While the grey area of uncertainty surrounding the necessity of FDA clearance has been reduced and physicians and patients can breathe a sigh of relief knowing that there may be federal validation for new and existing mobile healthcare tools, the document will have some rarely discussed consequences. While the mobile healthcare app market free-for-all was in absolute need of regulatory and future guidance, it’s important to note the winners and losers in the departure from a completely open playing field.
First off, clear winners from the regulation are those in the wellness coaching, electronic communication, and patient portal industries as these medical apps will clearly be exempt from future regulation. Mobile health communication portals and marketing is an industry that has by itself been skyrocketing in popularity, led in part by Mayo Clinic’s and Cleveland Clinic’s demonstrations that effective mobile communications and social media integrations are the “word-of-mouth” tools of the this century. As such, it should come as no surprise that large industry players such as Citrix and Qualcomm were both involved in the advisory and congratulatory process of and for the FDA document. However, in addition to the exemption of their primary technologies from FDA regulation that many large communication companies gained comes the added benefit of size, infrastructure, and a newfound leverage.
The mobile health app market is poised to explode. The market size is conservatively predicted to reach $26 billion within the next five years. More than 500 million unique users are expected in the next year alone, and there are currently more than 97,000 health care applications available in major app stores. However, how many have FDA clearance? While no one is exactly sure, it is quite likely to be fewer than 100 applications in total. Since the vast majority of these applications are self- or crowd-funded ventures, it is highly unlikely that many will be able to overcome the regulatory hurdles required for FDA clearance. Thus, larger companies will likely be able to consume these technologies for much cheaper than previously imagined. While no one can be exactly sure what the eventual consequence will be (other than less money at the end of the day for these startups), it is possible that the second major impact of this legislation will be fewer organic enterprises and overall less innovation at the outset.
The third impact may be to reduce the possibility of reverse innovation in America, the process by which technologies developed outside of the United States, often in developing countries, are then implemented into our healthcare system. For example, Biosense Technologies, an India-based startup, had crowd-funded its way to create an effective mobile app that could better improve the color analysis on urine test strips which could aid in the diagnosis of multiple conditions, from diabetes to hepatitis. Since it is now clear that they would need FDA clearance to operate in America, the company has announced that it has abandoned plans for the time being to enter the US market.
Finally, speaking to the points above, the last consequence of the FDA document may be that it fundamentally alters the investment climate for new medical applications. Given the regulatory hurdles for data gathering medical applications, investment may shift away from startups in this industry. Those who do continue in the regulated industry may be forced to consolidate resources, form partnerships, and lobby for better defined Medicare or payer reimbursement categories for these types of medical technology.
All in all, most (including me) welcomed the light regulation of the industry that the document outlines. For many, it remains largely hands-off and market-based. However, those applications who dabble in data gathering or in diagnosis will face a steep battle to attract funding and a long road to eventual market success.
Zachary Landman, M.D., is the chief medical officer for DoctorBase, a leading developer of scalable mobile health solutions, patient portals and patient engagement software. He earned his medical degree from UCSF School of Medicine and as a resident surgeon at Harvard Orthopaedics, he covered Massachusetts General Hospital, Brigham and Women’s Hospital and Beth Israel Deaconess Medical Center. He is a frequent author and speaker on the topics of patient engagement, mobile health, and patient portals.