It is correct that medication trials may prohibit certain concomitant medications. As far as I know, these trials involve Human Ethics Boards and therefore explicit informed consents. There is also usually random assignment involved with these trials, and a control group who get placebos. And in fact, occasionally, in different medical trials, the placebo group does better than the medication group! So yes, as long as the adults with low literacy are administered very explicit informed consents, and there is random assignment to a placebo condition, then your analogy may be correct. I am not sure how a placebo group can occur with the XPrize. People know whether they are getting instruction or not, while with a pill they do not know if it is the experimental medication or a sugar pill. Also, the concomitant medications that are not allowed in some medical trials are usually those that are not considered critical to a person, and the person is monitored very closely to make sure that there are no serious consequences as a result of not getting the concomitant medication. In this case, adults who seek out help with reading, typically do so as a result of some specific current issue in their life. They don't seek out instruction because it is "a fun" or "nice" thing to do. They seek it out because they need a job, a promotion, etc. They have a specific reason to do so, and to tell them that they cannot do anything else at all while doing this specific activity does amount to an ethical issue. But as I said, I guess if all of this is spelled out in an informed consent, then the adult is making an informed decision.
But then this brings us back to points raised in earlier posts. Having narrow restrictions (only reading till the 3rd grade level as opposed for example to the 8th grade level) and not being allowed to get any other kind of adult literacy help will terribly narrow down the number of people who will be part of this project, and will make it VERY difficult for researchers to find participants. And as an additional note, assuming that a tracking software is put on user's phones, this would also need to be part of an informed consent. And from what I know of most adult literacy programs, getting cooperation from the program staff to tell the XPRIZE foundation whether the trial participants have been violating guidelines will probably not happen. Adult literacy program staff have one focus in mind-and that focus is to help the adult student. They would not want to exclude an adult student from a program because they are part of this activity. Putting the ethical issue aside (which would be difficult for many if not all programs) many adult literacy programs get federal and state funding and this is not part of the inclusionary/exclusionary criteria for attendance.