FDA final guidance could squeeze out small startups

The "clear winners" from the U.S. Food and Drug Administration's final guidance on mobile medical applications are those in the wellness coaching, electronic communication, and patient portal industries as these medical apps may be most likely to be exempt from future regulation according to a blog posted to Health Data Management.

"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," writes blogger Zachary Landman, M.D., chief medical officer for Doctorbase, a developer of mobile health solutions, patient portals and patient engagement software. "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."

Because the "vast majority" of the more than 97,000 health care apps available in major app stores are "self- or crowd-funded ventures," Landman argues that many won't be able to get through FDA clearance. As a result, he believes that larger companies "will likely be able to consume these technologies for much cheaper than previously imagined," resulting in less innovation and less money for startups.

Another major impact of the FDA's final guidance that Landman foresees is a potential reduction in 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." As an example, he points to Biosense Technologies, an India-based startup that opted out of being introduced to the U.S. market because of FDA hurdles.

In addition, another consequence of the FDA document "may be that it fundamentally alters the investment climate for new medical applications," he writes. "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."

Landman concludes that "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."  

In a July article, Landman made the case that one of the potential benefits to society from widespread mHealth adoption is reduced medical malpractice cases. He believes that mHealth can reduce the "suffocating" costs of malpractice that plague our healthcare and legal systems. Landman argues that "whereas email and 'EHR messaging' feels and acts impersonal, takes considerable time and forces physicians to be stationary (more difficult than it sounds), mobile messaging is in real-time and emulates a conversation." 

As a result, he asserts that mHealth can create an environment in which "true dialogue can occur, allowing physicians and, potentially, patients to connect" and "with improved dialogue, physicians will be less critical to patients and those patients who do feel slighted will have an easier time expressing their concerns directly to the physician, allowing for heartfelt apologies and explanations, all leading to empowered patients, fewer claims and lower malpractice rates." 

To learn more:
- read the blog

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