17 September 2020
While the COVID-19 pandemic has presented a number of challenges for Australia’s digital health sector, it has also accelerated the use of digital health technologies, opening up potentially significant growth opportunities for the sector.
ANDHealth’s recent report on Australia’s nascent digital health sector, Digital Health – The sleeping giant of Australia health technology industry, highlights a number of challenges and opportunities facing the sector following the impact of COVID-19.
Given the opportunities for growth in these technologies, key regulatory issues for companies in this sector will concern data management and regulation of software as a medical device under the Australian therapeutic goods regime. Companies that are able to navigate these frameworks will be well placed to accelerate growth both during and after the pandemic.
Telehealth (including telemedicine) has received particular attention during the COVID-19 pandemic. The forced uptake of the technology by many medical professionals and their patients appears to have resulted in a greater acceptance of digital technology as a means of delivering healthcare services, so much so that its use is predicted to continue well after the pandemic has subsided.
However, before the pandemic, telehealth services were not included on the Medicare Benefits Scheme (MBS). Apart from the negative financial impact for patients, some commentators believe that the failure to place telehealth on the MBS has been a disincentive for investment in the sector, thereby stifling innovation.
As an emergency measure during the pandemic, a range of telehealth services were included on the Medicare Benefits Schedule from 30 March 2020 (see list here). These changes are temporary and designed to help reduce the risk of community transmission of COVID-19 during the pandemic (they are currently due to expire on 31 March 2021). However, given telehealth is likely to become a routine method of facilitating healthcare, there are now calls for the placement of telehealth items on the MBS to be permanent. If such a change is made, it could have a significant impact on the growth of the digital health sector in Australia.
Any increased uptake in telehealth will bring into sharper focus the need for GPs, specialists and allied health service providers to ensure that the systems they use to store patient data are secure, and that their remote working information handling practices comply with applicable privacy laws. Digital health technology providers will also need to ensure that their systems are secure and privacy law compliant, including the systems and practices of their third party infrastructure providers. Compliance with accepted information exchange protocols and integration with MyHealthRecord will also be key.
Telehealth also makes it easier for medical practitioners to conduct inter-jurisdictional patient consultations (i.e. consultations not conducted in person, where the patient or the practitioner is located outside Australia). The Medical Board of Australia requires that medical practitioners using technology to provide inter-jurisdictional medical consultations or services to patients in Australia:
Different types of digital health technologies attract different levels of regulatory oversight.
Software which meets the definition of ‘medical device’ under section 41BD of the Therapeutic Goods Act 1989 (Cth) (SaMD) must be registered on the Australian Register of Therapeutic Goods before it can be supplied. Examples of SaMD include:
In addition to telemedicine, remote monitoring technology is seen to have significant growth opportunities in a post-pandemic world. Given that a device used to monitor a body function will be a medical device under the Therapeutic Goods Act, the impact of regulation under the Therapeutic Goods Act should be considered in the early stages of product development and will be a significant part of the commercialisation pathway for these technologies.
The regulation of SaMD has been a key focus of the Therapeutic Goods Administration (TGA) over the last few years due to the inadequacy of the legislation to keep pace with advances in technology (we wrote about this in detail here). The consultation process has resulted in new regulations which will come into force on 25 February 2021. The TGA has set out a summary of the changes here.
Any digital health technology delivered to Australian consumers must also comply with the Australian Consumer Law (ACL). This includes a statutory guarantee that the technology will be of acceptable quality (including that it will be fit for the purpose that the supplier said it would be fit for).
The ACL also prohibits a supplier from making false or misleading representations (e.g. representations about the performance of the technology where the supplier does not have a reasonable basis (e.g. sufficient clinical evidence) to support the representations). In addition, unfair contract terms must not be included in any standard form agreement that individual consumers may be required to agree to before they can use the technology.
A supplier cannot exclude the application of the ACL to its contracts with consumers (e.g. by making the user terms subject to the laws of a foreign jurisdiction). Compliance with the ACL needs to be carefully managed, but doing so will assist to build a supplier’s reputation and trust amongst users, which will be critical to user uptake in the digital health sector.
While COVID-19 accelerated the use of digital medical technologies in some respects, it has also presented significant challenges.
The technological innovation necessary for success in the digital health sector requires access to capital and the traditional capital sources, which have generally been constrained due to COVID-19. Companies looking to foreign investment to support their growth will also need to be aware of the changes to the FIRB processes, implemented in March 2020 in response to COVID‑19 (see our article on this topic here) and the permanent changes expected to be implemented in early 2021 (see our article on this topic here).
Regardless of the regulatory and financial constraints, there appears to be significant optimism in the digital health sector. If made permanent, the newly-introduced Medicare reimbursement of telehealth services may also foster further innovation, opportunity and growth in the sector.
This publication is introductory in nature. Its content is current at the date of publication. It does not constitute legal advice and should not be relied upon as such. You should always obtain legal advice based on your specific circumstances before taking any action relating to matters covered by this publication. Some information may have been obtained from external sources, and we cannot guarantee the accuracy or currency of any such information.