ICER rips Pear. Orexo DTC. CMS comments.

Issue 077

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Digital health research from Brian Dolan.

Welcome to E&O.

Last Friday I wrote about the rise of SPACs and the ones most likely to acquire and take digital health companies public. As two readers pointed out, I should have mentioned two other health tech-related SPAC mergers that have already taken place: SOC Telemed and Clover Health.

And if you missed E&O Mondays, I covered more than $370 million in funding deals and gave non-paying subscribers a peek at my Omada Health revenue calculations.

(Heads-up: The first issue of E&O Wednesdays, the enrollment/employer-focused newsletter goes out this week.)

OK, enough of that. Here’s what’s happening in the world of digital pharma products and FDA-regulated digital health this week:

Lilly’s chief information and digital officer (CIDO), Aarti Shah, has announced plans to retire after 27 years with the company. She’s been CIDO since 2016. Lilly’s digital health partners include Evidation, Dexcom, and Livongo. It’s also working on a digital therapeutic (Issue 026) for migraines. Curious to see if the C-suite change causes any of the above to shift course.
Sanofi’s VP and head of digital acceleration for digital therapeutics, Anish Shindore, left the company to join Biogen as its new Head of NeuroTech and Open Innovation.
Meanwhile, Sanofi inked a deal with Tencent to develop digital health tools for people with atopic dermatitis in China.
This lawsuit alleges, among other things, that a big pharma company tried to acquire Navigating Cancer, a Merck Global Health Innovation Fund portfolio company, back in June 2019, but the startup’s board member from MGHIF blocked the deal so it wouldn’t go to a competitor.
The on-demand replay of the FDA’s Listening Session #1 for its Digital Health Center of Excellence is now up on the agency’s site if you are desperate to kill some time in the coming days.
This (rather confusing to me) study in JMIR from two weeks ago attempted to use what was known about the FDA’s conceptual Pre-Cert Program to evaluate whether top-ranked medical apps in the app stores might need regulatory oversight. It concluded: “The FDA’s risk-based framework has the potential to improve the efficiency of the regulatory review process for health apps. However, we were unable to identify a standard measure that differentiated apps requiring regulatory review from those that would not. Apps exempt from the review also carried concerns regarding privacy and data security. Before the framework is used to assess the need for a formal review of digital health tools, further research and regulatory guidance are needed to ensure that the Pre-Cert Program operates in the greatest interest of public health.”
Medtronic and Blue Cross Blue Shield Minnesota have inked a new agreement that expands on a pioneering one they announced in 2019 focused on Medtronic’s Guardian CGM. Now, BCBSMN will pay based on time-in-range outcomes for members using the CGMs with Medtronic’s insulin pumps. Like the 2019 deal, this one will be exclusively available through a pharmacy prescription.
AstraZeneca is working with healthcare provider Humanitas in Italy on a digital health program to prevent subsequent heart attacks (myocardial infarctions) in patients who already had one. The 500-person pilot in the Lombardy region of Italy includes an app and various educational resources to help people take their medications and make healthy lifestyle choices.
Aptar has acquired the assets of Cohero Health for an undisclosed sum. Aptar CEO Stephen Tanda mentioned it on the recent Q3 analyst call: “We have been able to pull the trigger on some very small things that — you may have seen a connected reusable packaging company in Europe, MIWA, and a connected device company, Cohero. Very small investments but — larger premium assets still come at premium prices, especially with the interest rates, where they are, and sponsors are able to get money again. So — and we remain disciplined.”
One more thing… Paul Jin and Daniel Lee left Bose Health earlier this year to start a new medtech startup called Pre Health. Its tagline: “Sensor Enabled AI Wearable To Prevent Disasters Before They Happen.” Curious to see if this group is working in the hearables space too. Fall prevention?

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ICER’s final report and response to criticism remains a scathing review of Pear’s reSET-O

Back in July (Issue 059), I first mentioned that ICER was beginning its review of Pear Therapeutics’ reSET-O prescription digital therapeutic for opioid use disorder (OUD). Then in September (Issue 070) I caught you up on the researchers’ draft report, which was underwhelmed by reSET-O’s cost-effectiveness and clinical efficacy.

You can read the final report from ICER here, as it is out today. However, the companion document that included ICER’s responses to the public (which, in this case, includes issues raised by both Pear and the Digital Therapeutics Alliance) is probably a more interesting read. I pulled out some excerpts below.

But, yeah, the final report and, especially, the responses to the public comments are at times both pretty scathing.

ICER not impressed by new Pear economic study

Pear brought up that new peer-reviewed, real-world evidence is now out that showed reSET-O “resulted in a reduction in high-cost service utilization including facility/clinical encounters saving $2,150/patient”. ICER responded that they couldn’t use the results from that study for its final report because “the pre-period rates of health care resource use reported in the publication are higher than the average healthcare resource utilization of the OUD population.” ICER also wanted to know how the study population was identified and wished there was an external comparator group.

Pear wondered why ICER wouldn’t recognize the older RCTs on reSET-O’s academic predecessor

Pear also asserted that: “ICER’s report inaccurately states that there were no clinical trials of reSET-O,” and brought up the three RCTs that used reSET-O’s predecessor intervention, TES, which Pear acquired from an academic research lab. ICER held firm that the predecessor was not the same as reSET-O: “We summarized all three of the cited trials in the text and abstracted their data, but they are not reSET-O. The CM used in the studies is fundamentally different than that of reSET-O and the patient experience is different (app on phone outside of clinic versus internet version on a computer in the clinic).”

ICER went on to point out that “the FDA would never approve a drug given orally at 10 mg once a day based on a trial of the same drug given [via] IV 1 mg once every 2 weeks.”

ICER also revealed some of its behind-the-scenes, internal discussions about one of the TES RCTs: “Some argued that the Christensen study was poor quality rather than fair. It is clearly not a good quality RCT.” Ouch.

ICER also took a shot at the value of Pear’s substance use disorder DTx, reSET

In response to a public comment, ICER even suggested that Pear’s SUD product, reSET is of questionable value: “Yes, there is additional uncertainty in the value of reSET-O because the value of reSET is questionable despite the FDA approval. The 510(k) process has been roundly criticized and clearly OUD cannot be treated in the same way as SUD or there would not be separate applications and a long history or separate research.”

ICER argued its report wasn’t premature but it might be late

My favorite comment from ICER’s researchers came in response to a suggestion from Pear’s partner, Shatterproof, which wondered if ICER’s evaluation was premature: “We would be very concerned if a premature evaluation of cost-effectiveness for the first FDA-approved digital therapeutic had the unintended consequence of discouraging further innovation and investment in prescription digital therapeutics. We encourage ICER to consider this contextual factor as you make your final report.” ICER fired back: “As for the concern about premature evaluation of digital therapeutics, they are clinically available, so clinicians need to know whether to use them and insurers need to decide whether to cover them and if so, how much they will pay for them. We are, in fact, somewhat late with our report. Usually, we aim to have our report available at the time of FDA approval as it may have the greatest utility at that time.”

Orexo goes direct-to-consumer with $750 substance use disorder digital therapeutic

In its Q3 investor call, Orexo recapped progress on bringing its three digital therapeutics to market and declared that is sees “several alternatives for future payor models and will not apply a traditional one-fits-all Rx model.”

Orexo is working on commercializing its digital therapeutics in three ways: the Rx/pharmaceutical model, contracts with health insurance companies to cover it for members, and direct-to-consumer.

At the end of September, the pharma company added a self-pay option (https://us.vorvida.com/) for its alcohol use disorder (AUD) offering, vorvida. The DTC pricing is $750 for six months of access. Once the person pays for vorvida they are promised that a product access code will be emailed to them within 24 hours.

Orexo plans to launch a similar DTC set-up for its depression-focused digital therapeutic deprexis by the end of the year.

More details in the Orexo Q3 report from a few day ago here.

Cognoa, MedRhythms, and Blue Note sent CMS feedback on “Breakthrough” reimbursement plans

Back in September (Issue 068), I joined many others in wondering whether CMS’ promising proposed rule, the Medicare Coverage of Innovative Technology (MCIT), which would create a pathway for medical devices with Breakthrough designation to secure reimbursement, excluded most digital therapeutics companies even though a number of them have Breakthrough designation.

As Cognoa’s VP of Market Access Andy Molnar put it in a recent letter to CMS this week:

“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.”

Cognoa, MedRhythms, and Blue Note Therapeutics were among the company that offered feedback to CMS this week on MCIT. Cognoa, however, was the only one of the three DTx companies to bring up the Medicare benefits category limitation for DTx. I wonder if the other two figured out a benefits category that they could shoehorn into?

Ultimately, Molnar suggests:

“CMS could use the MCIT rule to clearly state that the existing benefit category, durable medical equipment (DME), applies to many digital therapeutics and diagnostics and clarify that breakthrough-designated SaMD could be subject to this coverage and subsequent payment.”

MedRhythms’ Co-founder and President Owen McCarthy wrote CMS to encourage the agency to finalize its proposal. While he does note the need to fit into an existing Medicare benefits category, McCarthy didn’t offer up any changes:

“We write today in full support of the Centers for Medicare & Medicaid Services’ (CMS) proposal to establish a new MCIT pathway… We encourage CMS to finalize the proposed rule as soon as practicably feasible.”

Blue Note Therapeutics, an early-stage startup developing prescription digital therapeutics that focused on mental health issues facing people with cancer, focused on a handful of other suggestions in comments to CMS. Blue Note’s Head of Access and Reimbursement Michael Malecki didn’t mention the benefits category limitation either. Instead, he asked for a longer period of guaranteed reimbursement and for a stricter requirement around prescriptions:

“CMS should also consider limiting the applicability of the MCIT pathway to only breakthrough medical devices that are prescribed or ordered by qualified personnel (e.g., ordered by a physician or other healthcare provider with prescribing privileges). Adding the requirement that devices appropriate for the MCIT pathway must be ‘Rx only’ (or similar) reinforces the value of clinical evidence since prescribers will look for clinical evidence (among other things) in making their prescribing/ordering decisions.”

The proposed rule for MCIT suggested four years of reimbursement for this pathway following the device’s FDA authorization. Malecki argued it should be longer:

“While we appreciate the proposed four-year window, we note that an extended coverage period of five or six years may allow some developers sufficient time to conduct clinical studies in rare diseases or other situations where recruiting for clinical studies may be difficult.”

Quick links: E&O research reports and databases

The links below aim to make it easier for paying subscribers to find the long-form research reports and databases on the E&O site:

The Virgin Pulse Report (Subscribers-only Link)
The Evidation Health Report (Subscribers-only Link)
Database: Rx-only Digital Therapeutics Pipeline of Pipelines (Subscribers-only Link)
Database: Online Diabetes Prevention Program Companies (Subscribers-only Link)
Database: Digital Health PPP Loans (Open Access)
The Proteus Digital Health Report (Subscribers-only Link)
The Hinge Health Report (Subscribers-only Link)
The Digital Health Enrollment Report (Subscribers-only Link)
The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)

That’s a wrap on Issue 077 of E&O.