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.
OK, here’s what’s happening this week in the world of pharma digital products and FDA-regulated digital health:
- In a letter to the OIG of HHS, a group of healthcare providers and non-profits recommended that the agency create “a new safe harbor provision to the Federal anti-kickback statute (AKS) to protect the use of cash and cash-equivalent payments offered as part of contingency management (CM) in the treatment of [substance use disorder]. CM is among the most effective evidence-based psychosocial treatments for SUD. With appropriate safeguards in place to prevent fraud, waste, and abuse, it can and should be made available to all patients receiving SUD treatment.” The letter specifically mentions prescription digital therapeutics as one type of SUD treatment that makes use of CM.
- BioWink secured FDA 510(k) clearance for its app, Clue, which helps its users avoid pregnancy. Unlike competitor Natural Cycles, this app does not require temperature readings or any other sensor data input. The newly created product code for Clue explains: “Algorithm transforms user data into user-specific information regarding fertility and provides timeframes when pregnancy is unlikely.” Here’s Clue’s clinical trial.
- And Qardio received 510(k) clearance for its QardioCore ambulatory ECG device, which it will market for Holter monitoring applications.
- The FDA’s 8-page Data Modernization Plan came out on Wednesday — read it here.
- Random revenue metric: Somnoware, which offers SaaS for “respiratory healthcare management… automate[s] the diagnostic workflow, integrate[s] data from 150+ devices/software systems, and provide[s] predictive analytics to care providers,” was bringing in close to $4 million in annual recurring revenue recently. (One of their investors just removed that probably-too-revealing-fact from their portfolio page blurb about the company this week.)
- Withings and the Mayo Clinic are studying an under-the-mattress-sensor device’s ability to diagnose obstructive sleep apnea. (The device is similar to the one Apple acquired when it bought Beddit a few years ago.)
- I mentioned these on Monday already, but Pear Therapeutics added another $20 million to its Series D (from an unnamed IDN). And Blue Note Therapeutics raised $26.3 million.
- Freespira, which offers an FDA-cleared digital therapeutic for panic attacks, panic disorder and PTSD, has made its DTx available to adolescents. Children’s Community Health Plan, an HMO in Wisconsin, will be the first to roll it out to that age group.
- One more thing… Wise Therapeutics, which offers a direct-to-consumer CBT stress and anxiety-focused app, also has a pipeline of prescription digital therapeutics focused on therapeutic areas including: perinatal anxiety, alcohol use disorder, multiple sclerosis-related anxiety, pediatric autism spectrum disorder, cancer-related anxiety, diabetes-related anxiety, PTSD, and eating disorders.
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BCBS of MA: Rx digital therapeutics for substance abuse not yet evidence-backed
Here’s a scoop: Blue Cross Blue Shield of Massachusetts has added a new medical policy for its Medicare and commercial plans entitled “prescription digital therapeutics for substance abuse.” 
As the snip above shows, the effective date of this new medical policy is June 1, 2021. (Is this actual coverage? The phrase “investigational indications” is giving me pause.)
I’ve reached out to BCBSMA for comment and will let you know what I hear. (Update: I did hear back — this is a decision not to cover PDTs for substance abuse. More from BCBSMA and other Blues who made the same decision in next week’s issue.)
This is almost certainly a deal with Pear Therapeutics, which is also a Massachusetts-HQ’d company. And if that is the case, this marks the biggest name payer deal for Pear to date. While the information provided above does not fully explain BCBSMA’s plans to cover (or just pilot?) prescription digital therapeutics for substance abuse, it’s a positive sign for PDTs that a big-name payer like this has taken a leap (of any kind).
Payers talk benefit categories, FDA, voice of consumer research, DiGA-like bake-offs, and more
One of the panels that I had high hopes for at DTx West was the one on payer perspectives. This event seemed to veer away from the pharma-like, prescription digital therapeutics companies that dominated it when I first attended a few years ago. As a result, a lot of the discussions were about digital health in general. Still, this panel — while wide-ranging — did offer up a few interesting moments that in the very least help us understand what’s top of mind for the payers that participated. My takeaway was that none of them appear poised to provide coverage for prescription digital therapeutics anytime soon.
Here were some highlights for me…
CVS on the benefit category question: medical vs pharmacy vs some new benefit: Theresa Juday, Director, Speciality Innovation, CVS Caremark indicated that she gets this question often. (Her answer here is a little muddled because the discussion about digital therapeutics at DTx West used a wide-ranging scope and pretty much included any kind of digital health intervention.)
“I don’t think it is going to be a one-size-fits-all approach with the way the marketplace is set up today — and the types of digital therapeutics that are on the market. I think it’s going to have to be a thoughtful approach that is: Does it make more sense in a medical benefit or does it make sense in a pharmacy benefit? Or — does it need to be looked at completely separately? Is there a holistic healthcare benefit that comes out of this where it really doesn’t matter where it sits, but it is all about the outcomes that are being driven. So, if that’s the case, then it pays that way. There is some value, from a pharmacy perspective, that for some digital therapeutics it might not be a bad idea for a pharmacist to be involved.”
Like self-insured employers’ HR departments, health plan executives are overwhelmed with paralysis of choice too: Michael Sherman, Chief Medical Officer, Harvard Pilgrim Healthcare:
“The challenge for me as the health plan’s chief medical officer is, I don’t know which are the right [digital therapeutic] video games. Everyone is sending me information about their video games, some of them are really crappy video games and don’t work well, and others are terrific. Sorting through all of that is a big problem… My biggest challenge is I don’t have time to look through all the emails let alone evaluate all of them.”
Liability fears: Sherman also seemed uncomfortable with the prospect of 24/7 remote patient monitoring streams of data that would create liability for his providers — that is an age-old concern for telehealth, and I was a little surprised to hear it come up in 2021.
Who cares about the FDA: One of my favorite lines from Sherman was about how he doesn’t care much about whether a digital health offering has gone through the FDA or not — he’s never asked a company “if they’ve taken it to the FDA… I don’t need a Good Housekeeping seal of approval from a regulator.” Instead, his main question is whether they have demonstrated effectiveness in the real-world and in a population like his.
Fast-follower mentality: Sherman says if you can show something works in Blue Shield of CA, well, that’s a real player and his team will respect that. It makes it more likely that his team will consider it.
Blue Shield of California feels strongly about voice of consumer research: Ryan Lawton, Chief Architect, Customer Experience & Engagement, Blue Shield of California: This came up again and again in Lawton’s comments at DTx West. If you are working on a pitch to this payer, maybe do this research first?
“I do feel like there is just a fundamental lack of knowledge of voice of the customer within the industry and I encourage people to continue to pursue those studies.”
Does the US need its own version of Germany’s DiGA? Lawton didn’t reference Germany’s DiGA initiative, but his comments on this front made me think of it:
“One of the things we are lacking is a proving ground for some of these solutions. It costs anywhere from $750,000 to $1.5 million to plug in one point solution for a health plan when you get done with data integration, credentialing, single sign-on, and all those other things. So, we are forced to choose the winning horse upfront. What we lack is an area where we can do demonstration projects on a large scale and learn from them.”
(And, wow, that’s a lot of money for a health plan pilot.)
“We were fortunate to set-up our marketplace as a true marketplace and be very capitalistic and data-driven. I call it, lovingly, Thunderdome. What we learned from that experience was that the cream absolutely rose to the top. A year-and-a-half into this, there is a tier of high performers and a tier of low performers and no one in between. So, we are in a position now to ask ourselves what do we do with the underperformers? And how do we channel people more to the high performers? That is a small demonstration project. We only have about 40 different providers in that network. How do we scale something like that?”
Beware of poor engagement metrics in roll-outs and selected populations in studies: Elizabeth Kwo, Deputy Chief Clinical Officer, Anthem pointed to two pitfalls that she indicated she has seen crop up: poor engagement and selected populations in studies.
“When payers are deciding what to cover, we consider all sorts of things — not only what are the patient-improved outcomes but also what are the comparables in the space. Also, how do you guarantee engagement? … if there is less than 2 percent engagement or less than 0.2 percent engagement, how does it benefit the member?” “What we have seen too is that when [a digital health company] has clinical evidence sometimes it is a selected population. The question is whether you can generalize it across populations…”
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