Silicon Valley has been interested in the healthcare industry for many years. Genetic testing startup 23andMe’s battle with the FDA highlights the continued tension between Silicon Valley’s desire to innovate and FDA’s interest in a rigorous—often slow—regulatory framework. A recent article in Pharmaceutical Processing addressed this divide. “Silicon Valley is pouring billions into gadgets and apps designed to transform health care,” the article notes. “But the tech giants that have famously disrupted so many industries are now facing their own unexpected disruption: regulation.”
Google co-founder Sergey Brin describes the healthcare industry as “painful” because it remains so heavily regulated in the United States. This has not stopped tech entrepreneurs from spending billions into efforts to reshape health care, a market estimated at over $2.7 trillion the article states. Venture capital funding for companies in the digital health space surpassed $2.3 billion in the first half of 2014, more than the $1.9 billion raised in all of 2013.
Tech vs. FDA
For the developers of medical apps, FDA’s regulatory requirements serve as a gatekeeper to the American health market. Steve Grossman goes so far as to call it a “culture war” between the agency and Silicon Valley. Grossman, an FDA consultant, further adds: "Silicon Valley is used to just bringing their products straight to the market and any regulatory scheme that involves scrutiny and delay is alien to them."
We recently covered one such medical device regulation here, on how manufacturers must outline the cybersecurity risks of their product in their submissions to FDA.
In fact, this scrutiny and delay keeps tech entrepreneurs—and the innovation they may bring to the healthcare industry—off the playing field. "They look at the environment and the expenses and the cost of navigating it and just say, 'To heck with it,'" says Colleen Klasmeier, an attorney who advises companies.
Collaboration is key?
FDA stresses that its guidelines are "non-binding," and that manufacturers should "engage in early collaboration meetings with the FDA" about how their technology will be regulated. The article points out that both Google and Apple (and Amazon, according to other reports) sent company leadership to FDA’s headquarters looking for clarity on upcoming health “wearables.” Ultimately, Google and Apple have both expressed an interest in moving into the digital and mobile health field.
Google reportedly met with the agency to discuss its plans for a contact lens that could sense a patient's glucose levels through tears. Apple reportedly advanced its plans for its HealthKit application and iWatch smartwatch in an FDA meeting. According to a report obtained through the Freedom of Information Act, Apple claimed it “may have a moral obligation to do more” in the healthcare space.
Additionally, according to a memo cited in the article, the government has stated FDA’s meeting with Apple last December shows the company pledged to "work closely with FDA as they develop future products."
The genetic testing company 23andMe may have the most interesting case study of a hostile relationship with FDA. Last November, FDA ordered the company to stop selling its medical tests.
In a warning letter, the FDA said despite "hundreds of email exchanges" the Google-backed company failed to demonstrate the effectiveness of its saliva-based kit, which claimed to tell customers if they were at risk for more than 250 health conditions. Clearly, collaboration may not always end in a positive result for private parties working with public health agencies like FDA.
The article explains that 23andME has since brought on board executives with healthcare industry experience and submitted an FDA application to start a series of genetic health tests. Anne Wojcicki, the company’s CEO, offers a great concluding quote:
"You need to understand that language and the way that they do business there almost in the same way you would going into China or India," she said.
There is a large untapped market, and as recent evidence indicates, more companies are seeking to fill that space with healthcare technology ventures. Firms invested $632 million into biotech in the second quarter, more than double the amount in the first quarter, and investments in healthcare service jumped by $40.5 million. In Silicon Valley alone there were 13 healthcare tech company IPOs during the first half of 2014.