Virtual and Digital Health Digest
This digest covers key virtual and digital health regulatory and public policy developments during September and early October 2024 from the United States, United Kingdom, and European Union.
In this issue, you will find the following:
U.S. News
- FDA Regulatory Updates
- Health Care Fraud and Abuse Updates
- Corporate Transactions Updates
- Privacy and AI Updates
- Policy Updates
U.S. Featured Content
On September 18, 2024, the state of Texas reached a landmark settlement with Pieces Technologies (Pieces), a Dallas-based health care company, settling allegations that its generative artificial intelligence (AI) products were not as accurate as advertised. As part of the settlement, Pieces agreed to clearly and conspicuously disclose the meaning or definition of used metrics, benchmarks, or similar measurements, as well as the method or procedure used to calculate these metrics and benchmarks; to accurately disclose the extent of its products’ accuracy; and to clearly and conspicuously provide customers any known or potentially harmful uses or misuses of its products or services.
EU and UK News
EU/UK Featured Content
Guidance on AI continues to be published. In the EU, the European Medicines Agency (EMA) has published its Reflection Paper on the use of AI throughout the medicines life cycle. In the UK, the Medicines and Healthcare products Regulatory Agency (MHRA) opened applications for its AI Airlock, a regulatory sandbox for AI as Medical Devices. And over 100 companies have signed up to join the EU AI Pact, a voluntary initiative to encourage companies to comply with the AI Act before the statutory deadlines. These guidance documents and initiatives provide companies with much greater clarity on how the authorities will regulate the use of AI in health care.
U.S. News
FDA Regulatory Updates
FDA Announces Inaugural Meeting of the Digital Health Advisory Committee (DHAC). On September 17, 2024, the U.S. Food and Drug Administration (FDA) announced that it will hold the inaugural meeting of the DHAC on November 20-21, 2024, in hybrid format. The meeting will address total product lifecycle considerations for generative AI-enabled devices, including how the use of generative AI may impact the safety and effectiveness of medical devices enabled with this technology.
FDA Creates Digital Health and Artificial Intelligence Glossary. On September 26, 2024, FDA issued a Digital Health and Artificial Intelligence Glossary. The glossary is intended to help FDA and stakeholders consistently use digital health and AI terminology.
FDA Authorizes Marketing of First Over-the-Counter Hearing Aid Software. On September 12, 2024, Apple, Inc. (Apple) received marketing authorization through the de novo pathway for Hearing Aid Feature, the first over-the-counter hearing aid software. The device is a software-only mobile medical application that is intended to be used with compatible wearable electronic products. The feature is intended to amplify sounds for individuals 18 years or older with perceived mild to moderate hearing impairment. Users may customize the Apple Hearing Aid Feature to meet their hearing needs without the assistance of a hearing health care professional. In authorizing the Apple Hearing Aid Feature, FDA is establishing a new Class II classification for “air-conduction hearing aid software.”
Health Care Fraud and Abuse Updates
DOJ Releases September 2024 Update to Its Evaluation of Corporate Compliance Programs Guidance. On September 23, 2024, the Criminal Division of the U.S. Department of Justice (DOJ) released its revised guidance, the Evaluation of Corporate Compliance Programs (ECCP), following its last update in March 2023. Among other additions, the ECCP includes a list of questions for prosecutors to consider in regard to a company’s management of risks to ensure compliance with applicable laws in the face of increased use of AI.
OIG Issues Report on Remote Patient Monitoring in Medicare. On September 24, 2024, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) released a report titled “Additional Oversight of Remote Patient Monitoring in Medicare is Needed” where OIG highlighted the growing use of remote patient monitoring across the Medicare population. As a result of the expectation that utilization will continue to increase, OIG notes that there is a need to understand how remote patient monitoring is being utilized, including who is receiving it and for what conditions, as well as the need to identify vulnerabilities that could limit the oversight of these services. OIG ultimately recommended various steps that the Centers for Medicare & Medicaid Services (CMS) can take in order to strengthen and bolster oversight and integrity of remote patient monitoring.
California Implements New AI Health Care Laws. On September 28, 2024, California Governor Gavin Newsome enacted two AI-focused health care bills into law, setting new requirements for health insurers, physicians, and other qualified health care providers. First, Newsome signed SB 1120, which requires health care service plans or specialized health care insurers that use AI to comply with certain requirements in order to ensure that provider decision-making does not become superseded by AI. Newsome also signed AB 3030 into law which requires health facilities, clinics, physician’s offices, or offices of a group practice that use AI to create written or verbal patient communications related to patient clinical information to guarantee that these communications include (1) a disclaimer specifying to the patient that this communication was AI generated and (2) clear instructions detailing how a patient can speak to a human health care provider, employee, or other appropriate person.
Corporate Transactions Updates
Investors Bet Big on Digital Health AI: The New Frontier Where Algorithms Make House Calls. Venture Capitalists continued to pour money into digital health funding at the end of Q3 and the beginning of Q4 of 2024.
On September 26, 2024, Mendaera, Inc., a Silicon Valley-based health care technology company, completed a $73 million Series B funding round led by Threshold Ventures. Mendaera plans to use its Series B funding to develop a new robotic platform integrating AI, real-time imaging, and virtual connectivity to assist with mainstream medical procedures. While robots have previously been used in specialized surgeries, Mandaera’s platform intends to utilize an AI-powered platform to perform more general procedures such as biopsies, organ and vascular access, and pain management interventions.
On September 30, 2024, it was announced that Colorado-based VieCure completed a $45 million financing led by Northpond Ventures that will be used to meet the increasing demand for its AI-enabled community oncology care platform “Halo Intelligence.” Halo Intelligence helps oncologists better manage cancer treatments by bringing together patient-data-like genomics, treatment responses, and wearable data for its more than 18,000 patients who are supported by the platform daily.
Seattle-based Rippl, an AI-powered virtual dementia care company, announced on October 2, 2024 that it raised $23 million in its Series A funding from a team of investors including General Catalyst, Mass General Brigham Ventures, and Google Ventures. Rippl currently partners with the Alzheimer’s Association to provide virtual care for seniors facing Alzheimer’s and other dementias, anxiety, and depression in Washington, Texas, Illinois, and Missouri. Rippl’s new funds will be used to expand its care into new markets over the next four years, including California, Florida, and Arizona.
Privacy and AI Updates
AI Health Care Company Reaches Settlement With Texas Attorney General Regarding Misleading Claims of Generative AI Accuracy. On September 18, 2024, Texas Attorney General Ken Paxton announced that he had reached a settlement with Pieces Technologies, Inc., a company that develops and deploys AI-based products and services for use by in-patient health care facilities, including clinics and hospitals, resolving allegations that the company violated the state’s deceptive trade practices law by making false and misleading claims about the accuracy and safety of its products. This settlement ensued from an investigation undertaken as part of a “major data privacy and security initiative, establishing a team that is focused on aggressive enforcement of Texas privacy laws,” that Paxon launched in June 2024.
As described on the Pieces website, Pieces Technologies: Clinical Generative AI for frontline care teams, the company’s AI technology automates the creation of detailed notes by drawing on the entirety of a patient’s Electronic Medical Record. According to the settlement agreement, Pieces developed a series of metrics and benchmarks purporting to show that the outputs of its generative AI products were highly accurate.
Attorney General Paxon asserted that Pieces falsely advertised the accuracy of its generative AI products by claiming that they have a “critical hallucination1 rate” and “severe hallucination rate” of less than .001%. As stated in his press release on the settlement, Paxon’s investigation found that these statements were likely inaccurate and may have deceived hospitals into relying on the company’s products.
Although the settlement agreement does not require Pieces to pay penalties, it imposes a number of ongoing obligations on the company to address its alleged false advertising practices. This includes clearly and conspicuously disclosing the meaning or definition of used metrics, benchmarks, or similar measurements, as well as the method or procedure used to calculate these metrics and benchmarks; accurately disclosing the extent of its products’ accuracy; and clearly and conspicuously providing customers any known or potentially harmful uses or misuses of its products or services.
Policy Updates
Senators Wyden and Warner Introduce Federal Cybersecurity Standards for America’s Health Care System. On September 26, 2024, Senate Finance Committee Chair Ron Wyden (D-OR) and Sen. Mark Warner (D-VA) introduced the Health Infrastructure Security and Accountability Act (S. 5218; section by section), which would require the HHS to develop and enforce a set of minimum cybersecurity standards for health providers, health plans, clearinghouses, and business associates. The bill intends to improve cybersecurity standards following a period of increased cyberattacks on U.S.-based health care systems.
Majority Leader Schumer and Senator Markey Call on Biden Administration to Protect Civil Rights When Using AI. On September 16, 2024, Senate Majority Leader Chuck Schumer (D-NY) and Sen. Ed Markey (D-MA) sent a letter to Office of Management and Budget (OMB) Director Shalanda Young urging all federal agencies to prioritize the mitigation, prevention, and elimination of algorithmic bias and discrimination, especially when utilizing AI-based technologies. The letter asks OMB to consider requiring all federal agencies that utilize AI to establish civil rights offices tasked with mitigating algorithmic bias and discrimination.
Stakeholder Groups Urge CMS to Increase Reimbursement for Remote Monitoring Services. On September 9, 2024, the American Telemedicine Association, Alliance for Connected Care, and Connected Health Initiative sent a joint letter to CMS Administrator Chiquita Brooks-LaSure urging the agency to “mitigate the harmful effects” caused by reimbursement cuts for remote physiologic monitoring (RPM) services included in the proposed Calendar Year 2025 Medicare Physician Fee Schedule. The letter urges CMS to pay for costs associated with offering RPM services, including technologies that rely on software, licensing, and analysis fees.
EU and UK News
Regulatory Updates
EMA Reflection Paper on the Use of AI in the Medicine Life Cycle. On September 30, 2024, the EMA published its Reflection Paper on the use of AI in the medicines life cycle, from medicine discovery to post-authorization. The paper underscores the utility of AI in digital transformation, while urging developers to take a risk-based approach to ensure patient safety and data integrity. You can read more in our October 2024 BioSlice blog.
MHRA Opens Applications for AI Airlock Pilot. As reported in our June Digest, the MHRA recently launched the AI Airlock, a new regulatory sandbox for AI as Medical Devices (AIaMDs). It is intended to act as a platform for the relevant stakeholders to collaborate to understand and mitigate novel risks associated with AIaMDs. On September 23, 2024, the MHRA opened applications to take part in the AI Airlock. Certain eligibility criteria must be met, including that the product is innovative, presents a regulatory challenge, and that the proposal is ready to be trialed. The call for applications closed on October 7, 2024. You can read more in our May 2024 BioSlice blog.
Companies Join EU AI Pact to Encourage Compliance With EU AI Act. Over one hundred companies have recently joined the EU AI Pact. The EU AI Pact is a voluntary initiative aimed at encouraging companies to begin implementing the requirements in the AI Act. You can read more in our August 2024 BioSlice blog.
Draghi Report on the Future of European Competitiveness. On September 9, 2024, the European Commission published a report on The Future of European Competitiveness, prepared by former European Central Bank President Mario Draghi. Regarding pharmaceuticals, the report proposes policy recommendations such as maximizing the EU Health Data Space (EHDS) by improving access to and sharing of electronic health records, increasing efforts to standardize existing health data sources to a common data model, and leveraging the DARWIN EU network (i.e., the network created by the EMA to deliver real-world evidence (RWE) to generate evidence for innovation. It also calls for the use of AI to support policy and clinical decision-making, as well as scale up genome sequencing capacities. Though non-binding, the proposals could influence future EU policies.
The MHRA Sets Out Its Data Strategy for 2024-2027. On September 18, 2024, the MHRA published its Data Strategy for 2024-2027, which addresses data, digital technology, and RWE focusing on five key themes. For example, supporting data-driven innovation, early access, and interdisciplinary data science to underpin the regulatory framework, and enabling effective, timely, and proportionate regulatory decision-making through RWE.
MHRA Provides a Progress Update on Roadmap for Future Regulation of Medical Devices. As previously reported in our February Digest, the MHRA published a roadmap for the future regulation of medical devices in the UK. The MHRA now reports that some details and timelines will be changed. The intention to update the Medical Devices Regulations 2002 through statutory instruments (SI) remains, beginning with an SI clarifying the rules on Post Market Surveillance, which the government intends to lay before Parliament by the end of the year.
The Innovative Health Initiative Launches a Project Targeting Synthetic Data Generation. The collaborative project, SYNTHIA, involves both industry and academia. The aim is to provide validated, reliable tools and methods to support the generation of synthetic data. SYNTHIA’s tools span multiple areas, including lab results, clinical notes, genomics, imaging, and mobile health data. The output will be made available to the research community.
Reimbursement Updates
Belgian Parliament Calls for Enhanced Accessibility and Affordability of Digital Health Applications. On September 3, 2024, the Belgian Parliament adopted a resolution calling for the Belgian government to advance digital health solutions. In particular, it calls for:
- Enhancing accessibility, affordability, and quality of digital health applications, with a special focus on vulnerable groups
- Encouraging KCE, the Belgian health care research institute, to conduct research on the implementation of digital health, particularly on digital health apps
- Defining a growth trajectory for increased federal investment in digital health, emphasizing research, innovation, and practical implementation
- Creating a legal framework for digital health apps
- Developing a system to expedite the approval and reimbursement of health apps with unproven socioeconomic value
NICE Recommends Digital Mental Health Technologies in an Effort to Improve Access to Mental Health Services. The UK National Institute for health and Care Excellence (NICE) conducted rapid assessments to recommend seven digital health technologies for the treatment of depression, post-traumatic stress disorder, social anxiety, body dysmorphic disorder, and generalized anxiety. The assessments compared the digital technology to face-to-face therapy.
Privacy Updates
ICO and NCA Will Enhance Collaboration on Cybersecurity. The Information Commissioner’s Office (ICO) has agreed to a Memorandum of Understanding with the National Crime Agency (NCA) for deeper collaboration regarding cybersecurity. This includes the ICO sharing more information about cyber incidents with the NCA on a systemic, anonymized, and aggregated basis, and where suitable, also on an organization-specific basis, in order to enhance the NCA’s visibility. Further, it encourages organizations to engage with the NCA on security matters, including in relation to cybercrime.
New EFPIA Anonymization Gradient. On September 10, 2024, the European Federation of Pharmaceutical Industries and Associations (EFPIA) introduced the Anonymization Gradient, a visual tool to help EU and Member State bodies understand the balance between preserving data utility and patient privacy. It outlines various controls and degrees of data redaction, showing the transition from personal to anonymized data. EFPIA believes the tool will be particularly relevant for implementing anonymization in the EHDS and national research programs.
IP Updates
European Patent Office Rejects Reinforcement Learning Patent for Lack of Technical Effect. The Board of Appeal of the European Patent Office (the Board) issued a decision against granting a patent with a claim including a machine learning system due to lack of inventive step. In case T 1952/21, the Board considered the “starting point” for assessing the technical character of reinforcement learning to be that simulation models are not themselves technical but may contribute to technicality if they:
- Are a reason for adapting the computer (at base of the claim) or its functionality
- Form the basis for further technical use of the outcomes of the simulation
In this case, the Board held that the computer was not adapted and no further technical use was claimed. Advantages in reinforcement learning were argued by the appellant, but the Board did not agree that these advantages were to be acknowledged — neither by experiments or theoretical considerations could it be concluded that a technical effect was present over the full breadth of the claim. Therefore, the appeal was refused.
*The following individuals contributed to this Newsletter:
Eugenia Pierson is employed as a senior health policy advisor at Arnold & Porter’s Washington, D.C. office. Eugenia is not admitted to the practice of law.
Sonja Nesbit is employed as a senior policy advisor at Arnold & Porter’s Washington, D.C. office. Sonja is not admitted to the practice of law.
Mickayla Stogsdill is employed as a senior policy specialist at Arnold & Porter’s Washington, D.C. office. Mickayla is not admitted to the practice of law.
Katie Brown is employed as a policy advisor at Arnold & Porter’s Washington, D.C. office. Katie is not admitted to the practice of law.
© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.
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