Medical Device Connectivity Conference Regulatory Trends and Predictions Opening Remarks

September 9, 2011 Dane Stout The Anson Group dstout@ansongroup.com 317.698.3826

AGENDA

• A High Level View of Networked Health Technologies

• HIT

• Connected Health

• mHealth

• Philosophical Challenges of Medical Device Regulation

• The Procrustean Bed

• The Sorites Paradox

• Lack of Common Vocabulary and Context

• Regulatory Trends and Four Major Challenges to Innovation Commercialization in Medical Technology

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HIGH LEVEL VIEW OF NETWORKED HEALTHCARE TECHNOLOGY

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“The Network Knows what the Nodes Do Not” Kim Rachmeler Former VP Worldwide Discovery Amazon.com

3 BUILDING BLOCKS OF NETWORKED HEALTHCARE

1. HIT Connectivity

2. Connected Health

3. Mobile or mHealth

• All eventually connected to form a single network

• The single network is essential to healthcare reform

• But we don’t have to treat the Network as a monolith

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HIT CONNECTIVITY

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CONNECTED HEALTH

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MHEALTH OR MOBILE HEALTH

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THE INTERNET CONNECTS ALL THREE

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PHILOSOPHICAL CHALLENGES IN MEDICAL DEVICE REGULATION

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“Language is the source of misunderstandings” Antoine de Saint-Exupéry in The Little Prince

THE PROCRUSTEAN BED OF DEVICE REGULATION

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We have to make it fit

“New indications for use or new

technologies are assigned new

product codes that are placed

under the original regulation”

(Source: FDA)

HOW PRODUCT CODES FIT THE CFR

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REGULATION Part 862-892

e.g. 870

21 CFR

ORGANIZED BY PANEL

INDIVIDUAL PRODUCT TYPE DESCRIPTION

PRODUCT REGULATION e.g.. 870.2910

PRODUCT CODE e.g. DRG

PART 870 -- CARDIOVASCULAR DEVICES

Subpart C--Cardiovascular Monitoring Devices

Sec. 870.2910 Radiofrequency physiological signal transmitter

and receiver

~1800 Product Codes

21 CFR 892.2050 PICTURE ARCHIVING SYSTEM

THEN NOW

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CARE AND COMMUNICATION CONVERGE

Organization Primary Business Connected Health Impact

Orthosensor Orthopedic implant device Wireless monitoring of implant/cloud software and real time analysis of implant stability

CardioMEMS Pulmonary Artery Pressure monitoring during surgery

Remote and continuous wireless monitoring of pulmonary pressure

MicroChips Drug Delivery microfluidics device

Customized drug delivery from in and on-body sensors and wireless communications

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VAGUENESS

• Medical Device regulation defined by intended use

• Intentionally vague in the statute

• The technological advancements could not have been reasonably foreseen in 1976

• IP protocol introduced

• Vague is supposed to be flexible

• Wellness and prevention were not on the minds of lawmakers or regulators

• “Healthcare” meant an encounter with a provider

• “Healthcare” today is diet, exercise, and now, monitoring and feedback

• Today’s “healthcare” is like “tall”. Harder to precisely describe and define

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SORITES PARADOX: LITTLE BY LITTLE PROBLEMS

How much sand is in a heap?

Where does the medical device begin and end?

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THERE IS NO ONE TYPE OF “MHEALTH DEVICE”

Data hub for Multiple devices

Medical Device w/3G wireless Phone built-in

Mobile Smartphone app and device pairing

Feature of Smartphone Is the medical device

Mobile phone Controls a medical device

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A SUPER COMPUTER AS PHYSICIAN?

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MICROSOFT CCM AND HEALTHVAULT

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LACK OF COMMON VOCABULARY AND CONTEXT

• Each participant sees the market a bit differently

• Things get misinterpreted in translation

• Technology, workflow and cultural barriers

• Business model change • “Format Invasion” Booz

• Participants don’t trust each other

• Historical animosity in the legacy healthcare system

• New entrants can be naïve or brash

• No one trusts the government

• The government doesn’t trust them either

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CONCEPT TO REVENUE: REGULATORY TRENDS AND CHALLENGES

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“If you want immediate success, start a long time ago” Lucien Bronicki Chairman of the Board and CTO Ormat Technologies

FOUR MAJOR BARRIERS TO ENTRY FOR CONNECTED HEALTH

Innovation Concept

Safety and Efficacy

Security Privacy

Reasonable Necessary

Comparatively

Better

Intellectual

Property

Commercial

Launch

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$$ and Time

REGULATORY TRENDS

Healthcare Innovation Barrier to Entry Regulatory Trends to Watch

1. Safety and Efficacy FDA guidance publications accelerating MDD guidance update expected Debate on current regulatory framework IOM Report

2. Security and Privacy HITECH HIPAA Expansion and Extension to Business Associates Device Security (Eshoo/Markey letter re: GAO FCC investigation)

3. Payments and Business Model Reasonable & necessary, evidence of clinical improvement vs. existing treatments

PPACA Uncertainties: • ACO Regulation in public comment phase • Comparative Effectiveness, establish PCORI

(Patient Centered Outcomes Research Institute) • Insurance Exchanges

4. Intellectual Property DOJ has intervened in patent sales to prevent damage to open source software industry—will there be more? US Patent Office issued 8 millionth patent in August

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Panel Discussion Dane Stout dstout@ansongroup.com 317.698.3826 mobile