PLUS: Anti-Kickback reform and DTx
Issue 079
E&O Fridays.
Welcome back. Last Friday I broke some news: Amwell has held talks to acquire Omada Health. (Omada counts Sanofi as an investor, so I found a tenuous tie to this pharma-focused edition to E&O). No confirmation yet. I also dug into more feedback from digital therapeutics companies to CMS on its proposal to create a reimbursement pathway for breakthrough devices.
And if you missed E&O Mondays, I covered more than $570 million in announced and unannounced new funding, revealed the answer to the trivia question (along with two readers who got it right), and connected a few dots around a not-so-secret Peloton asset acquisition deal.
This coming Wednesday I’ll send out another enrollment-focused digital health newsletter that will include a new Fortune 500 Digital Health Stack and more…
Here’s what’s happening this week in the world of digital pharma products and FDA-regulated digital health:
- The news you know: Amazon Pharmacy is now live with some added perks for Prime members. (I expect to revisit this soon once this pharmacy is fulfilling requests for prescription digital therapeutics.)
- Koa Health inked a “strategic collaboration” with JNJ company, Janssen Pharmaceutica. Koa just spun out of Spanish telecom giant Telefonica. Koa and JNJ scientists will “research the delivery of digital cognitive behavioral therapy (dCBT) for treatment-resistant major depressive disorder (MDD) patients, in conjunction with pharmacological treatments.” The research will include a US-based multi-site feasibility study with patients who have treatment-resistant depression.
- Novartis and smartpatient have teamed up to build out more tools for patients with age-related wet macular degeneration (AMD). The companies’ co-created app will soon include tools to help patients with their treatment adherence, booking appointments, and “digitally connecting” to their care team. It launches in Spain and Italy first.
- Bayer announced a handful of startups it would fund and partner with, including Sweetch, Caria, and Elly Health.
- Voluntis secured a CE Mark for its cancer-focused digital therapeutic, Oleena. That’s the company’s twelfth market authorization from a regulator.
- FDA granted Alivecor yet another 510(k), this time for its Kardia AI.
- And Stat ‘s always great Health Tech newsletter alerted me to a recent 510(k) clearance for Nanowear’s SimpleSense device. It’s underwear that packs “synchronous electrophysiological, hemodynamic, acoustic, metabolic and activity monitoring.” They sound pretty comfy.
- One more thing… The USPTO issued Happify Health a patent for an algorithm that uses “conversational dialog management and natural language processing to detect when a user slips away from the intention of an activity and gently guides them to be more adherent.” It will power the company’s conversational health bot, Anna, which, as it happens, they are hiring a voice actor for right now. Apply right here if you have a voice acting side hustle and think you might be Happify’s future virtual therapist.
Price tag speculation: Amwell-Omada
So, on Monday I promised a few follow-up thoughts on the potential Amwell-Omada deal. The one consistent question that came up in my calls with readers this week was, of course, the price tag.
Please keep in mind this is (mostly) speculative:
If the deal does come together, the consensus range I’ve heard from readers is that Amwell will likely buy Omada for between $1.5 billion and $2 billion. These were readers with no knowledge of this potential transaction. They were just thinking it through with me.
The one number I did hear from a person with knowledge of the deal — that I couldn’t confirm with other sources (so, again, take this more as speculation than fact) — was:
$1.8 billion.
My takeaway from all these calls was that the $1.5 billion to $2 billion range is what we should expect — if the merger does indeed happen.
Considering what I think we know about Omada’s annual revenues, which E&O estimates were around $72 million in 2019, this speculative range would make for a 15x to 20x multiple of 2020 revenues. That’s assuming the company is on track to hit $100 million in revenues this year.
What’s your take on a potential Amwell-Omada deal?
Pear’s busy week: Somryst, ICER vote, HTA
I knew I’d be writing about Pear Therapeutics this week because ICER held its virtual meeting to discuss its report on Pear’s opioid use disorder digital therapeutic, reSET-O. However, Pear also had a splashy launch for its third digital therapeutic, Somryst, and it announced a well-timed partnership with a sort-of, kind-of PBM-like entity named the Health Transformation Alliance.
First up, ICER vote. Two weeks ago I wrote up some takeaways from ICER’s review of reSET-O’s clinical and cost-savings claims: ICER rips Pear (Issue 077). When the committee gathered this week to take a series of votes mostly focused on reSET-O’s claims, the votes largely echoed what was in the report. Here are the real-time results from one such vote:
Pear’s Chief Medical Officer and Head of Development Dr. Yuri Maricich had five minutes to try to make the case for reSET-O and voice objections to the ICER report’s methods and conclusions, but it seemed to have little influence on the votes.
Maricich showed side-by-side views of TES, reSET-O’s academic forerunner, and the modern-day reSET-O version to make the content’s equivalency clear. He also pointed out that the FDA affirmed their equivalency. Finally, he said that ICER was being inconsistent:
“We also noted that ICER’s appraisal is inconsistent with the methodology it used for other non-drug modalities. For example, in a prior ICER report on the Diabetes Prevention Program, many products did not distinguish between digital delivery format, and blinding was not attempted, and yet the products were granted a B+ rating.”
As I’ve written before, ICER was adamant that the older RCTs that Pear used to secure FDA market authorization were for a different therapeutic because required participants to make in-person visits to a clinic to use the software on a computer vs. today’s commercially available reSET-O, which is a smartphone app used remotely. As a result, ICER did not accept the results from the RCTs as relevant to reSET-O’s efficacy. This was the main sticking point. You can watch the various recordings of the half-day event here.
ICER is set to publish its final recommendations for reSET-O in mid-December.
But the Health Transformation Alliance (HTA) approves. The day after the ICER vote, a group called the Health Transformation Alliance announced that it was adding reSET-O and reSET to a custom formulary it offers to its self-insured employer clients. I asked HTA what criteria they used to add the Pear products to their formulary (given ICER’s vote just 24 hours prior) but haven’t heard back.
Somryst goes live with virtual visits, online prescriptions, and digital delivery. Pear’s third prescription digital therapeutic, which is focused on insomnia, went live this week in an unusual set-up. Taking a page from the likes of Ro and Hims, Pear’s go-to-market for Somryst starts with a video visit between a potential patient and a prescriber. Pear has partnered with UpScript for the video visits portion of the patient journey and with Truepill on the pharmacy fulfillment part.
(This also shouldn’t be a complete surprise to longtime E&O readers. I wondered when a digital therapeutics company would go this route back in Issue 033: When will DTx go DTC like Ro, Hims?)
One fun fact about Somryst that isn’t widely known: Pear originally sought an indication for use that included not just chronic insomnia but depression too. Here’s the wording of Pear’s press release from July 2019, just prior to Somryst’s FDA submission:
“Pear Therapeutics today announced the filing of a submission to the U.S. Food and Drug Administration (FDA) seeking marketing authorization for Somryst, a prescription digital therapeutic (PDT) intended for use in the treatment of adults with chronic insomnia and depression.”
Following its FDA clearance, Somryst’s IFU makes no mention of depression. Now it was just “intended for use in the treatment of patients 22 years of age and older with chronic insomnia.”
So, the Somryst submission looks to be a worthy case study for any DTx company hoping to get FDA clearance with a comorbid indication for use.
Anti-Kickback rules and DTx
Politico’s healthcare ace Dan Diamond has a scoop that HHS is set to rollback Stark and Anti-Kickback rules later today.
While I know this rollback is controversial, there is an appetite for clarification of the federal Anti-Kickback Statute (AKS) within digital health circles. Zimmer Biomet, UnitedHealth Group, Akili Interactive Labs, and others have asked the administration for changes to AKS that would help make digital health more accessible.
I’ll focus on Akili. Back in 2018, Akili Interactive Labs wrote a letter to the HHS Office of Inspector General (OIG) expressing its support for some changes to AKS. Here’s the reason:
“[T]echnologies such as ours often require patients to utilize a smartphone or tablet in order to access treatment. Unfortunately, many low-income patients do not have access to such platforms. We, therefore, request clarity from the OIG surrounding the circumstances in which it may be appropriate to provide these platforms to financially needy individuals to allow them to access innovative digital therapeutics.”
The administration is worried that gifting people a smartphone or a tablet so that they can use a digital therapeutic might be too much of an incentive for bad actors to enroll in such a program just to get the free device. Here’s Akili again:
“While the OIG has made clear that the AKS would be implicated in situations where a beneficiary receives something of value from a device manufacturer as an inducement to use its product, the OIG has not provided guidance surrounding the provision of consumer technologies to low-income patients as a necessary adjunct to the digital therapeutic itself. The OIG has offered slightly more instruction regarding the provision of technology in the context of the Beneficiary Inducements CMP. For example, OIG has explained that expensive technologies would not qualify for protection under current Beneficiary Inducements CMP exceptions when less expensive options are available.”
Akili suggested that the OIG use these three safeguards to make its policy around digital therapeutics and the Anti-Kickback statute clearer:
“The proposed safe harbor/exception could include the following components:
- The consumer technology must be necessary for the patient to access the digital treatment effectively.
- The consumer technology must be limited in its functionality such that non-treatment functions are disabled. The patient must only be able to use the technology needed to access the treatment and data usage would be limited to approved applications.
- The program must be limited to those with financial need, based on a good-faith, individualized assessment of the patient’s circumstances.”
So, I’m curious to see if the HHS-OIG took letters like Akili’s into its rollback decision today. I’ll update this on the E&O site when the administration posts the new rules. UPDATE: Here’s a good place to start with the new rules, which did, in fact, come out at the end of November.
That’s a wrap on Issue 079 of E&O Fridays.
