Healthcare goes digital but regulation hard to disrupt

Healthcare technology is at a pivotal moment in its development. The healthcare industry is primed to take advantage of the innovative tools that technology can provide and governments are positive as to the potential healthcare cost savings that are expected to follow. Regulators around the world are increasingly starting to acknowledge that conventional approaches to regulation may act as an impediment to digital innovation in healthcare and are looking to modernise health regulation. But we are still a long way off an environment where regulation has caught up with technology.

Digitisation of healthcare

Across the world technology is changing the way that healthcare is provided. The adoption of digital health technologies is helping medical practitioners to perform complex procedures, administer medicines with fewer errors and monitor and care for patients in a more consistent and effective manner.[1] Researchers have also concluded that the digitisation of healthcare can improve drug development and supply-chain management.[2] Governments are also looking to fully digitise health services by implementing digital initiatives such as online health record systems and secure digital channels to improve the continuity and coordination of treatments.[3]

Digital disruption in healthcare and the role of regulators

Improvements to health services, facilitated by the uptake of digital health technologies, is commonly linked to the idea that digital disruption in healthcare is occurring. These benefits are typically measured by the cost savings and increased efficiencies that result from the use of technology in health services, for example eliminating the costs spent on incorrect or unnecessary treatment.[4] It is not so clear, however, that there is true disruption when it comes to how government regulators are reacting to new technologies in healthcare.

Innovation in healthcare can be difficult due to the high risk and costs associated with developing therapeutic products. Strict regulatory requirements exist, intended to apply safety and efficacy standards to all therapeutic products, and criticism is regularly leveled at regulators for perceived delays and unwillingness to change their historical approaches to fulfilling public health mandates. For example, traditionally regulation as well as safety and efficacy assessments of medical devices have centred on the devices meeting conformity standards and manufacturers supplying extensive safety and efficacy testing data, often from clinical trials, to regulators. Now the industry has to contend with the extremely fast-growing emergence of a multitude of beneficial health apps and wearable health technologies. With such exponential growth, traditional means for assessing the safety and efficacy of an app or a wearable personal health device arguably are out of step with ongoing evolutions in those technologies.

Regulators are acknowledging that analogue-based regulations do not support digital change..[5] Certain countries are beginning to embrace digital change to health services by implementing national digital strategies (Australia) or amending existing laws and policies to limit what is defined and/or actively regulated as a medical device (US). But governments and authorities acknowledge that more can be done to provide a flexible framework for this level of innovation. For example, the U.S. Food and Drug Administration (FDA) has acknowledged the potential of enormous amounts of health and medical "real world data" (RWD) generated by digital health products: these potentially can be organized and analysed to support in whole or in part medical device marketing authorization deliberations and other regulatory decision-making in lieu of traditional means of safety and effectiveness data gathering and analysis. In this respect the U.S FDA is looking for ways to utilise RWD more effectively in its regulatory processes. The U.S. FDA is also looking to develop new programs which would pre-certify the quality and validation practices of certain developers of medical device software products, to avoid assessing these practices for each device reviewed by the FDA for marketing authorisation.

Internationally, efforts are also underway to accelerate the harmonisation and convergence of medical device regulations. Members of the International Medical Device Regulators Forum (IMDRF) meet regularly to produce harmonised principles that act as guidance for individual jurisdictions. However this guidance extends only to the regulation of medical devices, leaving those categories of health-related apps or programs seen as non-devices, subject to the regulatory and enforcement discretion of individual jurisdictions.

What does this mean for health tech companies?

While we are seeing regulators looking to modernise and harmonise health regulation, health regulation is still fragmented and lagging behind digital developments in health tech. This presents companies operating in this space with both opportunities and challenges.

Understanding existing regulatory frameworks presents health tech companies with the opportunity to design the functions and claims of their health-related apps, wearable technologies and other software devices, to avoid or minimise active regulation as a medical device. Further, with health technology outpacing regulatory development, there is scope for health tech companies to play an active part in development discussions with governments and ultimately shape future regulatory frameworks.

To the extent that regulators have greater access to RWD to streamline regulatory processes, health tech companies face challenges in retaining primary control of important data sets that detail product safety and effectiveness. Historically, reliant on the data provided by manufacturers and other regulated parties, regulatory authorities that can collect and analyse RWD will be less dependent on this flow of product information from manufacturers and other regulated parties.. Regulators will have significant amounts of RWD at their direct disposal, which could result in quicker and more unilateral decision-making and regulatory action where a product safety or efficacy issue is perceived. Without an opportunity for meaningful consultation, health tech companies may be placed in the unenviable position of having to react to agency demands for action or additional information after the regulator has already formed an opinion on the issue.

For the moment health tech companies must continue working within existing regulations whilst also being ready to embrace developing regulatory changes which foster innovation and faster market access for digital health technologies.

[1] Peter Newman, 'Digital Disruption in Healthcare: The $8.7 trillion opportunity in digital health,' Business Insider Intelligence Report, 15 May 2017

[2] https://www.morganstanley.com/ideas/digital-disruption-drugs-healthcare-sectors-bluepaper

[3] Toby Patten and Rowena Baer, 'Strategic Change: the digitisation of Australian healthcare,' Digital Health Legal, October 2017.

[4] 'A digital revolution in health care is speeding up'  The Economist, March 2017

[5] 'Digital and disrupted: all change for healthcare' Roland Berger report, September 2016



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