House Republicans will hold hearings March 19, 20 and 21 to determine how the Affordable Care Act will affect makers of smartphones, tablets and medical device-related apps.
Bloomberg reports that the House Communications and Technology Subcommittee gets the ball rolling with a March 19 hearing focused on how FDA regulations and the new healthcare-reform-related device tax could affect the mobile apps industry. The House Health Subcommittee will look at the issue a little more broadly on March 20, according to the story, with a focus on how to promote innovation in technological advancements for patients. And then the Oversight and Investigations Subcommittee will meet on March 21, featuring FDA and Department of Health and Human Services testimony about mobile health applications and how they plan to regulate them.
The scheduled committee meetings reflect fears that some Republicans already put on the table earlier this month. Michigan Rep. Fred Upton, chairman of the House Committee on Energy and Commerce, and 5 of his peers sent a letter to the FDA expressing concern that smartphones, tablets and makers of medical device apps that run on both would be subjected to the 2.3% medical device industry tax because they will qualify as devices.
FDA officials propose regulating apps used as an accessory to a medical device, or apps that make iPhones or other communications into devices. They noted, for example, that more than 40,000 medical apps have already hit the marketplace and more are coming. Just recently, J&J's ($JNJ) LifeScan won FDA approval for a glucose monitoring system that is meant to work with an app that works on an iPhone, iPad or iPod touch. Crescendo Bioscience just rolled out an iPhone app designed to help patients who use its rheumatoid arthritis diagnostic test to track their systems. Countless new medical apps are on their way.
The fear here is that the tax will force technology companies operating in or enabling the medical app business to pay the tax too, because of their de facto role as a medical device. And tax opponents worry that this would hamper business growth and innovation and kill a badly needed expansion of jobs. Next week's hearings ideally will provide some answers, but we may also hear a lot of posturing, politics and uncertainty at play. To be sure, there is much more to come.
- read the Bloomberg story