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Freshfields MedTech Update Q3 2023

Recent efforts to integrate generative AI into the medical field are revolutionizing healthcare delivery. This technology empowers personalized monitoring, preventative care, chronic disease management and early disease detection. At the same time, concerns are emerging among regulators and industry leaders regarding the ethical and operational aspects of AI development and implementation. These concerns encompass consumer data privacy and transparency issues.

In response to these challenges, regulators and policymakers around the world are prioritizing the regulation of generative AI technology. They are also closely scrutinizing the data privacy and AI compliance practices of MedTech companies, as evidenced by some of the key trends observed in Q3, along with the associated legal considerations.

Generative AI Applications in Healthcare

Advancements in generative AI continue to draw attention to the technology’s potential benefits, though also raising ethical concerns and clinical risks as roadblocks to adoption and rollout. A recent McKinsey report suggests that generative AI has the potential to unlock up to $1 trillion in value for the healthcare industry. In the MedTech space, by automatically and immediately summarizing large volumes of unstructured data, generative AI can streamline the work of call centers, health insurance prior authorization and claims processing. This, in turn, frees up healthcare providers to dedicate more time to addressing complex needs.

Generative AI is also being studied for clinical use cases. A recent study led by Mass General Brigham found that ChatGPT exhibited approximately 72 percent accuracy in overall clinical decision-making, encompassing possible diagnoses and final diagnoses, as well as care management decisions. Still, in a poll of 94 health system executives conducted by Bain, only 6 percent of health system executives claim to have a generative AI strategy in place. These executives point to resource and cost constraints, lack of expertise and regulatory and legal considerations as the primary barriers to embracing generative AI.

As the technology continues to mature and prove its value, we expect that companies that prioritize generative AI’s various use cases, particularly for administrative and operational efficiency, and build robust governance structures will reap the dividends of such upfront investments.

Recent Advances in Wearables

The wearable technology market is predicted to be worth $156 billion by 2024. Medical wearables play a pivotal role in driving this growth, fueled by factors such as an aging population, growth in remote patient care and increased use of internet of things in hospitals. The rise of continuous glucose monitors (CGMs) has gone hand in hand with an increase in the popularity of medical wearable technology.

CGMs are wearable devices equipped with a sensor under the skin to provide real-time glucose level monitoring. These devices transmit this vital information to a linked handset or mobile phone. The recent push for CGM use beyond the diabetic population has spurred innovations in monitoring device technologies. Apple is reportedly developing a non-invasive technology that uses chip-based silicon photonics and optical absorption spectroscopy to measure glucose levels for diabetic and non-diabetic consumers. CGM use is gaining traction outside of the U.S. as well, with Health Canada approving the Dexcom G7 CGM device for people with all types of diabetes aged two years and up, while South Korea has approved its first locally developed CGM device.

We expect the integration of generative AI into healthcare to foster further innovation in wearable technology. This trend will continue to push MedTech companies to adopt direct-to-consumer marketing strategies for their wearables in response to rising consumer demand for virtual and personalized healthcare solutions.

U.S. Regulatory Focus on Privacy and Security Risks from Online Tracking Technologies

The U.S. Department of Health and Human Services’ Office for Civil Rights (OCR) and the Federal Trade Commission (FTC) have taken significant steps to address privacy and security concerns related to the use of online tracking technologies. These agencies recently sent warning letters to approximately 130 hospital systems and telehealth providers. The OCR and FTC expressed concerns that the entities could be impermissibly disclosing consumers’ sensitive personal health information to third parties, including multi-national tech companies. Such actions could potentially violate the Health Insurance Portability and Accountability Act of 1996 or the FTC Health Breach Notification Rule. The warning letters follow recent FTC enforcement actions against BetterHelp, GoodRx and other companies, as well as the FTC’s proposed changes to strengthen its Health Breach Notification Rule.

As the unauthorized disclosure of consumer health data remains an enforcement priority for U.S. regulatory agencies, companies processing and using health data from patients in the United States should ensure that any online tracking technologies are implemented in compliance with the FTC’s latest guidance and settlement orders.