Will Regulation of Mobile Health Devices and Apps By the FDA Be the Industry’s Sin Tax?

Your smartphone a medical device? There’s a possibility that this could happen as Washington and its players continue to evaluate whether in the Food and Drug Administration should regulate mobile apps technologies, including health-related apps.

Based on the interpretation of the current administration’s perspective of mobile health innovation and regulation and how those innovations benefit patients will likely determine whether regulation, and ultimately, taxes are assessed on them.

Mobile health apps can range from an iPhone app that monitors diet to mobile or wireless technologies used in hospitals and home-care settings.

Obviously, developers and those producing the apps want more clarification on the issue. As expected from a federal agency, the FDA has issued draft guidance in 2011 according to Modern Healthcare about how it plans to oversee mhealth apps, but nothing final has been released. So, what we’ve seen may not ultimately be what we get.

Some people believe health apps will help solve the overwhelming cost crisis in healthcare; thus, shackling them with additional oversight, taxes and regulation will stifle a burgeoning industry. As such, according to Modern Healthcare, there needs to be “’predictable, transparent and risk-based regulation,’ the value of interoperability, and reimbursement policy that aligns stakeholders.”

I couldn’t have said it better myself, and I agree with the fear that some lawmakers have about a concern that FDA regulation of smartphones, tablets and apps could mean those technologies are subject to the medical device excise tax, a 2.3 percent tax on the sales of certain devices that went into effect in January.

The tax is part of the Patient Protection and Affordable Care Act and is considered the device industry’s contribution to financing healthcare reform.

In a March 1 letter to FDA Commissioner Dr. Margaret Hamburg (PDF), the House committee leading testimony asked the FDA to clarify whether the smartphones and mobile health apps will be subject to the tax. No response as yet. Not surprising. Additionally, leadership also requested that the agency provide information about when it plans to issue final guidance on how it plans to oversee mobile medical apps.

“Most Americans have no idea that their smartphone, tablet or the mobile apps that have become part of their daily lives could be subject to added red tape or a new tax under Obamacare,” Energy and Commerce Committee Chairman Fred Upton (R-Mich.) said in a news release.

According to the Washington Post, “In 2012, Congress gave the FDA the green light to define which medical apps would require its attention. The agency has asked for comment on a proposal that would give it regulation authority over accessories to existing medical devices, such as apps that show MRI scans, as well as apps and accessories that transform mobile devices into regulated medical devices, such as attachments or apps that turn smartphones into heart monitors.”

For those with an interest at stake here, they should feel some level of concern, no matter the side of the isle they happen to sit. Further regulation, and definitely taxation (especially at the app user level), will destroy the momentum gained by these tools to the market since they’ve been developed.

In the very least, the seemingly unending and elusive patient engagement game that plays on may find itself put on pause as this has the potential to once again remove personal control of tools designed to help manage and improve one’s health and to regulate it.

In many ways this seems like a sin tax. High taxes are used to get people to quit bad behavior, like smoking. When the prices gets too high, they (ideally) quit.


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