by: Shu Xiang, Mittal Consulting

On September 12, 2024, the FDA cleared the Hearing Aid Feature of Apple’s AirPod Pro, which marks another win for the tech giant’s move towards the healthcare arena. This was not the first Apple device feature to receive FDA clearance. In 2018, FDA cleared the ECG App on Apple Watch, opening the door for big-ticket consumer product manufacturers to enter the medical device market.

The De Novo Pathway and First-Mover Disadvantage

The initial clearances of Apple’s device features were all through the FDA De Novo pathway, a pathway that was introduced in 1997 and further streamlined in 2012 to reduce the regulatory burden of innovators. Before then, novel medical devices without a legally marketed predicate device were automatically classified as Class III devices, which require long and costly clinical trials to obtain premarket approval (PMA). Since 2012, the usage of the De Novo pathway has seen a steady increase.

With the De Novo pathway intended to facilitate medical device innovations, many still argue that the regulatory uncertainty of medical devices contributes to a first-mover disadvantage. While not as burdensome as a PMA, innovators going down the De Novo pathway still bear the burden to prove the safety/effectiveness for a new device category, which requires significant testing. On the other hand, device innovators do not have the market exclusivity that innovators in the pharmaceutical industry enjoy. Once a new device category is established, second-movers with similar (but non-infringing) technology can go down the much shorter 510(k) pathway, using the innovator’s device as a predicate. Indeed, that was what Samsung did after Apple’s ECG App clearance – the Samsung ECG Monitor App got clearance citing Apple’s ECG App as the predicate.

Does this signal a war among consumer electronics manufacturers in the over-the-counter hearing aids market? Only time will tell.

The Strategy to Focus on Software as a Medical Device

A closer look at the FDA clearances that are in the tech giants’ portfolios reveals another interesting observation: they are all Software as a Medical Device (SaMD), a term defined as “software intended to be used for one or more medical purposes that perform these purposes without being part of a hardware medical device.” This is counterintuitive when you consider that the cleared software functions are, after all, based on a piece of hardware such as AirPods or Apple Watch.

The choice to go after SaMD is not by coincidence. As with any B2C industry, consumer electronics companies need to offer a competitive price. If any hardware components that these companies manufacture and sell around the globe become a regulated medical device, the regulatory and quality management burden will skyrocket the manufacturing cost. Therefore, Apple and Samsung, among other giants eyeing the healthcare market, have strategically chosen to seek regulatory clearance of their SaMD, while intentionally keeping their hardware a non-medical device.

The rationale for why these hardware products are not medical devices walks a fine line between practical reasoning and sophism. Part of the definition of medical device in the Food, Drug, and Cosmetic Act is “…intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease”. It is therefore reasonable to conclude that hardware products like AirPods or Apple Watch are not intended for medical use; their primary intended purpose is non-medical (general wellness is not considered under the prevue of medical devices). However, companies should not take the determination on what constitutes a medical device lightly. Many have suffered from significant market setbacks when the FDA disagrees, as seen in the case with Owlet Baby Care.

The Future

Digital health is a winner-take-all playfield, since whoever that gets the biggest dataset will likely develop the best technology and dominate the market. This naturally attracts B2C companies with their huge customer base. With the tech giants laying their eyes on the medical product market, the boundary between a general wellness product and a medical device has become increasingly blurry. Apple, for example, already has filed a patent application on brain activity monitoring for AirPods; sure, it can be for a non-medical purpose (to gather data to optimize the user experience, for example), but when technologies traditionally used only in a medical field like electroencephalogram (EEG) is used in a consumer product, who will regulate these products, and where do we draw the line? These are all questions worth considering, and the ripple effect of the early consumer product-related clearances is still evolving.

References:

1. https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfpmn/denovo.cfm?id=DEN230081, accessed Sep 15, 2024.

2. https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfpmn/denovo.cfm?id=DEN180042, accessed Sep 15, 2024.

3. Aboy, M., Crespo, C. & Stern, A. Beyond the 510(k): The regulation of novel moderate-risk medical devices, intellectual property considerations, and innovation incentives in the FDA’s De Novo pathway. npj Digit. Med. 7, 29 (2024). https://doi.org/10.1038/s41746-024-01021-y.

4. https://www.accessdata.fda.gov/cdrh_docs/pdf20/K201168.pdf, accessed Sep 15, 2024.

5. FDA warning letter, MRCS-CMS 616354, Oct 5, 2021.

6. Azemi, Moin, et al. (2023) US20230225659A1. U.S. Patent and Trademark Office.