Privacy, patents and property
While both life sciences and technology companies face a number of strategic, operational and cultural obstacles, they also need to understand several pressing legal issues in order to succeed in digital healthcare.
Data dilemmas More than half of our respondents—in both the technology and life sciences sectors—said their digital healthcare strategies will require them to collect, store and transfer individuals’ health information. Of these, 44 percent of technology companies and 32 percent of life sciences companies said this will involve the transfer of data outside the United States, which means they could become subject to the privacy laws of additional jurisdictions like the EU.
There is plenty of uncertainty over the legal issues involved in doing this. In our survey, a lack of any standardized global privacy regulations was, by far, the most frequently mentioned data privacy issue, with 73 percent of respondents seeing this as a problem that could stifle growth in digital healthcare. Respondents want global standards (even among all EU member states and US states) to reduce their legal and compliance issues and costs.
“Global standards would make a huge difference in speeding up our development programs,” said one life sciences Digital Strategy Director.
When trying to address these data privacy concerns, those surveyed said they would be most likely to focus their communication efforts on regulators (85 percent), patients (71 percent) and payers (66 percent).
The key for companies dealing with these data issues is to start early, plan accordingly and take control, according to Daren Orzechowski.
“Digital healthcare businesses need to think about data privacy elements from the start,” he says. “They should focus on privacy issues when they start developing new products and defining the user experience, and, at that time, try to determine how their company will use the data it collects.”
A company that can solve how to rapidly share information, get patient consents for data sharing efficiently and satisfy regulators will have a great deal of opportunities in the market. “No one is fully realizing this opportunity yet,” says Orzechowski. “But someone could create a platform that would bring this all together.”
Protecting your property IP issues were seen as a barrier to the growth of digital healthcare by 81 percent of the technology respondents and 75 percent of the life sciences respondents. Of those who saw IP concerns as a barrier to growth, 40 percent said the biggest barrier is the slow (up to three- or four-year) process for obtaining patents amid rapid innovation. Meanwhile, 15 percent and 27 percent pointed to the specific difficulty of getting patent protection for software applications and abstract ideas as the biggest or second-biggest barrier to growth, respectively.
Yet for companies fearful that not getting a patent might impede their strategic growth, there are ways to speed up the patent review process or, in some cases, bypass it altogether. “In the United States, for example, it is sometimes possible to request accelerated patent examination, if the applicant bears more of the examination burden and pays extra costs,” says Jeff Oelke.
In special cases, patent reviews can be expedited for a particular industry. For example, Bijal Vakil points to a recent US Patent and Trademark Office (PTO) “Green Technology” pilot program that preferentially advanced patent applications related to greenhouse gas reduction and sustainable energy. “An industry consortium could ask the PTO to consider similar accelerated procedures for reviewing patent applications for life-saving digital healthcare technologies,” he suggests.
Also, most companies can file a patent application—thus staking a claim for priority—and start selling a product immediately (assuming there are no FDA or other regulatory requirements). “Particularly with today’s rapidly shifting information technology, you may have to get your product out quickly and begin building momentum in the market while you wait for your patent to be reviewed,” says Vakil.
Some digital healthcare inventions may benefit from trade secret protections instead of patents. Companies need to keep their data, product details, algorithms and processes confidential to protect trade secrets.
“Whether you actually file for a patent at all is a business decision. If you decide to protect your intellectual property as a trade secret, like a closely guarded recipe for a soft drink or food product, then you don’t have to disclose it publicly, as you would in a patent filing,” says Oelke.
Patents may not always foster innovation, according to some commentators. “The Patent and Trademark Office is seriously understaffed ... many patent examinations are perfunctory, and there is a general concern that too many patents are being issued,” wrote the eminent Judge Richard Posner in The Atlantic magazine.
Posner and other authorities have suggested reducing the length of patent protection from the current 20 years in industries that do not have the long development and testing time of pharmaceutical treatments, instituting a system of compulsory licensing of patented inventions and several other patent reforms.
A 2015 report in The Economist condemned the US practice of extending patent protection to business processes and financial products, claiming that 40 – 90 percent of patents issued are never used or licensed by their owners, but serve purely as a means of blocking rivals and denying market access to competitors.
All this may explain why 90 percent of our technology respondents and 82 percent of our life sciences respondents still said they would be likely or very likely to continue their digital healthcare strategy even if they knew they might not receive full patent rights in the United States and other developed markets.
Rules, regulations and compliance concerns Regulatory and compliance issues were a frequently mentioned concern among our survey respondents. Finding out which products need approvals and who must approve them is not straightforward, with 71 percent of respondents citing this as a challenge. Meanwhile, 63 percent of respondents complained about the length of time needed for regulatory review processes, and 47 percent expressed concern about the costs of these processes.
“I don’t think it’s an overwhelming problem,” said McDevitt. “The companies going into this sector are certainly going to need people who know how regulators think and who can speak their language. Regulatory agencies do generally consult and give long notice periods, and there are plenty of opportunities for stakeholders to influence new proposed regulations.”
Further legal challenges mentioned by our respondents included uncertainty over antitrust issues (66 percent) and how to confront the potentially crippling problem of counterfeit products (51 percent).
The final analysis Digital healthcare is transforming the delivery and quality of healthcare services, with potentially revolutionary improvements for patients. Those who gain the most will be the businesses that embrace new technologies and collaborate effectively to surmount potential obstacles.
“People need to enter this sector with their eyes wide open to all of the challenges and pitfalls,” said Vakil. “We are confident that all of these problems can be overcome, if you are fully aware of the issues.”
■ Data privacy is a huge issue in digital healthcare, and most respondents (73%) fear the absence of standardized global privacy rules is a major barrier obstructing growth ■ 81% of technology and 75% of life sciences companies say IP issues present barriers to growth in digital healthcare ■ 90% of technology and 82% of life sciences companies said they would pursue a digital healthcare strategy even if they knew their products would not receive patent protection ■ 92% of technology and 97% of life sciences companies would be likely to challenge a competitor’s granted patent at the US Patent and Trademark Office as opposed to litigating in federal court
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