Mobile Health Apps Could Disrupt Medical Technology Market– Report

Ernst & Young annual report highlights the importance of emerging “patient-empowering” and “information-leveraging” technologies, and their power to drive health care efficiencies.

Emerging mobile health devices designed to provide real-time insights on a patient’s health, including smartphone apps that could be “conditions of safe use” requirements for potential novel OTC switches, represent a new class of medical technologies with “potential to reinvent health care and disrupt much of the traditional medical technology industry,” according to consulting firm Ernst & Young.

The disruptive power of such patient-focused technologies, also including sensor-embedded smart devices and social media platforms, stems from their potential to drive “tremendous” gains in efficiency, the authors state in a report, “Pulse of the industry: Medical technology report 2012.”

Released Oct. 2 at AdvaMed 2012: The MedTech Conference in Boston, the report defines medtech as medical devices, diagnostics, drug delivery systems and analytical/life science tools.

In a world of patient-empowering and information-leveraging technologies, as well as outcomes-focused payers, “value will increasingly flow to those who can improve health outcomes.” – Ernst & Young

The potentially disruptive emerging technologies highlighted in the report are defined as “patient-empowering” and “information-leveraging” technologies – “PI” technologies.

While traditional medical devices and diagnostics, as well as health information technology, have been intended primarily for use by health care providers, PI technologies “are fundamentally different” because they are aimed at, and designed for, patients, Ernst & Young explains. Data produced by PI technologies give patients more control over managing and monitoring their health (Also see "Cardiologist Calls For Real-Time Access To Personal Health Metrics" - Medtech Insight, 30 Apr, 2012.).

In an era when changing incentives give patients more responsibility for managing their own health, mobile decision-support tools on a smart phone, for example, could provide patients with information to help guide them through health care decisions.

Drug industry stakeholders propose that smartphone apps designed for consumers’ self-diagnosis of a condition and accurate self-selection of a drug could be linked to Rx-to-OTC switches that FDA would consider approving with “conditions of safe use” requirements (Also see "Devices Gain Ground On Pharmacists In Switch Paradigm Talk" - Pink Sheet, 23 Apr, 2012.).

Some smartphone apps and wirelessly connected devices also “can provide the timely feedback that is vital for continually motivating healthy behaviors,” such as through monitoring prescription compliance or exercise regimens, or by providing a range of biometric information, the report notes.

“The disruptive potential of PI technologies is significant because they can be radically cheaper [than frequent, in-person visits to doctors’ offices] and potentially very attractive at a time when the health care system needs tremendous gains in efficiency,” the report authors state.

Implications For Industry

The history of disruptive technologies in other industries suggests that medtech companies that discount the emergence of PI technologies as having little competitive impact on their business “do so at their own peril,” said John Babitt, Ernst & Young’s medtech leader for the Americas.

While the functionality of initial PI devices may be limited, and relatively easy for some mature incumbent firms to dismiss, their capabilities could rapidly improve over time – just like those of early personal computers or cell phone cameras, Ernst & Young cautions.

Not all segments of medtech will be impacted equally, but the advent of PI technologies “will likely disrupt the existing business model in many product categories,” according to Ernst & Young. As the customer base shifts increasingly to patients, it will be critical, for example, to develop product offerings that are “easy to understand and simple to use.”

In FDA’s consideration of allowing novel switches to facilitate making more drugs available OTC, particularly for chronic conditions, the agency could begin using for nonprescription area products its existing process for evaluating applications by Rx and medical device firms for drug/device combinations.

However, information technology and medical device developers already recognize the much broader potential for diagnostics. Leading voices in the area are the Clinical Decision Support Consortium, the Combination Product Coalition and the mHealth Regulatory Coalition (Also see "Combination Products Offer Regulatory Option For Novel Switches" - Pink Sheet, 23 Apr, 2012.).

The CDS Consortium focuses on research into improving knowledge management technology available to guide health care providers’ decision-making toward evidence-based practices; CPC advocates for improving the regulatory environment for combination products; and mHealth asks FDA to ease proposed restrictions on medical software apps.

Evidence Compelling To Payers

The Ernst & Young report also states medtech firms will need to understand what sorts of evidence payers find compelling, and then design offerings that “demonstrate improved outcomes and efficiencies,” the report states.

The report highlights the power of PI technologies for disease prevention and outcomes-focused health care solutions in particular.

“In a world of PI technologies and outcomes-focused payers ... value will increasingly flow to those [companies that] can improve health outcomes,” the report states. “As a result, demonstrating health outcomes – and data – will become increasingly critical.”

While companies might seek revenue models that monetize data, the report suggests that this could be hindered by patients’ growing expectation to “own their own data.” Nevertheless, it may be possible to monetize the value latent in customer data if the strategy “gives patients some flexibility in selecting how their data is used and explicitly gives them additional capabilities or services in exchange for their data.”

Many industry and government stakeholders are working to accelerate development of the PI field. For example, a public-private mobile health task force recently called for reducing barriers to greater adoption of wireless health technologies to help ensure that mHealth becomes a routine medical best practice in the U.S. within the next five years. (Also see "FCC-Appointed Task Force Seeks Public-Private Input In Growing U.S. mHealth Market" - Medtech Insight, 1 Oct, 2012.).

Ernst & Young outlines five guiding principles for medtech firms seeking to navigate the PI technologies space. In addition to not assuming immunity from the impact of PI technologies, firms should be patient-centric and payer-savvy, experiment with different business models, focus on demonstrating value and be strategic and not defensive, the report states.

[Editor's note: This story was contributed by "The Gray Sheet," your source for medical device news. For more information call 1-800-332-2181.]