Should mHealth companies want FDA regulation?

By Brian Dolan

Bradley Merrill ThompsonBy Bradley Merrill Thompson, MBA, JD

(I would like to thank Dr. Deepak Ayyagari of Sharp Laboratories of America and Dane Stout of the Anson Group for their comments on a draft. The views expressed, right or wrong, are only the author’s and should not be attributed to the commenter’s.)

At the risk of insulting my new friends in Silicon Valley, I submit that traditionally-unregulated IT companies may want to adopt a different view of federal regulation. Over the last couple years, I've had the opportunity to observe firsthand the culture clash as free-spirited, libertarian Silicon Valley meets Rockville, Maryland, the home of the decidedly more buttoned-down U.S. Food & Drug Administration. Rather than fleeing in fear of the federal bureaucracy, I would argue that at least some IT companies should consider embracing federal regulators. Well, maybe start with at least shaking hands.

This article is the fourth in a series (one, two, three) of seven planned articles about FDA regulation of mHealth. The series started off by explaining the scope of FDA regulation, and then the second and third articles explained how companies could comply with FDA regulation in the cell phone accessory and software app fields. With that basic framework behind us, this article will explore the burdens and benefits of entering FDA regulated territory. Yes, I said benefits.

It’s Okay to Consider the Benefits of Federal Regulation Limiting Competition

As I've learned recently working with Silicon Valley companies, IT companies generally seem to love nothing more than a good, competitive, bare-knuckled fight with their competitors, and abhor the first hint of artificial restraints on competition, especially those from the government. In the IT industry, cooperation around the development of industry standards sets the rules of engagement for the market, and then everyone competes intensely based on those rules and execution of their business plan. Innovation can flourish, with upstarts appearing and challenging big, established companies’ dominance of any particular portion of the business. The big companies accept it because they are moving aggressively too; adjacent markets can be pretty attractive if it appears there is money to be made by offering a faster, better, cheaper alternative to the current market leaders. The goal of unrestricted competition is great, and undoubtedly benefits customers in terms of producing products that they want at the best possible prices.

However, as IT companies consider entering the health market, they need to appreciate the differences. In traditional IT and telecommunications markets, if a product doesn't work, such as a server crashing, people can become really annoyed when they can’t check their email from their mobile phone every second. Inconvenient and somewhat costly, for sure, but all will be forgiven once the server is back up and running. If it happens with any frequency, the company that produced the technology will get a reputation for poor reliability, and may go out of business.