Electronic Health Record (EHR) and Clinical Decision Support (CDS) software providers are going to benefit from a new bill that aims at reducing U.S. Food and Drug Administration’s (FDA) regulatory supervision of Medical IT.
The Medical Electronic Data Technology Enhancement for Consumers' Health (MEDTECH) Act proposes to amend certain provisions of the Federal Food, Drug, and Cosmetic Act. The bill drafted by Senators Orrin Hatch (Republican–Utah) and Michael Bennett (Democratic–Colorado) argues that certain software should not be categorized under medical devices.
Software providing administrative or operational support and EHRs excluding diagnostic image data are some of the medical technologies that the bill proposes should be kept out of FDA’s purview as they do not pose risk to patient safety.
Per Reuters, the bill is expected to maintain FDA’s jurisdiction over medium and high risk software. However, the legislators have not asked for a separate body to categorize the risk of the said software.
The MEDTECH Act follows the Preventing Regulatory Overreach to Enhance Care Technology (PROTECT) Act that was introduced in Feb 2014. The PROTECT Act was supported by the likes of athenahealth, Inc. (ATHN), International Business Machines Corp. (IBM) and a number of IT companies who develop healthcare-related software.
The ACT reduces FDA oversight on some high-risk CDS software, mobile medical apps and other medical device functionality. These include wellness apps, emergency care predictive analytics software and hospital patient monitoring software. Per Boston Globe, the Act will also help health IT companies to avoid 2.3% tax charged to medical device makers as part of federal health reform.
The PROTECT Act was a companion bill to SOFTWARE Act, which was introduced to the House of Representatives in Oct 2013. The PROTECT Act is now under the purview of Committee on Health, Education, Labor, and Pensions.
Although the MEDTECH Act will take some time to get formally introduced in the Congress, the proposed amendments will definitely bring cheer to EHR providers like athenahealth, Allscripts Healthcare Solutions, Inc. (MDRX) and Cerner Corp. (CERN).
The lenient FDA regulation will help these companies to commercialize innovative solutions at a much faster pace that will ultimately benefit their top line. Software upgrades will also find their way out in a much easier and cost-effective manner.
Moreover, the MEDTECH Act is expected to remove ambiguity and uncertainty related to regulatory environment in the medical IT market. This will be significantly positive not only for large providers but also for many start-ups, ultimately helping them to offer better health care in the long run.
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