Thanks to Apple, Alivecor goes more DTC. Part II: Software as a drug.

Issue 055.

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Digital health research from Brian Dolan.

Welcome to E&O.

Last week I wrote up how Welldoc became the first company to get its digital therapy a billing code like a drug. Next week I am open to ideas — what should E&O dig into? Here’s what’s happening this week:

Meant to include this last week: In Issue 053 I wrote about an RCT focused on a coach-led intervention for depression and anxiety. Small detail, but I missed a step in the IP licensing daisy-chain. Here’s how it should have read: “A startup called Actualize Therapy has licensed the intervention for commercialization from the researchers, who incorporated as Adaptive Health.” I originally thought Adaptive was the licensee and not the licensor.
Striiv, which at one point tried to compete with Fitbit in the early fitness wearable market, looks to be going under finally. Its founding CEO David Wang left in 2018 to co-found medical wearable startup BioIntelliSense, where he is also CTO.
Amwell, a longtime provider of remote visits with physicians, has reportedly submitted a confidential filing to go public. The company recently raised $194 million.
Bigfoot Biomedical raised $55 million and submitted Unity to the FDA. “Bigfoot Unity utilizes proprietary, smartpen caps for basal and meal-time insulin dosing recommendations integrating Abbott’s FreeStyle Libre platform.”
Welldoc got its 8th 510(K) clearance: FDA “cleared an additional feature for the digital health product BlueStar Rx which supports individuals using long-acting insulin.”
Sharecare acquired MindSciences, a digital therapeutics company founded by neuroscientist Dr. Jud Brewer. The company’s offerings focused on unhealthy habits related to food, tobacco, stress, and anxiety. Sharecare partnered with MindSciences back in February to distribute its tobacco cessation program.
One more thing: Unclear how much digital health will come into play here, but a startup named Topography Health quietly raised close to $6 million. It aims “to accelerate the development of new therapeutics by helping physicians and coordinators manage clinical research at scale.” Perhaps the most notable thing about this company is that one of its co-founders is Alexander Saint-Amand, the former President and CEO of Gerson Lehrman Group. His Linkedin profile says he is the co-founder of a stealth startup as of January 2020.

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Alivecor’s latest FDA clearance allows it to go more directly to consumer, thanks to Apple.

Ever since Apple secured its two clearances from the FDA, I’ve been waiting to see which SaMD company follows their lead and uses their devices as a predicate. Here’s what I wrote in Issue 021:

“…the Apple clearances also marked the first time that the FDA regulated ECG software while ignoring the sensors that acquired the electrocardiogram. The agency essentially ignored the Apple Watch’s hardware — specifically its PPG sensors — in the clearance process.

I’ve been waiting and watching, but so far no company has managed to use Apple’s clearances as predicates to push something through the agency. The move by the FDA to give Apple a pass on its medical sensors has left SaMD regulatory experts scratching their heads. Which company is likely to follow Apple’s lead and be the first to use them as a predicate? It will likely happen soon.”

This week, I was surprised to learn that the first (so far as I can tell) company to cite Apple’s clearances as a predicate device was none other than Alivecor. (Alivecor secured this clearance back in January, but I only noticed the summary document for the 510(K) in the agency’s database this week.)

Even more unexpected, Alivecor pointed to Apple’s clearances not as a predicate for uncoupling software and hardware in a submission, but as a predicate for going more directly to the consumer.

If you recall, when Apple first announced its FDA authorization on-stage at its WWDC event back in 2018, Apple CTO Jeff Williams made the claim that “this is the first ECG product offered over the counter, directly to consumers.”

Most people in digital health immediately cried foul. Alivecor already had an OTC clearance, so Williams’ statement seemed false.

Those more familiar with Alivecor’s service, however, understood that even with the OTC clearance, Alivecor’s consumer device had to be “unlocked” by a physician when it was first used. With Alivecor’s latest clearance in January, that’s no longer the case. And it’s thanks to the precedent Apple set.

In its most recent FDA clearance from earlier this year, Alivecor explains:

“The Indications for Use between the proposed device and primary predicate device [Alivecor’s previous clearance] are highly similar and vary solely with respect to removal of the requirement for use under supervision of a clinician. The proposed device and secondary predicate device’s [Apple’s de novo clearance] Indications for Use statements describe the same range of functionality with respect to ECG recording, display, and analysis; and neither device includes an unlock mechanism for access to any functionality or requires use ‘under the care of the physician,’ as is the case with the primary predicate device.”

So, it turns out that Alivecor is the first to use Apple as a predicate, but not for the reasons I suspected a SaMD company would.

Part II: The path forward for DTx seeking payment via the pharmacy benefit

In last week’s newsletter, I recounted the story of how Welldoc managed to secure an NDC/NHRIC for its digital therapy, Bluestar, for diabetes management.

Getting the code required a personal favor from a sitting US senator, but the code still didn’t grant the DTx automatic entry into all of the major drug compendia.

Back in 2014, anyway, that strategy didn’t prove to be as frictionless a go-to-market strategy as hoped.

What’s more, the FDA has since ruled that SaMD will not be eligible to receive NDC codes moving forward. So this not-so-well-worn path is no longer an option.

A new hope: UDI digit-shaving via NCPDP W2

It has not previously been reported on, but a handful of prescription digital therapeutics companies have already convinced some of the compendia — First DataBank continues to be a holdout — to list their products.

But, wait a minute, without an NDC/NHRIC code how did they do it?

In recent years the FDA has pushed for a new coding paradigm called the Unique Device Identification (UDI) system. Once a SaMD company has submitted for its FDA market authorization, it can use that number to apply for a UDI.

Ultimately, these codes are arbitrary — both NDC and UDIs are issued by the FDA after all. So, most of the compendia are willing to use the UDI instead of an NDC, but the issue is that UDI codes are 14 digits long. An NDC/NHRIC is only 11 digits.

To find a way to make those numbers work, a handful of digital therapeutics companies went to the National Council for Prescription Drug Programs (NCPDP), which is a standards development organization. NCPDP tasked its Work Group 2, which focuses on product identification problems, with figuring out a standardized way to pare down a UDI so it can look and act like an NDC.

Since UDI’s have a leading zero and a check digit at the end, some of that process was pretty straightforward. Most digital therapeutics companies, however, go to this work group to get help retrofitting their UDI so that the compendia will list them.

What’s lost re: reimbursement now that NDC isn’t an option?

While the UDI digit shaving takes care of some of the technical issues that arise, had the FDA gone a different route back in 2016 and allowed SaMD that improve outcomes like a drug to be recognized with an NDC, reimbursement for prescription digital therapeutics might look a lot different today. Some state Medicaid programs, for example, make it fairly turnkey to get reimbursement once your therapeutic has an NDC. Suffice it to say, the FDA’s blessing would have led to some positive reimbursement implications. Those will now be hard-won.

Efforts to change policy to open up reimbursement for prescription digital therapeutics

E&O has tracked various lobbying efforts to secure CMS reimbursement for various categories of prescription digital therapeutics. Pear Therapeutics’ US Senate bill is one primary example (Issue 052). AdvaMed’s bill focused on reimbursement for FDA-designated breakthrough devices is another (Issue 033), since a number of prescription digital therapeutics companies have secured that designation.

In recent weeks there have also been various attempts to convince CMS to add some kind of reimbursement — even temporary — for prescription digital therapeutics during the current public health emergency (PHE).

The Digital Therapeutics Alliance asked HHS to consider reimbursement for 14 products from Welldoc, Dario, Kaia, Big Health, Akili, Pear, SilverCloud, Propeller, Voluntis and Palo Alto Health Sciences. As part of its recommendation to HHS, DTA said that CMS should “Direct authorized DTx products to use a specific uniform miscellaneous HCPCS code (or individual product code, if preferable)”.
On its own accord, Pear Therapeutics sent CMS a similar comment this week asking CMS to cover two of its digital therapeutics during the PHE: “We urge CMS to extend Medicare coverage to reSET and reSET-O under its section 402 waiver authority of the Social Security Amendments of 1967 to ensure continued beneficiary access to SUD/OUD, similar to how the agency extended coverage to certain antiviral drugs towards the end of 2004.”
In a recent letter to CMS, Swedish pharma company Orexo made its case for its two digital therapeutics, too. But Orexo also reminded CMS about its decision not to create a new HCPCS code for digital therapeutics two years ago:

“During its 2019 HCPCS coding review process, CMS considered a request to create a new Level II HCPCS code to identify ‘Computer Based Training for Cognitive Behavioral Therapy’ (CBT4CBT). In determining not to issue a payment code for this DTx, CMS noted that:

“CMS has not identified policy or claims processing need on the part of any insurance sector for code to identify self-guided training program on the claim. We understand that self-help web-based software treatment and self-help devices are an important and emerging science. It is our understanding that Food and Drug Administration and American Medical Association are reviewing this technology in detail as they consider product and procedure classification.”

While the NDC pathway has closed, the new hope is for CMS to issue some kind of HCPCS code for digital therapeutics — just like they almost did in their 2019 review.

Quick links to E&O research reports

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

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)

And so ends Issue 055 of E&O.