By Andrew Zarkowsky, Head of The Hartford’s Global Technology Practice
Consider this: an ingestible pill with an embedded sensor that transmits a digital message from within a patient’s stomach to an app on their smartphone.
It’s the stuff of science fiction, but may soon be reality.
etectRx, a Florida-based digital health company, recently announced the U.S. Food and Drug Administration (FDA) clearance of its patented ingestible event marker, the ID-Cap,® which is the first marker to “transmit digital messages from within the body to an external receiver without the need for direct skin contact for the purpose of recording ingestion events.”1
While it is still unclear what specific medications will be used with the technology, the marker will help address a growing issue in the healthcare field: medication adherence. Patients often neglect to take their medicine in the correct intervals and doses, leading to potentially harmful health outcomes. In addition to transmitting messages via a cloud-based server to the “ID-Cap App,” notifications will also be sent to a patient’s physician or pharmacist, enabling a real-time view and analysis of ingestion events.
The ID-Cap® is just one example of the rapidly growing digital health field, which the FDA describes as technologies (that) can empower consumers to make better-informed decisions about their own health and provide new options for facilitating prevention, early diagnosis of life-threatening diseases, and management of chronic conditions outside of traditional care settings.2 Digital health categories include mobile health, health information technology, wearable devices, telehealth, telemedicine and personalized medicine.
A Huge Growth Potential
The implication for insurance agents, brokers and carriers is enormous. One report puts the global digital health market size at more than $500 billion by 2025, expanding at a compound annual growth rate of 27.7%.3 With customers now expecting specialized service from their brokers, digital health and its web of regulatory complexity presents both tremendous opportunity and challenge for the insurance industry. Insurance carriers need to have strong knowledge of digital health and the nuances of the regulatory environment to offer innovative, customizable risk solutions that scale up as the company grows.
Regulatory Environment: The FDA’s Response to Supporting Digital Health
To the FDA’s credit, it’s taken the digital health space seriously, admitting its traditional approach to moderate and higher risk hardware-based medical devices wouldn’t work well for the “faster, iterative design, development, and type of validation used for software-based medical technologies.”4 Subsequently, the agency implemented a Digital Health Innovation Action Plan, which:
- Provides guidance on the medical software provisions of the 21st Century Cures legislation
- Launched Digital Health Software Precertification Pilot Program to help customers develop a new approach to digital health technology oversight
- Builds FDA’s bench strength and expertise in the Center for Devices and Radiological Health (CDRH) digital health unit.
The FDA’s Digital Health Program aims to create relationships with digital health developers, patients and providers and enact transparent policies while balancing the benefits and risks to the general public. For example, the FDA is focused on higher risk mobile medical app and decided not to focus on the lower risk mobile apps and products such as those that promote general wellness. By focusing on the higher risk technologies the FDA is able to streamline their processes to help advance technologies.
Over the past several years, the FDA has also:
- Confirmed it doesn’t plan to focus oversight on technologies that receive, transmit, store or display data from medical devices
- Clarified their expectations with cyber security
- Collaborated with stakeholders to form a community to exchange cyber security information
- Partnered with customers and other federal agencies to propose a new framework for Health IT in the FDA’s Safety and Innovation Act Health IT report
A New Approach to Certifying Lower Risk Digital Devices
The Digital Health Software Precertification Pilot Program should be of significant interest to developers. The precertification program would “replace the need for a premarket submission for certain products, and allow for decreased submission content and/or faster review of the marketing submission for other products.”4
Under this approach, the FDA could pre-certify eligible digital health developers who “demonstrate a culture of quality and organizational excellence based on objective criteria,” including superior software design, development, and testing. Pre-certified developers could then qualify to “market their lower-risk devices without additional FDA review, or with a more streamlined premarket review.”4
The Convergence of Technology & Life Science Risks
With the advent of the digital health age and the changing regulatory environment, risks such as business continuity, legal, liability, and safety have become more complex. Cyber concerns must be considered for both first and third party exposures.
Take, for example, the risks associated with the Dec. 2019 service outage of glucose monitor Dexcom G6. The device tracks glucose levels of users with diabetes via a sensor on their abdomens, and sends an alert to their smartphones when blood sugar spikes too high or low. When the service outage took place, thousands of users were suddenly without the critical information needed to regulate their blood sugar. One child nearly died when the device didn’t send an alarm to his mother’s smartphone, failing to notify her of his dangerously low glucose levels as he slept.5
Digital health applications are also susceptible to cybersecurity threats. As the majority of devices are connected to the internet or other networks, security breaches are increasingly possible. A malware attack can have devastating effects for users that rely on digital health products to monitor (or control) critical health function.
Insurance Solutions to Help Mitigate Risks
There are a myriad of coverage considerations in the digital health space. First party coverages include cyber business income, cloud computing, cyber extortion, data recovery/restoration, system failure and more. Third party considerations focus on cyber bodily injury liability, data wrongful collection and use, privacy breach liability and technology E&O.
The Hartford has a broad range of expertise, products and service capabilities in the digital health space spanning Life Sciences and Technology. Our coverage offerings can be customized to meet the unique needs of the customer. Digital health products and services that require FDA regulation fall under our Life Sciences practice, while devices that are not regulated are handled by our Technology practice. In both scenarios our combined expertise brings a unique perspective to understanding both the technology and life science risks associated with digital health.
For companies with employees who travel overseas or have overseas enterprises, we have a dedicated Multinational team. Our Technology and Life Science underwriters partner with this team to identify potential international risks and bring comprehensive multiline capabilities to our global digital health customers.
Insureds are increasingly demanding specialized partners for their evolving needs and rely on the expertise of agents and brokers to navigate complex regulatory environments as they invent, test, and go to market with cutting-edge digital health applications.
For more information, call your local representative or visit us at https://www.thehartford.com/technology.
About the Author
Andrew Zarkowsky, Head of The Hartford’s Global Technology Practice, is responsible for underwriting execution and strategy inclusive of growth, profit and product innovation for the Technology industry. He has nearly 20 years of experience underwriting Technology companies, having held various roles within the Technology and Life Sciences Practice during his tenure with The Hartford.
Andrew received his undergraduate degree from Boston University and recently received his MBA from DePaul University.
1 etectRx Announces U.S. FDA Clearance of Novel Ingestible Event Marker: https://etectrx.com/etectrx-announces-u-s-fda-clearance-of-novel-ingestible-event-marker/
2 Digital Health Innovation Action Plan: https://www.fda.gov/media/106331/download
3 Digital Health Market Size Worth $509.2 Billion By 2025 | CAGR: 27.7%: https://www.grandviewresearch.com/press-release/global-digital-health-market
4 Digital Health Innovation Action Plan.
5 In Weekend Outage, Diabetes Monitors Fail to Send Crucial Alerts: https://www.nytimes.com/2019/12/02/well/live/Dexcom-G6-diabetes-monitor-outage.html
ID-Cap® is a Registered Trademark of etectRx, Inc.
Dexcom G6® is a Registered trademark of Dexcom, Inc.
This content is provided for informational purposes only. The inclusion of the trademarks does not imply an endorsement or association.