Monday 19 April 2021 5:10 pm Fladgate Talk

Regulatory and legal challenges faced by Heathtech start-ups

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Tim Wright is a partner in the corporate department at London law firm Fladgate. He specialises in commercial, outsourcing and technology transactions across various sector, covering cloud computing, digital platforms and e-commerce, web development and hosting, software development and licensing, system integration projects, and business transformation and digital projects.

Healthtech – the digitisation of healthcare – aims to provide patients with easier and more accessible care with improved health outcomes.

Acceptance and demand for digital health products, such as telemedicine, wearables, and patient apps, has been given a massive boost by the COVID-19 pandemic. Other factors driving growth, as well as investment and consolidation, in the healthtech sector include advances in technology (such as artificial intelligence (AI), machine learning, big data, and blockchain) as well as ageing populations, increasing health and social care costs, and new and emerging insurance and cost-reimbursement methods. 

The UK has a burgeoning heathtech sector. UK based start-ups in the space include:

·         Baby2Body, which has developed an algorithm which assesses what stage of pregnancy a woman is at, creates a tailored wellbeing and lifestyle plan, and provides fitness workouts, nutrition advice, meal plans and  recipes, and meditation and mindfulness, and other inspiration and motivation.

·         BenevolentAI, which seeks to speed up the development of drugs using artificial intelligence and machine learning.

·         Birdie, which uses connected devices and machine learning to deliver improved preventative care for the elderly and other adult relatives helping them stay in their own homes for longer.

·         DoctorLink, which developed an online tool specifically for the NHS, designed to improve the patient experience and free up GP time by providing personalised medical advice and online digital triage.

·         Echo, a prescription management app which enables NHS prescriptions to be home delivered for free and sends reminders of how and when to take medication.

Healthtech start-ups providing a wide range of innovative products and solutions must navigate an ever more complicated regulatory and legal framework. Key areas include rules of general application such as data protection and privacy, cyber security, intellectual property, international data transfer, and workplace safety, as well as sectoral rules such as those governing medical devices (including software), patient care and confidentiality, clinical trials, governance, labelling, advertising, public procurement and product liability.

The compliance maze is further complicated since different rules apply across the UK, the EU, the US and other markets, with regulators often keen to make their mark. For instance, the trend which saw digital health applications in healthcare gaining significant traction in the last couple of decades led to the adoption of two new EU regulations: the Medical Device Regulation and the In Vitro Diagnostic Medical Device Regulation, both of which will be fully effective from May 26, 2021. In the UK, there has been a significant amount of attention on the use of AI and big data in the health sector, resulting in the adoption of the new NHS code of conduct for AI systems, potentially as a pre-cursor to wider regulation.

Covid-19 also brought its own regulatory and legal challenges of its own. For example, remote working can result in heightened cybersecurity risk; it also brings the challenge of ensuring employee welfare away from business premises, as well as the establishment risk of remote staff working remotely in foreign countries, from a tax perspective.

Despite this, the health of the sector is expected to continue, with healthtech start-ups and growth companies continuing to be attractive targets for investment and acquisition.

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