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Freshfields MedTech Update Q2 2024

Innovation at the intersection of AI, technology, and the life sciences and healthcare industries remains at an all-time high.

Alongside such innovation, global regulatory authorities are intensifying efforts to regulate the development and use of AI-driven offerings, as well as oversee the integration of digital health technologies into the care continuum. For example, US federal and state lawmakers are currently deliberating on the passage of the Telehealth Modernization Act, which would permanently expand telehealth services for Medicare patients. This quarterly update delves into recent technological advancements in healthcare innovation, with a focus on the world’s first AI-generated gene editor and the emerging online prescription market, as well as the US Federal Trade Commission’s finalization of its Health Breach Notification Rule.

OpenCRISPR-1, the World’s First AI-Powered Gene Editing Tool

Profluent, a Berkeley, California-based start-up recently released the world’s first AI-generated gene editor known as OpenCRISPR-1. Like other large language models (LLM) that collect and analyze large amounts of data to generate an output, Profluent’s algorithm is trained on massive amounts of protein sequences to generate CRISPR-like proteins capable of editing DNA. Profluent’s LLM will remain closely held, but the company’s initially released gene editing tool, OpenCRISPR-1, is available free to the public pursuant to an open-source license. By generating AI-designed proteins that do not occur in nature, Profluent’s technology unlocks new potential for custom genetic medicine. These novel AI-generated proteins have the potential to revolutionize genetic medicine by expediting the development of genetic therapies that target a broad range of illnesses with precision. AI-generated custom gene therapies present an exciting opportunity for MedTech companies to take part in developing a new generation of medicine.

Pfizer to Launch Direct-to-Consumer Online Platform for COVID and Migraine Medications

In line with broader trends in the pharmaceutical industry toward simplifying medication access, Pfizer is reportedly launching a platform later this year for patients to directly order medications, including the anti-COVID drug Paxlovid and the Zavzpret nasal spray for migraines. The platform aims to eliminate industry middlemen and sell directly to consumers, with independent telehealth consultants prescribing the medication and a supplier filling and shipping the prescriptions. Pfizer’s move follows Eli Lilly’s launch of a similar platform, LillyDirect, earlier this year for certain of its obesity, diabetes and migraine medications. LillyDirect partners with online pharmacies including Truepill and Amazon Pharmacy to dispense its medicines, offering more options for how and where patients can access medicines. Both companies’ online platform push represents a significant shift toward direct-to-consumer healthcare by pharmaceutical manufacturers, streamlining medication distribution and access by bypassing traditional distribution channels.

FTC’s Finalization of Health Breach Notification Rule and Cerebral Order

The Federal Trade Commission (FTC) recently finalized its Health Breach Notification Rule, broadening the entities covered by the rule to include vendors that manage digital health records, including through health and wellness apps and devices. Additionally, the rule codifies the FTC’s position that a breach includes both data security breaches and unauthorized disclosures, which has been similarly highlighted in recent FTC enforcement actions. Cerebral, a virtual mental health startup, recently agreed to an order by the FTC prohibiting the company from disclosing consumer health data to third parties for advertising purposes and requiring Cerebral to implement a comprehensive data security program. The company will also be required to pay more than $7 million to provide partial refunds to consumers affected by its deceptive cancellation policies. In the proposed order, the FTC alleged that Cerebral provided sensitive information of nearly 3.2 million consumers to third parties such as TikTok and LinkedIn via integrated tracking tools. The FTC further alleged that Cerebral engaged in careless security practices, including allowing former employees to access user data and sending out promotional materials in which patient names and diagnoses could be easily seen. The FTC’s recent actions are the latest in a string of enforcement activities with respect to the illegal use and sharing of data by digital health companies, including Monument, BetterHelp and GoodRx, highlighting the increased accountability expected from such companies with respect to data disclosures and consumer-facing practices.