Virtual And Digital Health Digest - Healthcare - Food, Drugs, Healthcare, Life Sciences (2024)

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30 August 2024

FDA Announces the Roster of the Digital HealthAdvisory Committee. On August 1, 2024, the Food andDrug Administration (FDA) announced the roster of the DigitalHealth Advisory Committee (DHAC). As FDA previously explained, theDHAC's role will be to provide advice and recommendations onnew approaches to develop and evaluate digital health technologies,as well as identify risks, barriers, or unintended consequencesthat could result from proposed or established FDA policy orregulation. The DHAC will be chaired by Dr. Ami Bhatt, ChiefInnovation Officer of the American College of Radiology, andincludes nine other members. Committee member expertise includesdigital health, telemedicine, emergency medicine, clinicalinformatics, machine learning, psychology, chronic disease, healthcare innovation, biomedical informatics, and human systemintegration. Among the panel members are a consumer representative(Dr. Melissa Clarkson) and a federal representative (James Swink ofthe Center for Devices and Radiological Health's Office ofManagement).

FDA will hold the inaugural meeting of the DHAC on November 20-21,2024, in hybrid format. The meeting will address total productlifecycle considerations for generative Artificial Intelligence(AI)-enabled devices, including how the use of generative AI mayimpact the safety and effectiveness of medical devices enabled withthis technology. FDA is seeking expert recommendations to helpassess the potential risks and benefits of these devices.

FDA Held a Public Workshop on AI in Drug andBiological Product Development. On August 6, 2024,FDA, along with the Clinical Trials Transformative Initiative, helda hybrid public workshop on AI in drug and biological productdevelopment. The workshop covered guiding principles on theresponsible use of AI in drug development, including discussions ofreal case examples.

FDA Issues New Educational Materials To Accompanythe Digital Health Technologies for Remote Data Acquisition inClinical Investigations Guidance Document. In July2024, FDA issued new educational materials to accompany the DigitalHealth Technologies for Remote Data Acquisition in ClinicalInvestigations guidance document. These materials include aguidance snapshot, which highlights key points in the guidance, anda podcast, which addresses the background, intent, and other keyrecommendations of the guidance.

For more information about the Digital Health Technologies forRemote Data Acquisition in Clinical Investigations guidancedocument, see the .

DOJ Charges Montana Doctor in Durable Medical EquipmentFraud Scheme. On July 18, 2024, Ronald David Dean, alicensed physician, admitted to falsely billing Medicare and otherhealth care programs in a durable medical equipment (DME)telemedicine scheme. The government alleged that from January 2022to July 2023, Dean was paid by a telemedicine company to signorders for medically unnecessary DME. Dean allegedly would chargehealth care programs such as Medicare, CHAMPVA, and the RailroadRetirement Board programs for telemedicine office visits that didnot occur. Dean's information also was purportedly utilized bythe telemedicine company to prescribe unnecessary COVID tests forpatients. Dean's orders consequently resulted in false billingto government health care programs in excess of $39 million.

These charges are a part of the Department of Justice's 2024National Health Care Fraud Enforcement Action, as described infurther detail in our July 2024 digest.

Commure Secures Spot in AI Medical Scribe Market in $139Million Deal to Acquire Augmedix. On July 19, 2024, healthcare technology company Commure announced its plans to buyAugmedix, a health care software company whose products utilizeartificial intelligence to extract and automate the creation andpopulation of EMRs with medical notes, documentation, and otherstructured data from natural language conversations. The deal isanticipated to further bolster Commure's spot in the AI medicalscribe market. In a blog post, Tanay Tandon, CEO of Commure,stated that the deal, which is scheduled to close in late Q3 orearly Q4 of 2024, will create one of the "largest, mostcomprehensive, and fastest-growing artificial intelligence softwaresuites in healthcare." Augmedix shareholders are anticipatedto receive $2.35 per share upon closing.

Demand is increasing for AI medical scribe technology, largely inpart because it alleviates administrative burden, which is asignificant driver of burnout among doctors, nurses, and medicalscribes. The latest update of STAT's Generative AI Tracker found thatnearly 90 health systems are currently experimenting with ambientscribes, some even committing to full implementation. OchsnerHealth system is one such example, which has recently gone all-inon ambient AI, tapping DeepScribe to deploy AI technology for 4,700physicians.

This acquisition shows Commure's focus on continued growth andexpansion of markets following its merger with remote patientmonitoring startup Athelas last year in a $6 billion deal. AfterCommure's announcement of the deal with Augmedix, Augmedixshares more than doubled in trading, jumping 150%.

Transitional Coverage for EmergingTechnologies. On August 12, 2024, the Centers forMedicare & Medicaid Services (CMS) finalized the MedicareTransitional Coverage for Emerging Technologies (TCET) pathway,which is intended to deliver "transparent, predictable, andexpedited national coverage" through the National CoverageDetermination (NCD) process for certain eligible FDA-designatedBreakthrough Devices. 89 Fed. Reg. 65,724. CMS anticipates onlyaccepting up to five candidates into the TCET pathway each year andplans to prioritize requests based on their "potential impacton the Medicare program and its beneficiaries." Id. at 65,744.The agency does, however, suggest it may consider expansion in thefuture if resources are available and as it gains experience withTCET.

In the final notice, CMS maintains that the TCET pathway is limitedto devices that fall within an existing Medicare benefit category— likely a disappointment to many advocates of digitaltherapeutics, which do not fit easily into Medicare's benefitcategory scheme. Additionally, CMS anticipates that many NCDsconducted under the TCET pathway will involve "coverage withevidence development" (CED) and that the duration of thetransitional coverage could be five or more years as evidence isdeveloped. In tandem with the TCET final notice, CMS also releasedan updated guidance document on CED. As for benefitcategory determinations, coding, and payment reviews, CMS indicatesthat it expects improved coordination efforts as a result of theTCET pathway, but does not provide specific detail about how thiswill be accomplished. For additional information about the TCETprocess, please see our August 2024 Advisory.

HHS Proposes Health Information Technology Rule ToImprove Patient Engagement, Information Sharing, and Public HealthInteroperability. On July 10, 2024, the HHS Office of theNational Coordinator for Health Information Technology (ONC)released a proposed rule titled "Health Data,Technology, and Interoperability: Patient Engagement, InformationSharing, and Public Health Interoperability" (the HTI-2Proposal). The HTI-2 Proposal is a new step in ONC's efforts toadvance interoperability and improve information sharing amongpatients, providers, payers, and public health authorities.

The HTI-2 Proposal is part of ONC's implementation ofCongress' mandate in the 21st Century Cures Act of 2016 (CuresAct) to establish the Electronic Health Records Reporting Programto provide transparent reporting on certified health IT. In a finalrule published in January 2024 (HTI-1 Rule), ONC established theInsights Condition and Maintenance of Certification within the ONCHealth IT Certification Program to provide transparent reporting oncertified health IT. As an update to the standards set forth in theHTI-1 Rule, the proposal would establish updated technologystandards, such as the capability to exchange clinical images(e.g., X-rays) and the addition of multi-factor authenticationsupport. The HTI-2 Proposal also includes a new, real-timeprescription benefit tool certification criterion designed to helppatients and their providers to make more informed decisions aboutprescription drug choices, based on information comparing thepatient-specific cost of drugs and suitable alternatives.

The HTI-2 Proposal would also create new exceptions to the ONC"information-blocking" rules, which prohibit certainimpediments to the sharing of health information. For example, theHTI-2 Proposal would broaden the scope of the information-blockingrules' "Privacy Exception," which generally permitsan information-holder to deny a request for access, exchange, oruse of electronic health information (EHI) in order to protect anindividual's privacy, provided certain conditions are met. TheHTI-2 Proposal would also clarify and expand theinformation-blocking rules' "Infeasibility Exception"and create a new "Protecting Care Access" exception toaddress concerns about the information-blocking rules'implications for limiting disclosures of a patient'sreproductive health care information in certaincirc*mstances.

The HTI-2 Proposal was published in the Federal Register on August5, 2024 and ONC is soliciting public comments on the proposalthrough October 4, 2024.

The King's Speech to Parliament Sets Out UpcomingLegislation. In his speech to the UK Parliament on July 17, 2024,King Charles set out the key legislative and policy agenda asdirected by the UK government, which came into office following thenational election on July 4, 2024.

The Product Safety and Metrology Bill is listed on this agenda.Although it is unclear exactly what will be included in the bill,it seems that it will have a wide scope and cover "nearly allmanufactured products." As no reference is made to medicaldevices, it is unlikely that the bill will seek to specificallyaddress such products, but could include powers to amend medicaldevice legislation. Further, it remains to be seen whether thegovernment will align itself with the EU products legislation dueto come into force, namely the EU General Product Safety Regulation(Regulation (EU) 2023/988) and the revised EU Product LiabilityDirective. While it is clear that the UK's regime needs to beupdated to reflect technological progress, it is crucial thatindustry considers its position carefully in order to providecomments on any forthcoming proposals. You can read more about thison Arnold & Porter's BioSlice blog.

In addition, the Digital Information and Smart Data Bill isincluded in the agenda. It is intended to enable scientists toharness the full potential of data in innovative research, forexample by ensuring that data subjects are able to provide validbroad consent for wide areas of scientific research.

Despite speculation from commentators, there was no AI bill in theagenda. Instead, the government will "seek to establish theappropriate legislation to place requirements on those working todevelop the most powerful artificial intelligence models." Wewill continue to monitor the new government's plans in thisarea.

German Court Rules on Classification of TelemedicineSoftware Under the Medical Devices Regulation. A Germancourt of appeal (OLG Hamburg) recently handed down a decision that considered the status of adermatologic telemedicine app under the Medical Devices Regulation(Regulation (EU) 2017/745) (MDR). The court found that the app wasa Class IIa medical device under the MDR, as opposed to its initialClass I classification.

The software at issue in this case was an app that allowed patientsto submit pictures of their skin and fill out a questionnaire,which was then forwarded to HCPs for assessment and diagnosis. Theapp was initially categorized under the MDR as Class I, the lowestrisk classification that can be placed on the market following aself-certification by the manufacturer. The claimant, a competitorprovider, argued that the software should be a higher riskclassification, namely Class IIa. This means that a notified bodymust be involved in the conformity assessment of the device.

The court agreed with the claimant. It held that the app was a"software intended to provide information which is used totake decisions with diagnosis or therapeutic purposes," inaccordance with rule 11 of Annex VIII of the MDR. It found that"to provide information" included the transfer ofinformation, and the fact that the app was transferring patientinformation to HCPs constituted provision of information,notwithstanding that the app itself was not making decisions withrespect to diagnosis or therapeutic purposes.

This decision has been criticized as it is not in line withguidance from the European Commission and does not focus on thefunctionality of the software (rather than the decisionstaken by those using the software). The court'srisk-averse approach will have implications on how telemedicineproviders consider the risk classification of their device.

Publication of the EU AI Act at the Official Journal asRegulation (EU) 2024/1689. On July12, 2024, the EU regulation laying down the first harmonized ruleson AI (referred to as the EU AI Act) was published in the OfficialJournal, setting in motion the implementation of this newregulatory framework. The EU AI Act entered into force on August 1,2024, with a staggered implementation of different parts of theregulation. The EU AI Act will apply to AI systems placed on themarket or put into service in the EU.

The focus of the EU AI Act is the new regulatory regime for HighRisk AI Systems, which applies in addition to any sector-specificregulatory regime, such as the MDR or In Vitro DiagnosticRegulation (Regulation (EU) 2017/746) (IVDR) for medical devices.Like these two regulations, the regulatory framework for High RiskAI Systems set out in the EU AI Act is largely based on the NewLegislative Framework approach, meaning many of the concepts willbe familiar to medical device manufacturers. However, in manyrespects, these obligations duplicate, and overlap with, therequirements of the MDR and IVDR. Key areas of overlap includepre-market conformity assessment; CE marking; risk management;obligations on the "provider" who is placing the AIsystem on the market to establish and maintain a quality managementsystem; and post-market surveillance.

The regulatory framework for High Risk AI Systems will becomeapplicable on August 2, 2027, meaning that from this date, only AIsystems that have undergone the necessary conformity assessmentprocedure can be placed on the market. Certain AI systems are"grandfathered" and not subject to the High Risk AISystems regulatory regime. However, this only applies to AI systemsplaced on the market or put into service before August 2, 2026,provided they are not subject to any "significant change"in their design after that date.

You can read more about the impact of the EU AI Act on medicaldevices in our expert chapter in The International Comparative LegalGuide.

Transition Periods Under the IVDR Extended. Thenew regulation (Regulation (EU) 2024/1860) introducing changes tothe transitional periods for certain in vitro diagnostic devices(IVDs) under the IVDR was published on the Official Journal of theEU on July 9, 2024.

As a reminder, the European Parliament and Council adopted astaggered extension of the IVDR transitional periods back inJanuary 2022. The transitional periods have now been extended onceagain, in light of the limited capacity of Notified Bodies toundertake conformity assessments and an on-going concern that therewill be a shortage of essential high-risk IVDs. Under the newregulation, transitional periods have been extended as late asDecember 2029 for some products, although the precise date dependson the risk classification of the IVD. You can read more about thison Arnold & Porter's BioSlice Blog.

ABHI Published Its Report on How HealthTech Can ImproveOutcomes Across the Whole Patient Pathway. The UKAssociation of British HealthTech Industries (ABHI) published itsreport which explores how HealthTech canimprove outcomes across the whole patient pathway. The reportconsiders the challenges faced by the National Health Service(NHS), such as financial strains and worker shortages, andhighlights how HealthTech (including digital health technologies)could be used to alleviate and address those challenges. This is inthe context of increased focus from the UK government in recentyears on the possibilities presented by digital healthtechnologies, including committing £2 billion to implementelectronic patient records across all NHS trusts.

The report puts forward the case for how digital healthtechnologies can be used to assist with and increase efficiency indiagnosis, patient safety, surgery, and patient management. Ithighlights the importance of diagnosing patients as early aspossible, using a ratio test for preterm preeclampsia as an exampleto show that greater accuracy can be achieved alongside a morestreamlined process which would also reduce the burden on the NHS.The report calls on the NHS to harness the benefits of HealthTechand to ensure its adoption. It remains to be seen whether the callswill be heard.

UPC Invalidates Dexcom's CGM Patent in OngoingDispute With Abbott in Second Substantive Decision. In theJuly 2024 digest, we reported on the ongoingglobal dispute between Abbott and other manufacturers anddistributors of continuous glucose monitoring (CGM) devices andtechnology and summarized decisions relating to the same from theUK Patents Court and The Hague local division of the Unified PatentCourt (UPC).

In infringement and invalidity proceedings between Abbott andDexcom before the Paris local division of the UPC, on July 4, 2024,the Court of First Instance held that Dexcom's patent EP3435866, whichrelates to systems and methods of communication between the sensorelectronics unit and the display device of an analyte monitoringsystem (of which CGM systems are an example), was invalid for lackof inventive step. Specifically, the court concluded that thenotional skilled person would consider it obvious, on the basis ofthe prior art put in evidence and common general knowledge, to useBluetooth to transmit the first portion of data collected by thesensor electronics unit and to use near field communication totransmit the second portion of data in response to a data requestcommand. It is expected that Dexcom will appeal to the Court ofAppeal of the UPC.