Surfing “Tech’s Next Big Wave”: Navigating the Legal Challenges in Digital Health

by McDermott Will & Emery
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McDermott Will & Emery

Fortune’s April 2018 cover story, “Tech’s Next Big Wave: Big Data Meets Biology,” conveys loudly and clearly that technological innovation is transforming the health care continuum—changing the way care is delivered, as well as how patients manage their ongoing health—and as patient demand for health innovation increases, more companies seem eager to hop on the digital health bandwagon. The article provides a thoughtful, realistic (and somewhat sobering) perspective on digital health innovation’s successes and other results to date. It also quite effectively uses real world stories to convey the human dimension of digital health. One is the story of a mother who manually sampled and recorded her son’s glucose levels 20 times a day before an automated monitoring system connected to a mobile app allowed them both to live their lives without constant interruption by this critical care management function. Another describes use of an artificial intelligence “command center” to expedite access to life-saving surgery by a man with an aortic dissection. These real-world examples drive home the fact that digital health is already making a profound difference in our lives by removing barriers to care that are critical to saving lives and managing chronic diseases.

What the article does not touch on, however, are the myriad, complex legal challenges that must be addressed at the earliest stages of the planning process and the intensifying interest of government oversight and enforcement bodies, such as the Federal Trade Commission, the Food and Drug Administration, the Office of Civil Rights of the Department of Health and Human Services, and the Securities and Exchange Commission, interested in protecting the safety and privacy of patients and consumers. Just last month, we saw the SEC charge Theranos’ CEO Elizabeth Holmes with fraud for allegedly misleading investors about the company’s ability to detect health conditions from a small sample of blood. Earlier this year, another “unicorn” start-up, Outcome Health, settled with the federal government after The Wall Street Journal reported that they allegedly misled advertisers with manipulated information. The United States has also brought claims against the private equity company investor of a compounding pharmacy that allegedly paid illegal kickbacks to marketing firms to induce prescriptions written by telemedicine providers for costly compounded drugs reimbursed by TRICARE.

Opportunities and Challenges of the Patient Data “Gold Rush”

Eric Topol, MD, director at the Scripps Research Institute, told Fortune that “the quest to retrieve, analyze and leverage” data “has become the new gold rush. And a vanguard of tech titans—not to mention a bevy of hot startups—are on the hunt for it.” There is no doubt that harnessing and analyzing big data provide virtually limitless fuel for digital health innovation of the type patients and consumers are demanding and that tech companies are eager to develop and commercialize. While optimism about the quest for big data is certainly justified, it must be tempered by caution and careful consideration of complex, multi-dimensional legal and regulatory requirements that can shape the strategy for the exchange, use and exploitation of identifiable personal health data and other personal data.  As innovation continues to move in many directions and at light speed, it can be easy to get wrapped up in the excitement, but it’s worth taking a step back to take a look at the legal implications of doing so.

There are many current laws protecting patient data privacy, confidentiality and security that limit the type and extent of data-sharing that patients and digital health technology innovators demand. For instance, some state and federal privacy laws that protect particularly sensitive information (e.g., information concerning HIV/AIDS, mental health, substance abuse, and genetic testing and counseling) are more restrictive than the Health Insurance Portability and Accountability Act (HIPAA) and may require express written patient consent for uses and disclosures that HIPAA would permit without consent, and the Genetic Information Nondiscrimination Act of 2008 also limits access to genetic information by group health plans, health insurers and issuers of Medigap policies.

Prioritizing Comprehensive Compliance Programs

While the Fortune article states that transformative technologies are putting consumers “in the driver’s seat,” there are still legal barriers that are currently keeping them in the passenger seat. To that end, and at the earliest stage of the research and development life cycle, companies must thoroughly think through key compliance considerations such as the nature and frequency of necessary patient and consumer consents, how they will substantiate claims they make in marketing and selling a product, what pre‑market regulatory approvals they need to obtain and how they will support the application for such approvals, to name just a few. A comprehensive corporate compliance program that incorporates the essential elements identified by the Office of the Inspector General can help companies identify, address and manage regulatory and compliance challenges before they become a serious problem that will threaten the success of the digital health initiative and expose them to government enforcement actions and third party lawsuits.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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