Managing your business risk in mobile health: Part 2

By: admin | May 1, 2013        

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Bradley Merrill ThompsonBy Bradley Merrill Thompson

As I said in the prior post, this series is for two types of companies: (1) those that are merely dipping their toes into mHealth because they’re afraid of the water, and (2) those that are diving right in head first with no idea how deep the water is. Both types of companies might be making mistakes, either by letting good opportunities go by or by incurring undue regulatory risk. I’d like to convince both types to be more measured and informed in their approach to mHealth.

In the first post, I laid out all the nasty stuff that can happen if you enter mHealth and your app or your hardware ends up FDA regulated, but you don’t comply. That post was ugly, but it had to be done, because it laid the groundwork for this post. Now I’d like to share the good news that there is plenty you can do to mitigate your risk of FDA enforcement. As usual, I think in lists. The following is my checklist.

1. Check your attitude. I’ve been doing this for almost 30 years now, and I can generally tell which companies will succeed and which will fail when it comes to FDA compliance. There is one very clear hallmark of the companies that succeed—in their attitude they are able to embrace the FDA and put patient safety first. If you can do that, you’ve won easily half the battle. It sounds almost silly, but it goes to the very DNA of the organization. If the organization views FDA as a stakeholder that needs to be kept happy, they will organize their business partly around pleasing that stakeholder, in addition to customers, shareholders, employees and others. These companies make it part of their mission to learn the rules and play by them. If you can’t do that, my advice is simple. Stay out of this space.

2. It’s all about intended use. In prior posts, I’ve tried to explain the concept of intended use. As you might recall, intended use is the manufacturer’s objective intent with regard to how its customers will use its product. This concept is the linchpin of FDA regulation. It determines everything, including (1) whether or not FDA regulates your product, and (2) if it’s regulated, to what level. Intended use is therefore by far the single biggest determinant of regulatory risk, and companies that figure that out put in place robust systems for managing the intended use of their products. That means they carefully manage how they promote the products and what design features they add. They tightly control all of the things which ultimately determine the company’s intended use for their product, so that it stays exactly where they wanted it to stay.

3. Aim as low as you can. To reduce regulatory risk, focus on the lowest risk conditions and the least claims you can make. The risk associated with the health conditions you target partly determines the regulatory category (it’s an element of the intended use), and the claims you make about your product need to be proven to FDA’s satisfaction. So I say, aim as low as you can. I can almost hear the marketing people screaming. Okay, I get it — you need to be bold in business to make money. So what I’m really saying is pick a happy medium between the “our product will save the world” claims the marketing people want to make, and selling an inert paperweight. Carefully pick whatever the least is that can accomplish your sales goals. Less can definitely be more. Further, many companies not traditionally in the healthcare space confuse “common” with “low” risk. Diabetes is quite common these days, but not low risk. Similarly, claims of real time monitoring of patients with serious conditions are not low risk. Learn the difference.

4. Pursue a generic intended use. You don’t always have to tell people exactly how to use something. I can make and sell test tubes without regulatory oversight so long as I’m just making a glass tube and the claims I make relate, for example, to the quality of the glass and its cleanliness. I can make a network router that is just a router. Where I tend to get put in the regulatory soup is when I start to make specific medical claims that, for example, my router is especially good because of its design for some specific medical application. For the generic intended use strategy to be legitimate, there have to be legitimate nonmedical uses, which for test tubes and routers is not a problem. Please remember, though, how broad the concept of intended use is, in that it encompasses, for example, (1) the words I use to describe the product, (2) any special design features I might add that have only medical uses, as well as (3) uniquely medical channels of distribution I choose to pursue.

5. Take a more nuanced approach. It’s not all in or all out. There are many different roles the company can play in the industry. Companies can avoid many of the regulatory obligations by limiting their role to serving as a contract manufacturer. Or a design firm can collaborate with the manufacturer without taking on all of the regulatory obligations. Or you can just be a distributor of someone else’s willing to be the manufacturer. There are lots of roles to play, they aren’t all equally risky. I explained that in excruciating detail in a prior post.

6. Manage your supply chain well. The most successful folks I know in the medical device industry would put this at the top of their list, as a matter of general business practice. It makes my list with regard to ensuring regulatory compliance for several specific reasons. Companies should get accustomed to using supplier contracting to share the burdens of regulatory compliance—asking their suppliers to shoulder some of the obligations. At a minimum, contracts should specify the regulatory obligations rather than leave the issues unaddressed. Warranties are important, and there is even a so-called “pure food and drug warranty” in the FDA regulations which if you use that wording you can shift regulatory risk upstream. There also are whole tasks that can be outsourced, notably the clinical research function to a Clinical Research Organization. This is a little bit controversial in the device area; there’s an express provision on the drug side of FDA that allows this but not so on the device side. Even so, using a CRO typically can help reduce the risk. Keep reading>>

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Proteus Digital Health raises $45 million, inks clinical trials deal with Oracle

By: Brian Dolan | May 1, 2013        

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Proteus Biomedical's Raisin system

Proteus Biomedical's Raisin system

Redwood City, California-based Proteus Digital Health announced that it had raised $62.5 million in its latest round of funding led by Oracle with participation from existing investors Otsuka, Novartis, Sino Portfolio and others. MobiHealthNews reported on the first $17.5 million that Proteus raised for this round a year ago, so the $62.5 million includes an additional $45 million raised over the course of the past year. In total, Proteus, which was founded in 2001, has raised north of $170 million from a long list of investors that includes Medtronic, Itochu, St. Jude Medical, and Kaiser Permanente Ventures.

Proteus Digital Health, which changed its name from Proteus Biomedical last July, is developing an intelligent medicine offering called Raisin, and the basic system includes sensor-enabled pills, a peel-and-stick biometric sensor patch worn on the body, and companion smartphone apps. The patch records when a pill is ingested and also tracks other things like sleep patterns and physical activity levels. The ingestible sensor component of the Raisin offering gained FDA clearance last July, while the company’s sensor-laden patch secured clearance in 2010.

Oracle and Proteus will work together to help investigators in clinical trials to better understand and measure medication ingestion, dose timing, and associated physiologic responses from patients. Proteus’ ingestible sensor technology will be integrated into Oracle’s clinical trial products, including InForm, Data Hub, and its Siebel clinical trial management system.

Last summer Proteus announced a partnership with Japan-based Otsuka Pharmaceutical, which is known for its Abilify drug for schizophrenia and bipolar disorder, that will bring technology based on Proteus Digital Health’s Raisin platform to that country.

In January 2012, UK-based retail pharmacy chain Lloydspharmacy inked an exclusive deal with Proteus to launch Proteus’ first commercial product, Helius, an offering that includes sensor-enabled pills, a peel-and-stick sensor patch worn on the body, and a mobile app. The offering is similar to Proteus’ Raisin technology but instead of integrating the sensor in the pharmaceutical itself, patients have to swallow a separate pill with their medication.

Proteus also licenses its peel-and-stick sensor patch technology to other companies in digital health, including BodyMedia, which had planned to launch a disposable sensor patch through a deal with Avery Dennison. Given its recently announced acquisition by Jawbone, it’s unclear whether that BodyMedia device will ever ship.

For more in depth coverage, visit our research store.

Hospital CTO helms pager replacement business

By: Jonah Comstock | May 1, 2013        

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SorensenMichael Sorensen, in his old job as chief technology officer of the University of Chicago Medical Center, had a problem: pagers.

Healthcare is one of the few areas where the pager still tenaciously hangs on in the age of the smartphone. A combination of factors contributes to this: many hospital CTOs find pagers more reliable than cellphones in a large hospital complex, and a switch to smartphones has to be done carefully to maintain privacy and security of patient information. But Sorensen didn’t find the case for the legacy devices compelling.

“Pagers are not as reliable as everyone thinks they are. If you drill down, there’s so many single points of failure that we were suffering outages all the time. We measured it in the most recent year. Within a calendar year, we missed about 2,000 pages,” he said. “And then finally the other thing that was frustrated was the expense associated with it. I was spending over half a million dollars a year on paging services. That was one of my top expenses.”

In addition, unlike pagers, smartphones can, in Sorensen’s words, “close the loop” — users can be notified when a recipient receives their message and when they open it. This ensures that, for instance, if a nurse sends an urgent message to a doctor who for any reason doesn’t receive it, the nurse can try another doctor right away.

So Sorensen founded a company, called Stage 8 Systems, which he ran in a largely advisory capacity while continuing to work as CTO at University of Chicago Medical Center. Stage 8 Systems was developing a secure messaging system on BlackBerry before the iPhone was even introduced, according to Sorensen. When the company was acquired by software company Mutare at the end of last year, Sorensen left the University of Chicago Medical Center to become president of Mutare’s newly established healthcare division.

“I either needed to go the route of VCs or find a company like Mutare. … I was able to find a company that had some of this mass notification technology already in their portfolio, and then assume a key role that allowed me to drive the innovation and the market strategy,” he said.

Plenty of startups are tackling the pager problem by including secure hospital messaging systems for smartphones as part of their offerings: AmcomVoalte, TigerText, and Docbook MD are just a few of the players MobiHealthNews has written about, many of which have been in the space for a number of years.

Sorensen feels many of his competitors (he didn’t name names) are offering too basic a product at too high a cost.

“I don’t want to trade my $500,000 paging bill for a $300,000 smartphone app,” he said, referring to the 4,000-pager system he had at the University of Chicago Medical Center. “I want to drive that down as low as I can get it.”

Sorensen said Mutare could get that number as low as $150,000, and their pricing scales with the number of users, allowing smaller practices to use the system for as little as $10,000. And on top of secure, HIPAA-compliant two-way messaging, the platform includes built-in disaster recovery (a back-up site kicks in in the event of a power failure at Mutare’s facility or in the hospital), mass notification for non-patient information that needs to get out to all hospital personnel, and basic patient engagement messaging, like sending out surveys to help reduce re-admissions.

Mutare’s messaging system, called Vital Link, works via a web application, as well as through native apps for iPhones, iPads, and Android and BlackBerry devices. Sorensen said the company is continuing to add features, and is also willing to customize the platform for hospitals’ individual needs.

“What really drives me is I’ve got some customers that really get this, that get the platform concept. We have a major customer in South Carolina who says ‘Couldn’t I send notifications out ot family members in our surgery waiting area?’ We get back here, we start literally adding on to the platform,” he said. “We are building that custom and near-cost for that hospital. … We come with these core capabilities, but if you want it to flash blue when you send a code blue message, we can do that. If they can tell me it will improve workflow and outcomes, I’m all set to make that happen.”

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Breaking: Jawbone acquires BodyMedia

By: Jonah Comstock | Apr 30, 2013        

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The BodyMedia Core 2 Armband, with "jewelry-like" customization.

The BodyMedia Core 2 Armband, with "jewelry-like" customization.

In the biggest digital health acquisition of the year so far, San Francisco-based Jawbone is acquiring Pittsburgh-based BodyMedia, the company announced this morning. Financial details of the deal have not been disclosed. This is the first major consolidation in the contentious wearable activity tracker space, and the second mobile health acquisition by Jawbone, which bought health app startup Massive Health for an undisclosed sum in February.

BodyMedia CEO Christine Robins will stay on as general manager of the BodyMedia brand and VP of Health and Wellness Business Development at Jawbone, and Jawbone will continue to sell and support existing BodyMedia products, BodyMedia told MobiHealthNews.

Jawbone and BodyMedia were both founded in 1999, though Jawbone only entered the mobile health space in 2011, with the launch of its original UP bracelet tracker. Prior to that the company focused on Bluetooth speakers, an offering that still makes up the bulk of their business. The first version of UP was discontinued with a voluntary refund after numerous user complaints, and the company has only been a serious contender in the health tracking space since its relaunch last November. Since then, the company has been aggressively developing, iterating, and — increasingly — acquiring in an effort to compete with the likes of Nike+ and Fitbit. Most recently, Jawbone launched an Android app and announced plans to market the UP in Europe and other international markets.

Ben Rubin, founder of the now-defunct sleep health company Zeo, pegged BodyMedia as a likely candidate for acquisition in an interview with MobiHealthNews back in 2011. At that time, the company claimed to have more than 700,000 users. The other factor that made BodyMedia a likely target for acquisitions was its wealth of intellectual property — the company currently holds 87 patents, most related to wireless sensors and wearable monitors. Additionally, BodyMedia has 14 years of user data.

“[BodyMedia] has amassed one of the largest living databases of raw and real-world human sensor data from its patented multi-sensor body monitors with over 500 trillion sensor points collected and analyzed over the company’s history,” the companies wrote in a joint press release.

Additionally, partnerships have always been a major part of BodyMedia’s strategy, offering white-labeled versions of its FIT Armband through partnerships with companies like Jenny Craig and Apex Gyms. Perhaps the company’s highest-profile deal was the it’s inclusion on two non-consecutive seasons of NBC’s “The Biggest Loser.” BodyMedia told MobiHealthNews that partnership would continue into the foreseeable future. In January, the company partnered with Cigna on an employee pilot using its devices for diabetes prevention.

With its FIT Armband FDA-cleared as a Class II device (a distinction BodyMedia alone holds in the wearable tracking space), the company has always maintained that its focus is not on the fitness enthusiast or the casual wellness tracker. Instead, BodyMedia has focused on creating devices for people with chronic weight problems looking to solve them and prevent complications like diabetes. Even when the company announced a more fashion-forward version of its armband at CES this year (a move with a nod toward Jawbone’s focus on aesthetic design), CEO Christine Robins maintained that their mission hadn’t changed, and they weren’t targeting the casual exerciser.

The Core 2 was set to launch later this year, as was the Vue Patch, a disposable adhesive sensor. It’s unclear whether these products will still launch on schedule or at all in light of the acquisition.

So far, Jawbone’s acquisition of Massive Health has seemed to shake out as more of a talent grab, with no immediate changes to Jawbone’s offerings. But Jawbone CEO Hosain Rahman’s statement to the press seems to suggest more of a partnership coming out of this BodyMedia acquisition: Keep reading>>

MobiHealthNews publishes State of the Industry Q1 2013 Report

By: Brian Dolan | Apr 30, 2013        

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Q1_2013_Thumb_260cAs we do at the end of every quarter, this month MobiHealthNews published our State of the Industry report for Q1 2013. The report not only includes a round-up of the mobile health startups that received investments during the first three months of the year, but also a collection of all the deals and partnerships MobiHealthNews reported on during those months. Our newest quarterly report kicks off with a discussion of the most important trends that emerged in the first quarter and includes a comprehensive discussion of the dozens of new top-line digital health metrics publicly released by data research companies.

The Q1 report also includes discussions of the most important mobile health news and announcements from health plans, healthcare providers, pharma companies, mobile operators, government agencies, and — for the first time — healthcare accelerators and incubators. While the healthcare accelerator trend ramped up throughout 2012, it became clear by the end of March 2013 that the group deserved its own chapter in our quarterly reports.

Another new — and long requested — addition to our Q1 2013 report are linkbacks. Our aim was to include a source link for each and every MobiHealthNews story that we referenced in the report, which makes the document even more of a compass for those looking to revisit mobile health news in the first three months of 2013.

Head on over to the MobiHealthNews Research Store to get a copy of this must-read report today!

Hires: Jawbone taps Yahoo’s Mayer; Lauderdale now leads Voalte

By: Aditi Pai | Apr 30, 2013        

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marissa-mayer-thmbYahoo CEO Marissa Mayer has joined Jawbone as nonexecutive director, according to All Things D. Jawbone’s UP is an activity tracking bracelet that records eating and sleeping data as well as other lifestyle information. In February, Jawbone acquired Massive Health, a mobile health design and software company, to improve UP.

Voalte promoted company founder Trey Lauderdale to president as part of their expanding executive management team. Lauderdale was previously the VP of . Founded in 2008, Voalte’s iOS-based offering combines high-definition voice calls, critical care alarms and presence-based text features and is intended for use by staff in acute care hospitals. Last October, Voalte raised $6 million with the goal of adding 100 new employees to the company.

Polaris Partners added former Free & Clear CEO Tim Kilgallon to their west coast office as CEO-in-Residence. Kilgallon was formerly the president of Applied Discovery and CEO of Pointshare Corporation.

Investment Firm firm Aberdare Ventures hired Mohit Kaushal MD as a new partner of an effort to evolve its company strategy in a shift towards digital health. Before this, Kaushal served as CSO and EVP at West Health.