Regulatory “Fast Tracking” Could Spell Opportunity for Innovators and Investors in Digital health

20 Jul

By Michael Quigley, VP of Investor Research, LSN


Earlier this year the FDA announced its plans to develop a Digital Health unit comprised of 13 engineers and experts in the digital health world, with the goal of restructuring the FDA’s assessment of digital health completely, making the process for approval more streamlined for new technologies. This announcement follows a trend of easing on regulations for medical software, as last summer the FDA announced that it would not be regulating fitness trackers and mobile apps.

Fitness apps are really just the tip of the iceberg. Things get much more difficult when you begin to evaluate the clinical validity of a constantly changing algorithm that sorts through streams of medical data to diagnose or recommend treatment options. Currently the FDA’s regulatory process is centered around consistency and reproducibility of results.  In order to accommodate these new technologies, the FDA too must adapt.

Bakul Patel, the associate center director for digital health at the FDA, will be building and heading the new unit. He envisions a new model for approvals similar to the TSA security line at the airport, where established veterans in the space can quickly pass through, while newer developers or those with less than stellar histories would still have to take off their shoes and get a full body scan (1).

It would appear as though that model is taking shape as just last month the FDA Commissioner Scott Gottlieb announced that the FDA would be launching a pilot program under which lower-risk digital health products could be marketed without FDA premarket review, and higher risk products could receive a streamlined review. According to Gottlieb, the pilot would help to certify whether a company “consistently and reliably engages in high quality software design and testing (validation) and ongoing maintenance of its software products. Employing a unique pre-certification program for software as a medical device (SaMD) could reduce the time and cost of market entry for digital health technologies.”(2).

This all is welcome news for innovators, investors, providers, payers, and patients who all stand to gain from the adoption of novel digital health technologies. It would also appear that investors have caught wind early of the FDA’s easing as funding for digital health companies was at an all-time high during the 1st half of 2017 with various research groups citing total numbers between $3.5-$6.5 billion(3). As the FDA solidifies its plans and programs for the review of medical software I would anticipate investment in the sector to remain strong. If the pilot streamlining process proposed by Gottlieb takes hold I could also see more and more large tech firms following in the footsteps of Google and IBM and getting into healthcare, as they have the resources available to qualify for streamlined review.


(2). FDA Pilot to Sign Off on Low-Risk Digital Health Products Without Premarket Review

(3). Rock Health: digital health funding hits $3.5B in first half of 2017


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