Issue 078
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Digital health research from Brian Dolan.
Welcome to E&O.
Last Friday I wrote about ICER’s blistering report on Pear, Orexo’s DTC move with its substance use disorder DTx, plus feedback for CMS on its plans for reimbursing breakthrough devices.
And if you missed E&O Mondays, I covered hundreds of millions in announced and unannounced new funding, added a new trivia question, and lamented my failed Cohero prediction. On Wednesday, E&O published its first edition of the enrollment-focused newsletter, which dug into Virta Health’s VA deal, Omada Health’s RCT, Vida Health’s Centene deal, Virgin Pulse’s money-back-guarantees and more.
OK, let’s cap off that recap and start anew. Here’s what’s happening in the world of digital pharma products and FDA-regulated digital health this week:
- I know this is a stretch but today’s top story is about Omada Health. Remember, Sanofi has a stake in Omada, so let’s allow it.
- Big news this week: NightWare, which offers an Apple Watch-based digital therapeutic for measuring and treating nightmares for people with PTSD, just secured a De Novo clearance from the FDA. The device creates the new product code: QMZ. According to the filing info, NightWare submitted in late May and got the De Novo on November 6th.
- During my sessions with Click Therapeutics CEO David Klein this morning at the Frontiers Health event, I asked Klein to share a bit about Click’s pricing strategy. As part of his answer, he mentioned that one agreement Click has with a payer values one of its digital therapeutics at about $1,000 per prescription. That is, in part, based on how much money the DTx would save the payer.
- Pear Therapeutics announced that Delaware-based health system, ChristianaCare will offer patients Pear’s reSET and reSET-O prescription digital therapeutics via the health system’s outpatient program, Project Recovery.
- Not new but learned this week: On May 8, 2018, PureTech lost control of Akili Interactive. As of that date, Akili was no longer considered a subsidiary but rather an independent affiliate. Today, PureTech owns a little more than a third of the company.
- Merck announced that it was working with Singapore-based Holmusk to bring the company’s GlycoLeap digital health program for prediabetes and diabetes to people using Merck’s diabetes meds in China, Malaysia, and Hong Kong. GlycoLeap will first need to get market authorization in each country.
- Finnish startup Popit announced that it was working with Spanish pharma Almirall on an app that helps people track adherence to their psoriasis medication. The program is already up-and-running in The Netherlands.
- One more thing… Glow, which offers an app focused on fertility, settled up with the state of California to the tune of $250,000 for a series of basic security lapses with the app. The case is one of the first high-profile ones to come about as a result of California’s Confidentiality of Medical Information Act (CMIA). Great write-up here.
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Sources: Amwell, Omada discuss merger
I have heard from a few sources this week that Amwell and Omada Health are in the midst of negotiations for a merger similar to the Teladoc-Livongo tie-up from earlier this year. Well, it won’t be as big of a deal, but it would create something close to a competitor to Teladongo.
Some of my sources believed the deal to be off, which, if true, means Omada is already talking to Wall Street about a Q1 IPO. Others said they had heard more recently that the deal is on and an Amwell-Omada hybrid will emerge.
The companies are deep into negotiations — and it still could go either way — but from what I’m hearing, I think Amwell will get the deal done and buy Omada. I heard one rumored valuation for the deal from one source, but wasn’t able to confirm it with others. (Let me know if you have heard anything, I’m happy to compare notes.)
If it does come together, it will be the first big ripple effect of the $18.5 billion Teladongo deal. But — certainly — not the last.
A DTx-specific benefit category and other comments CMS is sifting through right now
This week saw a flurry of new comments to CMS on its proposal for the MCIT pathway to reimbursement for medical devices with breakthrough designation. Most of the letters from groups affiliated with digital health or from representatives of digital health companies themselves were mostly in agreement about what CMS should tweak. Here’s a quick round-up of excerpts:
Propeller Health, ResMed, and Constant Therapy had similar comments:
“Digital medical devices do not have a Medicare benefit category, therefore are not presently covered by Medicare – a considerable obstacle. It is difficult to see how MCIT as presently proposed will benefit the small subset of medical devices that have achieved market authorization as well as Breakthrough device designation. CMS must therefore exercise its leadership within current regulatory authorities to expand existing benefit categories to cover and pay for digital medical devices.”
The Digital Therapeutics Alliance asked for a DTx-specific benefit category:
“Because no benefit category exists under the Medicare framework for DTx products, it is imperative to: 1.) Create a DTx benefit category; 2.) Determine which DTx products fit under currently available benefit categories, such as Durable Medical Equipment (DME); and, 3.) Ensure that the DME category enables for appropriate recognition of qualifying digital therapeutics.”
AdvaMed has clearly helped many of the letters forge their comments but one quick snipped from the org’s own letter summed this part of its comments up nicely: “CMS should use its existing regulatory authority to ensure AI, virtual, app-based and other digital technologies will be eligible for the MCIT coverage pathway.”
The American Psychological Association is also onboard with making sure this pathway doesn’t leave DTx behind:
“As the field continues to expand, we encourage CMS to continue to engage with the FDA and stakeholders, including health care providers, to develop a more holistic, long-term strategy for covering and reimbursing for digital health tools, including remote patient monitoring and digital therapeutics. Developing policies that promote coverage and reimbursement and regulatory mechanisms that strive to keep pace with technology developments are within the purview of CMS and FDA; however, the decision to use digital tools or digital therapeutics should remain within the professional judgment of the treating clinician.”
Ionic Ventures, a financial backer of pioneering Alzheimer’s focused DTx company, Dthera, echoed and quoted from AdvaMed’s comments:
“Allow automatic assignment and payment of HCPCS Level II codes for digital health technologies that are cleared or approved through the FDA’s Breakthrough Devices Program, used by a beneficiary in the home or community for a specified medical purpose as prescribed by a physician, and meet the other requirements under DME…
“Similarly, in rendering care, physicians may utilize digital health technologies which are not currently captured or incorporated as part of the current coverage or reimbursement structure. In one scenario, digital health technologies used directly by physicians to diagnose or treat patients may fall outside of an Evaluation and Management (E/M) or procedure code…
“Recommendation 3-A: Allow automatic use/assignment of and payment for Category III CPT codes for digital health technologies that are cleared or approved through FDA’s Breakthrough Devices program and are used by physicians.
“Recommendation 3-B: For new and emerging FDA-approved digital health technologies that are used by physicians, automatically assign a Category III CPT code and payment level for new technology or develop a modifier to use with existing CPT codes when the digital technology is used with the service.”
AdvaMed suggested CMS should ensure that the four-year reimbursement window that the agency proposed doesn’t unfairly shut early for the Breakthrough devices that received that designation years ago: “We believe CMS should provide four years of coverage beginning with the effective date of the final rule, or the date of FDA-market availability, whichever comes second.”
Finally, one comment sought more transparency from CMS and asked if it would post the full list of nearly 298 medical devices that have secured Breakthrough device designation.
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 078 of E&O.
