Legislative Exclusions of Software (21st Century Cures Act)
The 21st Century Cures Act (Cures Act), signed into law on Dec. 13, 2016, was designed to accelerate medical product development and bring new innovations faster and more efficiently to patients who need them. Interesting aspects of the Cures Act include that it
- streamlines FDA procedures to prioritize Breakthrough Devices;
- reduces or eliminates review of medical devices deemed to be low risk; and
- removes five categories of software from FDA review.
Under the Cures Act, the categories of software excluded from FDA review include:
- Category A: Software for administrative support of healthcare facilities, e.g., processing and maintaining financial records, claims and billing information, appointment schedules.
- Category B: “Healthy lifestyle” software that provides no diagnostic, prevention or treatment function.
- Category C: Electronic patient records, but not intended to interpret or analyze patient records.
- Category D: Software for transferring, storing, converting formats, or displaying test data lab tests or med device data, but not intended to interpret or analyze patient records.
- Category E: Clinical Decision Support Software (CDSS), i.e., software that provides recommendations based on medical information (e.g., peer review). The software must enable independent review of the basis of the recommendations and does not include medical imaging or in vitro testing.
It should be noted that the FDA is authorized to bring Categories C, D and E back under regulation with a showing of likelihood and severity of patient harm, the extent to which the software function is intended to support clinical judgment, a reasonable opportunity for a healthcare professional to review the basis of the information, and the intended user and use environment.
The FDA website includes a page concerning Mobile Medical Applications and notes that mobile apps can help people manage their own health and wellness, promote healthy living, and gain access to useful information when and where they need it. The FDA issued the Mobile Medical Applications Guidance for Industry and Food and Drug Administration Staff on Sept. 25, 2013, which explains the agency’s oversight of mobile medical apps. The FDA defines three broad categories that are regulated:
- App controls a medical device – FDA considers it an accessory. Example: Software that controls an insulin pump.
- App that transforms the mobile device into a regulated device. May include attachment for standard mobile device. App may be labeled for medical-specific uses. Example: App that allows for control of attached transducer that converts a smartphone into a glucose meter.
- App that performs patient-specific analysis and provides patient-specific diagnosis or treatment recommendations. Example: App that calculates dosage or creates a dosage plan for radiation therapy.
The above discussion is intended to be a useful guide helping entrepreneurs and investors understand whether a given digital therapeutic approach is likely to require FDA review and approval. For obvious reasons, legal counsel should be consulted when needed.
Intellectual Property Protection
In the United States, a medical device invention (including a software-based medical device) can be protected by patent, provided the invention is novel and non-obvious (the conditions for patentability) and does not fall within an excluded category of subject matter. The excluded categories include natural phenomena and abstract ideas. A full discussion of the topic of patent eligibility is beyond the scope of this paper. For our purposes, it suffices to say that software-based inventions that simply diagnose but do not treat a patient are more difficult to patent. On the other hand, devices that include a treatment function are more clearly eligible for protection. The interested reader is invited to review the articles cited in the notes below.
Reasons to Invest in Digital Therapeutics
The mental healthcare market is huge, and growing. It’s not an exaggeration to say that the market is proportional to the human population worldwide. Moreover, in the United States and other developed countries, it is becoming more common for mental health treatments to be reimbursed through employer-based health plans. At the same time, there is significant friction in the market, making it overly difficult and expensive for individuals to get the help they need. And the stigma associated with mental health issues acts as a further barrier to treatment.
Digital therapeutic approaches offer the promise to overcome all these problems in a highly scalable and profitable way. In addition, the FDA regulatory hurdles are relatively low compared to other medical device and pharmaceutical-based therapies. In today’s highly mobile society, digital therapies are more efficient than in-person or telephone counseling, and they offer opportunities for therapists to efficiently manage patients and gain insights from big data analytics and AI. The authors can envision a future (in the next five to 10 years) where hundreds of millions of users worldwide will have ready access to effective mental health therapies wherever and whenever they need them, through their smartphones.