Issue 244

Welcome back to E&O: SaMD, a paying subscribers-only weekly newsletter focused on the world of digital pharma products, prescription digital therapeutics and other FDA-regulated digital health.

 E&O: Software as a Medical Device

Here’s a quick rundown of news items and mini-scoops focused on FDA-regulated digital health…

• MedRhythms’ clinical trial with Alexion Pharmaceuticals focused on people with Neuromyelitis Optica Spectrum Disorder is now enrolling participants by invitation. The new intervention at the center of the study is: “MR-C-014… an autonomous neurorehabilitation system based on the principles of Rhythmic Auditory Stimulation (RAS) and is designed to operate digitally and autonomously. The core mechanism of RAS is ‘auditory-motor entrainment.’ Studies have shown that there is rich connectivity between the auditory and motor systems via multiple cortical and subcortical networks.”
• Speaking of MedRhythms… one of its co-founders, Owen McCarthy announced that he was exploring whether he should start a campaign to run for governor of Maine.
• The AMA’s CPT Editorial Panel Meeting is coming up next month and so far two of the code change applications that E&O is tracking have remained on the agenda. One applicant asks for two new billing codes focused on remote continuous temperature sensing. (Is that Natural Cycles?) The other is asking for one new code within the remote therapeutic monitoring family of codes focused on oncology. (Any guesses?)
• Finally… MedPac, which is a small government agency tasked with advising Congress on Medicare policies, recently convened a public meeting that included a promising discussion focused on Medicare paying for software. The conversation lumped clinical decision support software and prescription digital therapeutics into the same bucket at times, but overall I thought the meeting showed this agency is likely to start advising Congress to make some moves to make it easier for Medicare to pay for software-based interventions. You can read the full transcript here but it starts to focus on Medicare paying for software around page 227.

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Is $129 enough? Pricing for the new digital mental health treatment device G code may come up short

When CMS revealed its plans to create new HCPCS billing codes for digital mental health interventions in the Physician Fee Schedule last year, many of the companies and organizations that have been lobbying the government to reimburse for prescription digital therapeutics celebrated. Understandably. It was a surprise victory after many years of fruitless efforts, digital therapeutic SPACs, bankruptcies, insolvencies, and fire sales.

More background: CMS created three new G codes for digital mental health interventions that went into effect at the start of 2025. Two of them are service codes, which CMS priced by crosswalking (or aligning) them with the rates already assigned to similar service codes for remote monitoring. However, CMS decided that the third G code, a supply code that pays for the device itself, would go to contractor pricing and be priced locally by the MACs.

Sneak peek on pricing: E&O has learned that a couple of the MACs have begun paying just $129 on a case-by-case basis to providers who bill using the new supply code for digital mental health interventions. Remember, this is not a monthly fee. This is a one-time billing event that covers the device for the course of treatment for each patient.

Less than selling to employers: Big Health is one of the key proponents of the new digital mental health intervention G Codes. The company made the decision to set up new clinical trials and submit its two flagship interventions, Sleepio and Daylight, to the FDA for 510(k) clearances after selling into self-insured employers for many years. Big Health expected to be able to charge more for the FDA-cleared, prescription-only versions of its interventions. Remember: In a comment to CMS, back when it was deciding how to price the new G codes, Big Health provided invoices to the agency that indicated it wanted CMS to price the supply code at around $800 per billing event. Big Health also pointed to the price that Pear Therapeutics formerly listed its flagship intervention, Reset-O, at before it went bankrupt: $1,195 per prescription. E&O has previously reported that the average price point that Big Health sold its interventions to self-insured employers at was around $400 per participant. Clearly, Big was hoping to charge at least twice as much ($800) for the FDA-cleared, prescription-only versions of its interventions.

Is $129 enough? The big question for the backers of these new G codes is whether the reimbursement rate for the supply code will be enough for these companies to justify the costs of going through the FDA process (including the requisite clinical trials) and ongoing compliance. Considering Big Health’s decision to pivot from solely focusing on the highly competitive self-insured employer market, where it managed to price its interventions at $400 each, to the more costly prescription digital therapeutic go-to-market… I think it is obvious that $129 is not enough. It is less than half what Big Health charges its employer clients per course of treatment. And it is less than a quarter ($800) of what Big told CMS was a fair price. I can’t imagine that $129 is enough to sustain a prescription digital therapeutic go-to-market. Not final yet: While the $129 is a discouraging starting point for the proponents of the G Codes, it is not the final price point. The MACs are supposed to be going through a gapfilled process to create a reimbursement rate for this new supply code. I haven’t followed this process along for past codes, so I’m not sure what to expect exactly. It sure seems unlikely that this code is going to be paid at anywhere near the rate Big Health asked for though, right? P.S.: This episode reminds me of Big Health’s experience in the UK. NICE, which creates medical policies and sets payment rates in the UK, recommended that prescribers in that country consider Sleepio for their patients with insomnia. NICE’s analysis back in 2022 found that Sleepio was cost-effective at a pricepoint of £45 or about $56 per course of treatment.

FDA clearances: Click Therapeutics de novo for migraine intervention; Luminopia; Cognoa

Despite the turmoil at HHS, the FDA has continued to clear digital health software devices at a steady clip. I’m still waiting on more details and summary documents for some of these (including other recent ones I wrote about like Whoop’s first 510(k) for its upcoming ECG feature).

Click Therapeutics de novo clearance for migraine symptom prevention

Click announced that it had secured FDA marketing authorization for, CT-132, the first prescription digital therapeutic for the preventive treatment of episodic migraine. Here’s the indication:

Given that this digital intervention is intended to be used alongside pharmaceutical treatments, it’s likely that Click will pursue a PDURS-focused go-to-market for this one. The company hinted at this in its press release about the de novo clearance too: “CT-132 studies may provide data to inform future development of added clinical benefit claims consistent with the Prescription Drug Use-Related Software (PDURS) FDA Draft Guidance.” Notably, Click has not announced a pharmaco partnership in connection with its migraine intervention.

Luminopia adds a third 510(k) clearance for its VR-based amblyopia intervention

Last year Luminopia secured its second 510(k), which allowed it to add a new virtual reality device as an option for its patients. This month Luminopia added a third FDA clearance but details currently remain thin. Likely another VR device added? Apple Vision Pro?

Cognoa secures a new 510(k) for its Canvas Dx diagnostic aid for autism

Similarly to the Luminopia clearance above, this one from Cognoa is still scant on details. Maybe the age range has expanded thanks to the new clearance? Here’s some background on Canvas Dx:

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