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Advantages and Disadvantages of Medical Device Regulations

The World Health Organization estimates there are about 2 million different kinds of medical devices on the global market. These products are essential in all facets of healthcare and range from artificial hips and pacemakers to cutting-edge software as a medical device (SaMD) and digital therapeutics. Modern medicine simply would not be possible without them. 

But the road to approval can be immensely challenging, especially as medical device regulations by country vary significantly. For example, as the new EU In Vitro Medical Device Regulations come into effect, there is greater harmony between the EU and US, but this comes with additional scrutiny and notified body requirements.  

Getting into the nuances of international medical device regulations is a minefield of complexities, necessitating deep research and consideration. So instead, we’ll take a more universal look into the advantages and disadvantages of regulated medical device development, outline the pros and cons of each and share some key insights on technologies and legal changes every healthcare company should be keeping an eye on. 

The future of healthcare is regulated

Over the past decade—and especially since COVID—we have seen a proliferation of consumer health devices. From Fitbits to Happify, products that promote physical and mental health have flourished. There is so much that is positive about them. First and foremost, they have made access to better health management as easy as downloading an affordable or even free app. 

Simultaneously, they have been essential for facilitating the consumerization of healthcare. Looking at their medical-grade counterparts, we can see how consumer health devices have pushed products in the regulated space to be more user-centric, intuitive and integrable into workflows. 

With that said, however, over the next 5-10 years, the expectations of and respective capabilities of healthcare products will radically increase. What we’re seeing now is a convergence of consumer health grade devices starting to add functionality. Simultaneously, many regulated medical device manufacturers have made their products more user-centric, consumerized and easier to use by non-specialists. 

Butterfly Network’s handheld ultrasound is a great example of this. While it’s still intended to be used by a healthcare practitioner, the level of training necessary to operate it is much less compared to traditional devices. Not only is it portable, but it features AI guidance to help users capture the best image possible. You don’t have to look too far into the future to see how this could eventually end up as a self-administered in-home care device.  

And this leads us to the crux of why every healthcare business should be looking toward developing regulated devices, if not now then as part of their long-term strategy. There will come the point where patients who have the choice between a consumer-grade device that offers limited functionality and less reliable data and a medical-grade one that can support or directly diagnose, treat, monitor or cure a condition. 


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The advantage of medical device regulations

Medical device regulations exist to ensure products are safe and effective. While some manufacturers may prefer not to submit their devices for premarket approval, it has several benefits. Once the FDA approves a device, it becomes much more difficult for consumers to sue the manufacturer for issues linked to it because of preemption. The same is also true in the EU, thanks to the recent change from the MDD to the MDR. 

Regulations also increase transparency which is a win both for manufacturers and insurers. The benefit of higher scrutiny means that insurers have an easier time determining whether they will provide coverage for a given device, especially as safer products are brought to market. 

Everyone benefits from this. Patients receive better care. Providers have better tools. Payers have better certainty, and manufacturers see higher sales. Meanwhile, this drives costs down as better devices can translate to lower readmissions rates or, as we see more and more preventative care options to avoid expensive emergency room visits in the first place. 

Challenges and opportunities

Of course, the path to medical device regulation is complex and costly. The average cost of bringing a medical device to market is $31 million and can take a year or more. Furthermore, as regulations differ in each country, that doesn’t mean just because you managed to secure a CE marking on your product, the FDA process will be simple and straightforward. 

But these same obstacles are also an opportunity. Once you have achieved this status, you not only significantly increase the likelihood of provider and payer support, but it also makes it challenging for your competitors as they too will have to undergo the regulatory process if they wish to market as FDA-approved or FDA-cleared. 

The rise of SaMD and connected medical devices 

It’s important to take the $31 million statistic with a grain of salt. This is the industry average across all of healthcare. Developing a Class III novel pacemaker will be much more expensive and complex than a Class I device, which can be self-certified. 

What you’re building matters and where there is immense potential for impact, efficient deployment and revenue is MedTech and digital healthcare. At Star, we are particularly excited about Software as Medical Device (SaMD), digital therapeutics (DTx) and medical device software. The overall direction the industry is trending in is connected, digital and interoperable. Between 2019 and 2026, SaMD is projected to grow at a 69.3% CAGR—among the fastest growth rates throughout healthcare.  

Compared to physical/hardware medical devices, they have much more flexibility enabling them to maintain and even evolve over their 10+ year expected lifespan. Additionally, developing SaMD allows manufacturers to take a modular approach. Instead of your entire product being classified as a medical device or essentially putting all your eggs into one basket, one or a few components of it can be instead. This limits your regulatory burden while enabling other parts of a solution to be iterated and continuously developed.

Regardless of whether a company is a startup or enterprise, this presents numerous advantages. For example, if regulatory approval is a 3-5 year goal for you, but you want to get your product into the hands of consumers to test market fit, build a consumer base and start earning revenue, it’s possible to design a product that can later go through the approval process. 

There are many successful products like this on the market right now. The immensely popular AI-powered mental health chatbot Woebot is one example. Currently, it sends nearly 5 million messages to users in 135 countries worldwide. The company uses the data and usage patterns to build its clinical arm to enable Woebot (or likely a new iteration of it) to be prescribed and reimbursed as a therapeutic. 

Click Therapeutics and their signature product, Clickotine, also started as a digital health device gaining enough momentum and users to fund the regulatory and subsequent FDA approval. They are now working on a suite of different solutions for acute coronary syndrome, major depressive disorder, insomnia, migraines and many others.  

The lesson here is that it’s not regulated vs. unregulated but taking the right approach at the right time. 

Pathways to medical device development

The question of whether to pursue regulated medical device development looms large for every manufacturer. Regardless of whether you’re building a cutting-edge SaMD, modernizing a legacy device or designing a combined software/hardware solution, the route you take will determine the type of payer and provider support you get. 

The HealthTech landscape is evolving quickly and headed ever more into the regulated sphere. Every company aiming to create medical-grade or even consumer-grade health devices must consider their regulatory strategy from day one—even if notified body approval isn’t a near-term goal. Failure to do so could put you in violation of federal regulations, subject you to fines and penalties and even cost you your business. 


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