Cerebral's legal issues threaten telehealth's ad model

Digital prescription startup Cerebral may soon be facing a class action lawsuit for sharing sensitive health information with big tech companies like Meta and Google. Dozens of other telehealth companies do the same thing in order to target ads and learn more about customer behavior. The suit raises important legal questions: does this breach of privacy cause customers financial harm that should be reimbursed?

Telehealth companies' marketing practices have faced greater regulatory scrutiny in recent months.The Federal Trade Commission charged online drug coupon company GoodRx, which also runs a telehealth marketplace, with deceptive advertising practices in February, and the Health and Human Services Department office that oversees HIPAA published guidance last year that allowed for the use of tracking tools, but reaffirmed that companies can't expose protected health information without consent. Read more from my colleagues Mohana Ravindranath and Casey Ross.

mergers and acquisitions

Mindstrong sells its mental health tech

Mindstrong, a high-profile mental health tech startup, is selling off its assets to the therapy platform SonderMind. The acquisition comes less than two months after Mindstrong laid off most of its employees and permanently shuttered its Menlo Park offices.

The deal caps a remarkable downfall for Mindstrong, which had generated significant buzz and drawn backing from heavyweight Silicon Valley investors like General Catalyst with its pitch to analyze people's smartphone use for early signs of mental illness. In a recent investigation, Mohana found that Mindstrong faced significant pressure from investors to commercialize the technology too soon. Former employees also told her Mindstrong struggled to regain its footing after the departure of key founders and other dramatic management shakeups.

finance

Another mental health startup raises $32M

In the wake of consolidations and layoffs in mental health tech, digital mental health startup Bend Health is trying its own way to fill the gaps in mental health care. The startup has raised $32 million and forged partnerships with health insurers like UnitedHealthcare and Magellan in California, along with health systems like Prairie Healthcare and Allegro Pediatrics. Founded by child psychiatrist Monika Roots and her husband Kurt, Bend provides online counseling and resources to kids and teens struggling with everything from general stress to severe mental illness and substance misuse.

Their goal in these initial stages, Roots says, is responsible growth. "Growing at all costs, unfortunately, typically impacts two people primarily: the people that work for you, including the clinicians, which puts them at risk for burnout, and the people who are coming to you," she told STAT's Theresa Gaffney. While the company has a direct-to-consumer arm, they're focused more on collaborative care with pediatricians and partnering with payers and employers to offer services like video & chat counseling in all 50 states.

"It's thinking about: how do you fit into the health care system? It's complex," Roots said, "and unfortunately it's broken."

medical devices

FDA grants another approval to medtech startup treating sleep apnea

The FDA has given Inspire Medical Systems, a company developing nerve stimulators to treat sleep apnea, the go-ahead to offer its device to pediatric patients with Down syndrome. Obstructive sleep apnea affects nearly 80% of kids with Down syndrome, leading to brain fog and sleep deprivation. Inspire's device is a chest implant that stimulates a nerve to move the tongue during sleep, allowing more air to come through. The company published promising clinical results in patients with Down syndrome last year.

The nerve stimulation approach has also benefited from Philips' disastrous recall of its CPAP machines, which are currently the most popular treatment for sleep apnea. Dissatisfied patients are exploring other treatment options, leading to tremendous financial gains for Philips' competitors. Inspire's total 2022 revenue was $400 million, from $115 million in 2020.

covid-19

End of an era: FDA's last regular Covid diagnostic hearing

I sat in on the FDA's town hall to answer questions about test development during the Covid-19 and monkeypox public health emergencies. The agency has held 100 of these sessions over the past three years; today's session, the last recurring meeting, was number 101. The main order of business was the wind-down of emergency use authorization — a special pathway that allowed the FDA to quickly authorize unapproved Covid tests and vaccines. The public health emergency ending in May will not remove this pathway. That decision is in the hands of HHS secretary Xavier Becerra, who decides whether EUAs are necessary under the Food, Drug, and Cosmetic Act.

In the meantime, the agency has been ramping down its reliance on emergency use authorizations. And it's preparing for a return to standard diagnostic pathways. FDA officials said the Office of Management and Budget has reviewed its draft guidance for how emergency-authorized medical devices should transition to regular pathways, bringing it one step closer to officially releasing the guidance. Developers will be given 180 days notice of their emergency authorizations ending.

In response to several developer questions on which regulatory pathway makes sense for at-home Covid antigen tests, the FDA pointed to the de novo pathway for novel medical devices.

health tech

Industry news

Abbott's remote heart monitoring device has been approved by the FDA for patients living with mild heart failure and worsening heart failure
Getinge has recalled over 2,000 intra-aortic balloon pumps that are meant to improve blood flow. The company reported 44 complaints of the devices shutting down unexpectedly, but no injuries or deaths.
GrayMatters Health received 510(k) clearance from the FDA for its device treating post-traumatic stress disorder with nerve stimulation.
AI cancer diagnostic company Artera launched Tuesday with $90 million in funding.
The FDA issued endoscope-maker Olympus Medical a stern third warning letter last week, urging it to address complaints that its device's protective cap falls apart and causes "esophageal trauma."
Digital therapeutics company Mindset Health raised $12 million in a Series A funding round led by King River Capital.
Neurotechnology company Cognito Therapeutics raised $72 million in a Series B funding round led by FoundersX Ventures.
Health data company Graphite announced Thomas Beale as its new vice president of informatics and Swami Sundaramurthy as its new vice president of engineering. Beale came from openEHR and Sundaramurthy came from cloud analytics startup Startree.

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