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FDA Sets Its Sights On Silicon Valley’s Digital Health Boom

June 23, 2016

If it seems that the US Food and Drug Administration (FDA) is making unusually frequent appearances in Silicon Valley, it’s not your imagination. Innovative technologies for everything from counting steps and heart beats to mapping your genes are increasingly drawing the scrutiny of government agencies. Whether you’re a pharmaceutical company evaluating potential partnerships with mobile medical app developers or a technology company bringing a new wearable device to market, federal regulators could have you on their radar.

It’s common these days to read stories about businesses in the storied California tech hub receiving questions about their products, warning letters, and even fines, particularly when novel technologies are used for diagnosis and treatment—areas where concerns about patient health and safety most often arise. With the digital health market growing rapidly, we expect regulatory scrutiny from the FDA and the US Federal Trade Commission (FTC) to continue to increase in Silicon Valley, as well as in other innovation centers in the United States.

“When the process is managed right, we know that the government can be a powerful ally rather than an impediment to innovation,” said Morgan Lewis partner Michele Buenafe, who advises clients on emerging legal issues relating to digital health platforms such as mobile medical apps, clinical decision support software, telemedicine systems, wearable devices, genomic test systems, and other health information technology. “Earning the FDA’s clearance or approval can help distinguish a product from the rest of the pack and provide legitimacy in a market that’s becoming more skeptical of unsupported or idealistic health claims.”

OVERCOMING FDA AND IP CHALLENGES

Morgan Lewis’s team of FDA and IP lawyers works closely with life sciences and medical device companies to properly protect their innovations and smooth the journey from laboratory to marketplace. We advise clients on all aspects of the legal and regulatory minefields they encounter in the digital health technology space. Collaborating across offices and practices, our lawyers assist companies on everything from mobile medical apps, clinical decision support software, and wearable devices and sensors, to electronic health records, telemedicine devices, and remote monitoring systems. Learn more about our digital health team.

While many of these technology innovations have the potential to transform the treatment of various health conditions, the intellectual property that goes into the technologies also needs to be properly protected—making IP protection another growing area of concern in the current climate.

“Investment in digital health companies has increased rapidly over the past five years,” said Morgan Lewis partner Brett Lovejoy, who helps businesses create patent portfolios and provides strategic intellectual property counseling. “Digital health organizations are pursuing a number of legal strategies to protect their digital health IP in the context of today’s challenging legal climate, which is marked by recent court decisions that make it more difficult for companies to acquire intellectual property.”

Read more about the digital health sector and the current patent climate in “An Update on Digital Health IP Protection.”

Q&A WITH OUR PARTNERS

We caught up with Michele and Brett to discuss what keeps business leaders up at night when it comes to protecting their digital health technologies and clearing the necessary regulatory and compliance hurdles as they bring their new products and services to market. Read on and contact our partners directly with any questions specific to your business.

Michele, how often do you see regulators contacting clients now compared to five years ago?

The FDA’s interest in Silicon Valley and other tech centers has increased substantially in recent years, but it’s important to note that not all of this is bad for industry. Ten years ago, when we first started working in the digital health space, the FDA’s position with regard to digital health was very inflexible and almost archaic. Since then, it has been under a lot of pressure not to stand in the way of innovation, and the agency seems to have gotten the message. Thus, much of the FDA’s interest in Silicon Valley has been driven by its desire to understand where these digital health technologies are going so that it can craft appropriate regulatory policies. In particular, the agency has really made an effort to understand which technologies are more low risk and may be appropriate for enforcement discretion (i.e., exempt from FDA regulation). Because the FDA and FTC are still working to develop comprehensive digital health policies, there are significant opportunities for industry to engage with these regulators to help shape where they are going.

Having said that, we are seeing what may be the beginning of a pendulum shift in the other direction. High profile regulatory actions and consumer litigation against health tech companies have reminded the market that these technologies come with risks from both a regulatory and safety standpoint. It remains to be seen, however, how this may impact the FDA’s and FTC’s policy development going forward. 

Brett, what should digital health company leaders be thinking ahead about when it comes to protecting their new technologies?

Although leading cases, such as Mayo v. Prometheus Labs, Inc., Ariosa Diagnostics Inc. v. Sequenom and Alice v. CLS Bank have created a challenging environment for digital health patent protection in the United States, patent protection remains an important tool for protecting innovation in this space. A number of more recent cases, such as Exergen Corporation v. Kas USA and Enfish LLC v. Microsoft Corp., as well as subject matter eligibility examples disseminated by the United States Patent and Trademark Office have provided new pathways to seeking patent protecting in the United States. Patent protection for digital health innovation in Europe is guided by the analysis provided in the European Patent Office (EPO) board decisions T0784/06 (technical effect not found) and T2050/07 (technical effect found).

Michele, at what stage does the FDA or other regulator take notice to raise questions about products?

There are a number of ways a company or product can come to the attention of the FDA or FTC. Federal regulators are always on the lookout for unapproved products that pop up as a result of a public health issue or health trend. For example, the FTC has taken enforcement actions against marketers of mobile apps intended to diagnose melanoma and the FDA has issued a number of enforcement letters in recent months against companies marketing unapproved direct-to-consumer pharmacogenomic tests involving software-based analysis. New tech darlings that garner significant media attention also may find themselves subject to scrutiny by federal regulators. The FDA and FTC also may act as the result of trade complaints filed by competitors or safety complaints received from patients or healthcare providers. In addition, regulatory risk, especially from the FDA, increases significantly when a technology is directed at a higher risk disease or condition, such as the Zika virus, cancer, traumatic brain injury, and cardiovascular disease.

Michele, when does Brett call the FDA team in? How do you work together?

It’s never too early to begin thinking about the FDA regulatory status of a digital health product and how FDA regulation will impact the product’s lifecycle. Starting at the development stage, companies must consider how the product’s functionality and claims may impact the regulatory pathway. In this space, product development is generally iterative, and companies often choose to start with a product that avoids FDA regulation so they can begin generating revenue, with the goal of eventually going for an FDA approval or clearance. Knowing where the line is between regulated and unregulated territory is critical to product development planning.

Michele, what keeps our mobile and digital health clients up at night when it comes to regulatory scrutiny or compliance?

It’s really two issues that tie into each other: regulatory clarity and a level playing field. Although the FDA has been very active the past few years in trying to clarify its policies on digital health regulation, there is still a lot of work to be done. Most significantly, the FDA has yet to issue final guidance documents for general wellness devices, device accessories, and clinical decision support systems. There’s also pending legislation that could limit the FDA’s regulatory authority for certain types of health software. Because there is so much gray area and so many things that we are waiting for the FDA or Congress to act on, it can be very difficult for companies to plan ahead. These gray areas also lead to widely varying views on what is or is not currently subject to FDA regulation. Companies that are more proactive in working with the FDA often become frustrated when they see competitors marketing similar products without complying. We also hear of frustrations on the enforcement front and concerns that federal regulators aren’t always consistent. Ongoing engagement with the FDA and FTC can help mitigate some of these issues, but it’s really up to the regulators to move forward in finalizing their policies.

As the digital health market continues to grow, what’s next?

On the regulatory front, what we’re waiting for most immediately are the final FDA guidance documents for general wellness devices and device accessories, and the new draft guidance on clinical decision support and machine learning technologies. It’s also possible that currently pending legislation, such as the 21st Century Cures Act, may move forward, but that’s going to be harder to achieve in an election year. Looking further down the line, companies should understand that the FDA’s and FTC’s policy development for digital health is never really over. Innovation will continue to march on, and federal regulators will have to try to keep up as new and disruptive technologies continue to emerge.