Freshfields MedTech Update Q4
Despite the challenging macroeconomic environment, the MedTech industry remains resilient, in large part driven by increasing innovation in, and consumer demand for, healthcare technology.
As MedTech companies continue to prove the value of integrated tech-enabled care, we expect regulators and policymakers around the world to prioritise the facilitation of digital health regulatory pathways while continuing to assess MedTech companies’ practices from data privacy and antitrust perspectives.
In response, businesses are working collaboratively with regulatory authorities to adopt a globally integrated approach in the development and commercialisation of their MedTech offerings, as evidenced by some of the key trends in Q4 and associated legal considerations.
Regulatory pathway for digital therapeutics
Digital health companies and regulators are increasingly collaborating in an effort to help facilitate the inclusion of prescription digital therapeutics in major insurance plans.
Earlier this year, state Medicaid programmes in Massachusetts and Oklahoma announced new partnerships to cover certain digital therapeutics. Recently, Highmark became the first large commercial insurer to signal that it intends to pay for claims for the use of digital health apps that help treat psychiatric disorders and other complex conditions.
Even as clinical evidence and market demand continue to support the growth of digital therapeutics, companies in this space have faced reimbursement challenges, a significant barrier to widespread coverage of these technologies. Highmark’s new medical policy offers a blueprint for an approach to covering prescription digital therapeutics, which we expect to accelerate the adoption of digital therapeutics in the payer market.
White House AI Bill of Rights
The White House recently released its Blueprint for an AI Bill of Rights, a non-binding set of guidelines for the design, development and deployment of artificial intelligence (AI) systems. The blueprint addresses five broad principles:
1. individuals should be protected from systems deemed unsafe or ineffective;
2. algorithms and systems should be equitable and free of discrimination;
3. individuals should be kept safe from abusive data practices and have control over how their data is used;
4. individuals should be aware when an automated system is in use; and
5. individuals should be able to opt out of such systems, with the option to access a human decision-maker to remedy issues when appropriate.
The blueprint joins several other voluntary efforts by government agencies and companies to address transparency and ethics in AI. In the US, there are no federal laws specifically regulating AI or applications of AI. A handful of states have passed bills that limit the use of AI, including California, Colorado, Illinois, Alabama and Mississippi.
In 2019, the European Commission published a similar set of automated systems governance principles, called the Ethics Guidelines for Trustworthy AI. The European Parliament is currently in the process of drafting the EU Artificial Intelligence Act, which codifies the Ethics Guidelines. In response to these global developments, we expect MedTech companies to continue to prioritise investments in data privacy and security infrastructure to safeguard patient data. Learn more about the EU’s proposed AI regulation.
MedTech localisation strategies in China
In China, one of the world’s largest medical device manufacturing hubs, multinational companies (MNCs) continue to strive to expand their MedTech business lines. For example, Siemens Healthineers recently split China out of the Asia-Pacific region at the corporate level, appointing a dedicated director to head China operations.
At the same time, the Chinese government has been increasingly focused on strengthening its domestic medical devices industry, adopting policies to encourage local MedTech innovation and prohibiting non-approved imported medical equipment. Considering foreign manufacturers’ market share of the Chinese medical device market, we expect the potential shift in market dynamics to prompt discussions among MNCs, local innovators and government authorities over the long-term development of the global market for medical technology.
Vinita Kailasanath Partner
Sora Park Associate
Dr. Theresa Ehlen Partner
Düsseldorf, Frankfurt am Main
Dr. Christoph Werkmeister Partner
Dr. Lutz Riede Partner