All Access

Health Tech Deals

Health Tech Deals Alerts

Alert

Standard

Health Tech Deals Thought Bubble

Thought Bubble

mustard

BFD Expert Voices - Health Tech Deals

BFD Expert Voices

The Federal Trade Commission has charged the developer of period tracking app Premom with deceiving users by sharing their health data with third parties, including Google and two China-based firms.

Why it matters: Legal protections for sensitive personal health data — data that can include information such as medications, mental health and pregnancy status — have not kept up with the digital health sector's explosive growth, Erin writes. 

Driving the news: The ruling is part of a concentrated recent effort by the FTC under activist chair Lina Khan to target a growing class of companies that are not subject to HIPAA yet nonetheless share and sell health data.

Details: According to the FTC, Premom shared reproductive health and precise geolocation data with companies including Google and Alibaba subsidiary Umeng via tracking tools known as software development kits (SDKs).

That data sharing "led to the unauthorized disclosure of facts about an individual user’s sexual and reproductive health, parental and pregnancy status," per the agency, as well as users' social media account data, precise geolocation data, and information about users' mobile devices and Wi-Fi network identifiers, the FTC says.

What's happening: The FTC is fining Premom $100,000 in civil penalties.

If approved by the federal court, the order would bar Premom's parent company, Easy Healthcare Corporation, from sharing users' personal health data with third parties for advertising.

It would also require Premom to get user consent before sharing such data.

What they're saying: "Premom broke its promises and compromised consumers’ privacy," Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement.

Catch up quick: Wednesday's ruling follows similar actions against companies including period tracking app Flo, prescription discount startup GoodRx, and Teladoc mental health subsidiary BetterHelp.

The bottom line: The FTC's moves directly challenge the way digital health companies operate and could significantly alter the future health tech landscape.

1 big thing: After GoodRx, FTC cracks down on Premom

A Congressional panel unanimously advanced legislation with new transparency requirements for pharmacy benefit managers on Wednesday.

Why it's the BFD: Increased scrutiny on PBMs, many of which are vertically integrated with insurance carriers, will engender a more competitive independent pharmacy ecosystem, Axios' Claire Rychlewski writes.

Zoom in: The legislation takes aim at "spread pricing," a practice in which PBMs charge an insurer more than they pay a pharmacy for a drug, and pocket the difference.

Sens. Mitt Romney (R-Utah) and Rand Paul (R-Ky.) objected to the ban, arguing smaller employers prefer spread pricing as a less expensive option.

Romney proposed instead requiring PBMs to offer spread pricing as one option alongside others, but that amendment was tabled.

What they're saying: The current PBM structure funnels the majority of volume and profits directly to insurers and employers, one health care banker says.

In turn, independent pharmacies in particular get squeezed, he adds.

DTC pharmacy Cost Plus Drugs founder Mark Cuban had choice words for PBMs at last year's Axios BFD, saying if he'd ever been pitched the model on "Shark Tank," it would have been a hard no.

Yes, but: Alicia Boler, CEO of digital pharmacy Alto Pharmacy, had a more charitable view at this year's Axios BFD.

"I put myself in a large employers perspective, and if I have employees, I want a company with expertise to manage the pharmacy benefit too," she said.

"To really be an expert in managing what type of medications are available, what the cost should be — that's not something as a company I would be an expert in."

Meanwhile, the Federal Trade Commission is doing its own examination of how PBMs impact access and affordability of prescription drugs.

The FTC ordered two PBM group purchasing organizations to provide information and records on their business practices.

Be smart: Myriad digital pharmacies have emerged in recent years — and while they simplify supply chain processes, that's a small percentage of the costs associated with drug dispensing and distribution, the health care banker says.

The "gross-to-net bubble" — or the growing difference between the list price of brand name drugs and the actual price after rebates, incentives and returns — is ballooning primarily because of formulary rebates and 340b discounts, he maintains.

Flashback: The vertical integration wave that yielded deals like CVS Health-Aetna and Cigna-Express Scripts, along with other partnerships, has squarely contributed to a lack of competition and high costs.

"It's just the flip side of the same coin from when Merck owned one of the largest PBM and mail pharmacies," the banker says, citing the pharmacy giant's 1993 purchase of Medco, which was later spun off as an independent entity.

2. The BFD: PBM arena is in for a shakeup

Illustration of medical pills with half of the capsule created from paper money.

• Sensydia, a Los Angeles-based developer of noninvasive cardiovascular care tools, raised $8m led by Orlando Health Ventures with participation from Frontier Venture Capital, Colle Capital and others. https://axios.link/3Wa3Icd 

• Oncap invested in Biomerics, a Salt Lake City-based medical device contract manufacturer that will be merged with existing Oncap portfolio company Precision Concepts Group. www.biomerics.com

• Vertava Health, a Nashville-based addiction treatment company, sold three of four residential treatment centers to Regard Recovery, a Fort Lauderdale, Fla.-based network of substance use treatment centers. https://www.regardrecovery.com/ 

• Seedcamp, a London-based early-stage investment firm, raised $180m for its sixth fund. https://seedcamp.com/

3. Deals o' the day

• Sana named former Crossover Health chief designer Jay Parkinson chief medical officer.

• Valtruis promoted former associate Corey Lenhoff to VP.

4. It's Personnel

💰 Kaiser discloses timeline, financial commitments for megadeal with Geisinger — Fierce Healthcare

💊 The push for Medicare for all — CNBC

⚧️ Texas legislature bans transgender medical care for children — NYT                                                      

5. Your daily dose

illustration of a digital thermometer that reads "daily dose" 

🚴🏻 Erin continued her cycling circuit with a beautiful 14-mile ride along the river.

❤️ Thanks for reading, and thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece. Please ask your colleagues, friends, family and cycling buddies to sign up.

May 18, 2023

1 big thing: After GoodRx, FTC cracks down on Premom