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Obama – Raising the cost of Personal Healthcare?

November 9th, 2009 |  Published in eHealth & Assisted Living  |  1 Comment

Today should have been a day for celebration, as the US Senate passed the Healthcare bill.  But two strands of it – the device tax and product registry seem aimed to make barriers for the deployment of personal healthcare.

I don’t think anybody would argue against the need for reducing the cost of healthcare.  There are obviously many efficiencies that can be brought into the system, whatever and wherever that system may be.  But most agree that increasing the individual’s focus on wellness is an important foundation to that cost reduction.  To make that happen we need to make personal health devices cheaper and more accessible.

That’s where this bill betrays itself.  Hidden amongst the headline grabbing stuff are two clauses that may well help to slow the speed at which these devices come to market – a tax on each and every device, and a proposal for the FDA or similar body to administer an Orwellian control over what comes to market, potentially stifling innovation.  If this really is a bill for reforming healthcare, that’s a strange route to take.

When a company designs a medical product they quite rightly need to take it through a range of qualifications and certifications to ensure that it works and does no harm.  The newer and more innovative that product is, the more important that is.  But the level of these tests is getting onerous.

For any electronic products there’s CE or FCC requirements to make sure it meets basic safety levels.  If it includes a wireless connection, like Bluetooth or Wi-Fi, it needs to pass the qualification requirements set by those bodies, plus additional RF testing.  Most designers of medical products are now using the Continua Alliance guidelines, which mean that products from different manufacturers will provide compatible data.  That’s another certification and another cost.  To sell it in the U.S.A. it needs to be certified by the FDA.  Which is a considerable additional cost.  In fact we’re reaching the point where these costs can come close to the cost of designing the product.  Guess who pays?  In one form or another, the consumer.   And now the Senate has slapped on a device tax of 2.5% to every product to help make it less affordable to those who need it most.

But the more worrying feature of the bill is the proposal to institute a national registry of medical devices.  This seeks to list the serial number of every product that is sold.  The rationale is that it allows more effective recall of faulty products.  But it has the prospect of creating a bureaucratic monster that could potentially try to track every download of every iPhone medical application.

The recently published white paper form Triple Tree raises the spectre of the damage that the FDA could do, asking “If an iPod includes an application for diabetes tracking or another medical use, does Apple need FDA approval before selling an iPod?”  According to the letter of the law, the answer is yes.  Today’s bill potentially grants it even more draconian powers.

I’ve previously highlighted this issue and argued that we need the FDA and other regulators to step backwards.  There is no question that critical and new products need to be checked and regulated.  But if we want to encourage innovation, then we need to decide which categories of medical devices can be exempted to allow users to innovate.  I’ve suggested that Consumer Healthcare needs its own Manifesto to free it from the embrace of unnecessary regulation.  After today, that seems even more important, but sadly, further away than ever.

Today the device tax only applies to the more clinically focussed Type II and Type III FDA devices.  But taxes like this have a nasty habit of spreading.  As soon as personal healthcare takes off in volume, there’s a real risk that tax hungy legislators will see that as another source of income.  That’s a slide which must be resisited.

Despite all of its headline appeal, it feels that the details of today’s bill don’t understand the needs of the consumer.  Whilst welcoming the number of those it brings into healthcare, I’m worried that it will do nothing to help tens of millions more take more control over their own health.

1 comment so far ↓

#1 David Albert, MD on 11.10.09 at 12:45 am

The device tax does not apply to FDA Class 1 devices which is the category that most personal health devices will fall under so this concern is misplaced. People will have few Class II and Class III (CPAP devices which cost healthcare a ton) in their homes.

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About Creative Connectivity

Creative Connectivity is Nick Hunn's blog on aspects and applications of wireless connectivity. Having worked with wireless for over twenty years I've seen the best and worst of it and despair at how little of its potential is exploited.

I hope that's about to change, as the demands of healthcare, energy and transport apply pressure to use wireless more intelligently for consumer health devices, smart metering and telematics. These are my views on the subject - please let me know yours.

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