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FTC to probe SoftBank-backed Cerebral for false advertising practices

FTC to probe SoftBank-backed Cerebral for false advertising practices

According to a letter given to Cerebral Inc. by the U.S. Federal Trade Commission, the antitrust regulator has launched an investigation into the SoftBank-backed mental-health startup.

The letter has ordered Cerebral to retain documents and to provide information about programs in which the company continues to bill clients a subscription fee until the customer quits. It also mentioned that the agency will investigate whether Cerebral used misleading advertising or marketing methods to advertise drugs that were in the company’s favor.

Cerebral refused to specify the FTC investigation but stated that it is complying with the antitrust body. It is worth noting that back in December last year, the firm announced to have secured USD 300 million in a funding round that was spearheaded backed by SoftBank Vision Fund 2, bringing its total valuation to USD 4.8 billion.

Cerebral's telehealth platform offers mental health services such as consultations and medication prescriptions. Anxiety, sadness, insomnia, opioid use disorder, and hyperactivity disorder are among the mental health disorders treated by the company.

According to sources, the business encouraged its personnel to prescribe ADHD meds and overprescribed them.

The prescriptions provided by telehealth platforms have come under investigation, with Walmart Inc. and CVS Health Corp. announcing last month that they would no longer accept controlled substance prescriptions issued by telehealth firms Cerebral Inc and Done Health.

On the contrary, Cerebral spent millions on advertising, which was the primary cause for its success, experts claimed, as its popularity was likely aided by the desperate need for digital mental health treatments.

Telehealth use for mental healthcare exceeded that for physical care in the early months of the pandemic. Even though virtual outpatient treatment is on the decline, 36% of individuals with mental health and addiction disorders are found to use telehealth services.

Cerebral was served with a subpoena by federal prosecutors this month as part of a probe into suspected violations of the Controlled Substances Act.

Source Credits:

https://financialpost.com/pmn/business-pmn/ftc-launches-probe-into-mental-health-startup-cerebral-wsj-2#:~:text=The%20U.S.%20Federal%20Trade%20Commission,body%20sent%20to%20the%20company

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Rashi Thakkar

Rashi Thakkar

Rashi started her journey in content when she was completing her MBA. Since then, she has helped well-known startups and businesses boost their online presence. Currently Rashi pens downs insightful articles for AlpenHornNews and various other websites, covering an array of sectors from finance and business to technology and healthcare.