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Controversial legislation to reduce the regulatory burden for health-tech entrepreneurs has been introduced in the Senate this month.

The Preventing Regulatory Overreach to Enhance Care Technology (PROTECT) Act of 2014 was proposed by Senators Angus King (I-Maine) and Deb Fischer (R-Nebraska). Much like the SOFTWARE Act from October of 2013, the bill would strip authority from the Washington D.C. regulators who currently oversee health IT, notably the Food and Drug Administration (FDA).

The bill’s supporters say it would free up the FDA to focus on risky medical devices rather than “low risk” health IT or “digital health” technologies (the glossier term for the space, which includes electronic medical records, clinical support software, wearable devices, and fitness apps).

An FDA spokesperson declined to comment on proposed or pending legislation.


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Health advocates and entrepreneurs expressed mixed feelings about the bill in interviews with VentureBeat. They agree, however, that the bill has important implications for how Washington D.C.-based decision-makers plan to deal with the explosion of health IT.

Opposition groups: Patient safety is at risk

Bradley Merrill Thompson, a Washington, D.C.-based attorney with Epstein, Becker & Green, is concerned that the bill will violate patient safety. Thompson has been the most vocal and high-profile opponent of the PROTECT Act in the press.

“Some of the software [the PROTECT Act] would deregulate is virtually all clinical-decision support software,” said Thompson, who advises clients on navigating regulation and the FDA, in a phone interview. “That is software a doctor would use to help figure out what’s wrong with a patient or prescribe the right kind of medication.”

Thompson said he fears that all mobile medical apps would be unregulated. Those that are flawed or that simply don’t work would drag down the industry.

His law firm specializes in helping clients overcome regulatory frameworks. Therefore, he may have a vested interest in the industry remaining under the umbrella of the FDA.

But Thompson said he was perturbed by the timing of this bill, given that he dedicated months of his time over the summer to advising the FDA and other government agencies as part of a FDASIA workgroup. In the workgroup, the FDA asked experts in the space to convene regularly and prepare a report on an appropriate, risk-based regulatory framework pertaining to health IT, including mobile medical applications.

If the PROTECT bill passes, that initiative would have been for nothing.

Thompson did raise a salient point that is shared by most of the experts I spoke with: After months of delays, FDA is finally getting its act together on how it plans to regulate digital health.

The agency released its highly-anticipated final guidance on how it plans to govern mobile medical applications in September, 2013. That guidance was well-received by the community at large. It clarified that the FDA primarily plans to regulate mobile applications that seek to replace a doctor’s visit or perform clinical tests.

“The September guidance was greeted with relief and fanfare,” said Thompson. “Most people who read it said it’s a sensible approach, [so] why are we legislating to undo that?”

Thompson is not alone in condemning the bill (or at least parts of it), with patient-focused groups and technology lobbyists beginning to rally against the PROTECT Act.

“We are extremely concerned that this bill will deregulate a broad swath of medical devices that rely on software and will create opportunities for rampant ‘gaming’ to avoid regulation,” asserts a letter from a coalition of influential patient groups to Senator Tom Harkin (D-Iowa), Chairman of the Senate Committee on Health, Education, Labor and Pensions (HELP).

“For example, MRIs and CT scanners or heart monitoring devices might no longer be regulated by the FDA. This would put the health of millions of Americans at risk,” the letter reads.

Morgan Reed, a spokesperson for the Association for Competitive Technology (ACT), which represents the interests of small and mid-sized tech firms in the mobile app community, has been following this issue closely.

Reed said patients are better protected when the FDA isn’t crippled.

“I think the FDA actually deserves some credit for their stance,” said Reed.

“We don’t know where the next innovation will take us, but the FDA seems willing to let it play out as long as patient safety isn’t at risk.”

Entrepreneurs vs. incumbents

The PROTECT Act would make the National Institute of Standards and Technology (NIST) the agency with oversight responsibility over digital health products and companies, instead of the FDA.

Note that NIST is not a regulatory body with the power to investigate wrongdoing. It is a federal body that works with the industry to develop and apply technology, measurements, and standards.

This point is particularly troublesome for entrepreneurs. Malay Gandhi, chief strategy officer at Rock Health, an accelerator program for digital health, said he has no issue with the status quo. He’s concerned, however, about the consequences of a standards-setting body like NIST having more authority.

“It gives NIST the ability to potentially create new standards,” he said.

“In the past, that has entrenched the incumbents but hindered startups, as this certification process costs a lot of money.”

This outcome is referred to in the industry as “standards body capture.”

One such incumbent that supports the bill is Athena Health, an electronic health records vendor. Dan Haley, Athena’s Vice President of Government and Regulatory Affairs, said the FDA has provided little more than a set of “non-binding recommendations” and could change its mind at any time.

“On every page, the FDA’s final guidance provides a set of disclaimers,” he said. “This perpetuates uncertainty.”

Haley believes that government needs to take action to provide an appropriate framework, so innovation can flourish. When asked about whether the PROTECT Act benefits entrenched companies, he stressed that Athena offers an incubator program for startups.

“We are advocating as much for entrepreneurs as we are for ourselves,” he said.

Some entrepreneurs agree: Jordan Michaels, founder of an early-stage company that sells software to doctors called Ringadoc, is also pushing for clarity. The lack of black and white rules has led to an “apprehension” for investors and startups to enter the health-tech field. Developers have accused the FDA of “killing innovation” in the past for its glacial pace to approve new medical technology.

Michaels believes the bill has good intentions but doesn’t go far enough: “I would like to see a bill that takes a more active approach [and] presents an outline for the framework to begin discussions. The time to strike is now.”

Should the FDA regulate digital health at all?

The PROTECT Act is forcing a highly contentious issue into the spotlight: Who should regulate the explosion of new health-related applications? Experts are struggling to support innovation in health care while not putting patient safety at risk.

Haley believes that the FDA has regulated high-risk medical devices for decades but should not have oversight over digital health.

“We’ve got an agency, which was created long before these technologies even existed, proposing to shoehorn health IT into its existing framework,” he said.

“It’s like pushing a square peg into a round hole.”

Meanwhile, NIST is well-versed in this space and speaks “the same language,” Haley claims.

But Gandhi, who works closely with entrepreneurs, believes that the FDA is steadily improving. In recent months, he said that entrepreneurs have received fairly rapid feedback from the agency.

“I am at a loss about why we needed this bill at this moment,” he said.

Sources familiar with the matter have told me off the record that PROTECT is unlikely to pass. The FDA will likely move aggressively to solidify its hold on this segment, and this Congress has been referred to as the “least productive ever,” which further reduces the possibility of passing the bill.

That said, Haley is convinced that “something is going to happen on this issue in Congress” — and soon.

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