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Navigating Regulatory Hurdles in the Health Tech Industry

by Global Link Law
Jun 30, 2024
health tech

Technology is changing health care. As cited by a study from the National Institutes of Health (NIH), tech start-ups in the healthcare industry have raised a record amount of capital in recent years. While the health tech industry offers major commercial opportunities for innovative companies, there are also some significant regulatory hurdles that must be considered. At Global Link Law, we offer Health Tech Expander—the tool to help you take your health tech start-up to the next level. Within this article, you will find an overview of some of the key points to know about navigating regulatory hurdles in healthcare technology. 

Health Tech: A Patchwork of Law (International, National, and even State/Local)

Health care is one of the highly regulated industries. To start, it is useful to understand that companies that operate within the health tech space are subject to a diverse range of regulations. Indeed, there is a “patchwork of law” that can be daunting for companies to navigate. Depending on the specific situation that a health tech company finds itself in, it may be subject to international, national, and potentially even state/local regulations. For example, at the international level, American health tech companies may be subject to regulations from the World Health Organization (WHO) or European Union (EU). At the national level, companies may need to comply with regulations from the Food and Drug Administration (FDA). The bottom line: It is a challenging regulatory environment that health tech firms must be prepared to navigate. 

Clinical Trials (Validation/Evidence)

Notably, many health tech companies offer products—medical devices—that are subject to comprehensive requirements regarding clinic data. Before a medical device can be approved in the United States or European Union, it must be deemed sufficiently safe and effective. Reliable clinical data is absolutely essential to get a medical device approved. The process of conducting these trials is tightly regulated to protect participants and maintain the integrity of the data collected. Companies must design their trials to comply with international standards. 

Some versions of health tech that are not traditional medical devices are also subject to stringent regulatory requirements. For example, innovative technologies—such as AI-driven diagnostic tools or certain mobile health applications—may need to be approved for use by regulators. Clinic data is required to get regulatory approval in these cases. These trials must not only demonstrate that the technology performs its intended function but also that it does so with an acceptable level of accuracy and reliability. Beyond that, the evidence gathered must convincingly show that the technology improves patient outcomes or otherwise optimizes healthcare processes.

Insurance Compliance and Reimbursement

Few people pay fully out-of-pocket for medical services. Most health tech companies generate revenue primarily from private insurance or government health programs. Navigating insurance compliance and securing reimbursement are pivotal for the commercial success of health tech innovations. Health tech companies should align their products with the complex requirements of insurance providers, which often demand robust evidence of clinical efficacy and cost-effectiveness before agreeing to cover new technologies. Companies need to have a reasonable understanding of insurance coding systems—such as CPT codes in the United States. They are crucial for billing.

Data Protection and Security 

Businesses and organizations in the healthcare industry are subject to comprehensive data protection/security requirements. Companies must adhere to stringent regulations like the Health Insurance Portability and Accountability Act (HIPAA) in the United States and/or the General Data Protection Regulation (GDPR) in Europe. Both laws mandate rigorous data handling and confidentiality measures. Companies should implement strong encryption, secure data storage programs, and well-developed privacy policies. Failure to comply can lead to major sanctions. 

Post-Market Surveillance

For health companies, regulatory compliance does not end with a product or technology getting onto the market. Post-market surveillance refers to the process of monitoring the safety and effectiveness of a medical device. Ongoing evaluation helps to identify any potential issues or adverse events associated with the devices that may not have been apparent during the pre-market testing phases. Regulatory bodies—such as the FDA—require medical device manufacturers to actively gather and analyze real-world data on their performance.

Contact Our Health Tech Attorneys Today

At Global Link Law, we are dedicated to helping start-ups and other innovative companies within the healthcare industry expand. If you have any specific questions or concerns about the regulatory hurdles that you will face, please do not hesitate to contact us today for a confidential initial consultation. We work with companies in the health tech industry nationwide. 

Sources: 

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10668566/

The information provided on this website is for general informational purposes only and should not be considered legal advice. No attorney-client relationship is created by accessing or using this website. Please consult with a qualified attorney before making any legal decisions. Global Link Law is not liable for any reliance on the information provided. Prior results do not guarantee a similar outcome.

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