ramp-up with the dedicated sales team during the fourth quarter was focused on re-engaging with existing prescribers of EndeavorRx. The company will shift to focus more on detailing new prescribers moving forward. No surprise here, but Akili executives also noted on the call that they are also focusing sales resources on parts of the country where the prescription digital therapeutic class of interventions has seen positive signals for reimbursement by commercial payers in the near future. The obvious example: They pointed to Highmark and Pennsylvania as one focus area for Akili’s sales team.
Trials from Big Health (GAD) and GAIA (insomnia and T2D)
This is a recurring feature of E&O Fridays that digs into new digital health-related clinical trials as well as updates to others mentioned in previous issues. Just a handful of studies this week…
Now recruiting: Big Health’s generalized anxiety disorder (GAD) RCT
Big Health just posted its clinical trial focused on GAD in recent weeks, but as of this week the company is recruiting participants. It anticipates 374 participants. The RCT is a sign that Big is considering three different FDA submissions right now for depression (a version of Sleepio), GAD (a version of Daylight), and possibly some kind of insomnia indication too (a version of Sleepio). So far the company has only publicly discussed the possibility of an FDA submission for a depression-focused digital therapeutic.
Remember: During the public health emergency (PHE), Big Health marketed Sleepio and Daylight using treatment claims focused on depression and GAD thanks to the FDA’s waiver on digital medical devices addressing psychiatric conditions. As the PHE comes to an end, Big needs to decide if it wants to go the FDA-regulated route or not. More on the GAD study, which Big is conducting with Boston University:
“This study aims to examine the effectiveness of app-based digital CBT for anxiety compared to psychoeducation in individuals with a diagnosis of Generalized Anxiety Disorder. The primary outcomes are anxiety symptom reduction and remission after 10 weeks.”
Done recruiting: GAIA’s RCT on its digital therapeutic for insomnia
GAIA’s clinical trial in Germany for its insomnia-focused DTx, Somnovia, is all done recruiting after successfully bringing in 270 participants as originally expected. More:
“The trial aims to evaluate the effectiveness of a novel digital health application (somnovia), which was designed to increase sleep quality in persons with insomnia disorder. Therefore, 290 people with insomnia disorder will be recruited and randomized to two groups: (1) a control group, in which they may engage with any treatment for insomnia disorder and are offered access to somnovia after a delay of 6 months (i.e., Care-as-Usual [CAU]), or (2) to a treatment group that immediately receives 6-month access to somnovia and may also use CAU. The primary outcome measure is the score of the Insomnia Severity Index (ISI), collected at three months post-baseline.”
Delayed: GAIA’s study on its Type II diabetes DTx convivio
GAIA originally expected to start its study on Type II diabetes intervention convivio this past October, but now it plans to begin in July. As a result, the study is now expected to be completely finished by July 2024. More:
“This trial was designed to evaluate the effectiveness of the dialogue-based online intervention covivio, which was designed to improve diabetes self-management in patients with type 2 diabetes. The study aims to test the hypothesis that covivio has a greater positive impact on glycemic control than treatment as usual. Patients with type 2 diabetes mellitus will be randomized and allocated to either an intervention group, receiving covivio in addition to treatment as usual, or a control group, which receives only treatment as usual. The primary endpoint is the HbA1c value six month after baseline.”
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