FDA’s Mobile Health Guidance Removes Risk For Investors

Article preview from Start-Up - October 22, 2013

Investors and their limited partners really don’t like risk, especially not the kind due to uncertainty. Now, for developers of mobile health applications and their investors, at least one risk has been taken off the table: regulatory uncertainty. On September 23, the FDA published the much-anticipated final guidance on mobile medical apps.

FDA’s Mobile Health Guidance Removes Risk For Investors

Article preview from Start-Up - October 22, 2013

In 1889, the passing of an appropriations bill paved the way for the famous Oklahoma Land Rush, creating the cities of Oklahoma City and Guthrie in just one day. The US Food and Drug Administration’s finalization of highly anticipated guidelines on the regulation of mobile health apps might have a similar impact on the mobile health community.

Investors and entrepreneurs have been standing at the border of the health care’s new unsettled territory, waiting for some law of the land that would create regulatory clarity. According to investors, entrepreneurs, and attorneys, the FDA effectively established enough rule of law to invite investors and entrepreneurs. However, the agency may find it has more refining to do as these new guidelines get tested. Mobile health apps run the gamut from consumer health and wellness apps for tracking your heart rate during sports activities to Class III devices with life or death implications, but now the FDA has sorted them into three different categories: mobile apps that it does not consider to be medical devices, mobile apps that are medical devices and therefore the focus of the FDA’s oversight, and finally, an in-between zone for which it intends to exercise enforcement discretion.

“It is a complicated issue with a lot of gray zones, and they have provided a lot of clarification,” says Mohit Kaushal, MD, a partner at the venture firm Aberdare Ventures, who has served as director of Connected Health for the Federal Communications Commission (FCC) and is the former executive VP of business development at the West Health Institute, where he led investment strategy for the West Health Investment Fund. Investors will be glad of the certainty, and according to Kaushal, “If you are a start-up, now you have a good idea of where you fall in the spectrum and what you must do next to build your company.”.

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