Regulation Should Not Get In The Way Of Smart Electronic Skin Patches
Recent IDTechEx research in their report: Electronic Skin
Patches 2019-2029, has revealed significant opportunities in the development
and use of electronic skin patches, with over $7.5bn in revenue made from the
technology in 2018 and a growth forecast of over $20bn per year over the next
decade. However, it also shows that reimbursement and regulatory consideration
aren't necessarily keeping pace. James Hayward, Principal Analyst at IDTechEx,
highlights the dangers of a closed market driven by regulation and
reimbursement strategies which favour devices for simplicity and cost rather
than effectiveness;deterring new entrants.
Electronic skin patches are wearable products attached to
the skin of a user incorporating sensors, actuators, processors and communication
technology, allowing the device to connect to the internet to become ‘smart'.
Skin patches are one of the latest waves in health monitoring; their
non-intrusive design meaning they are comfortable and discrete. Unsurprisingly,
interest in electronic skin patches has soared, driven by significant hype and
market growth around wearable devices starting in 2014.
A number of significant applications of electronic skin
patches are now having a profound impact on health and quality of life. Some of
the foremost use cases centre around healthcare and medical applications, while
the consumer health market is another early adopter. As such, several product
areas, particularly in diabetes management and cardiovascular monitoring, have
grown exponentially to create billions of dollars of new revenue each year for
the companies at the forefront of this wave.
Cardiovascular monitoring faces reimbursement and
Alongside this growth has come the need for forward-thinking
regulation and reimbursement, especially given the life-changing medical
context of their applications. Following regulatory approval, the funding of
medical devices can come from different sources, including government-led
reimbursement schemes. These provide funding for medical devices defined within
certain categories according to central definitions and understandings of the
performance and cost of the device. While systems do vary by country, it is
typical for central procedural terminology to be linked to reimbursement
amounts for each device.
Take cardiovascular skin patches for example, which exist in
a highly competitive landscape alongside consumer wearables such as watches and
chest straps (which provide cardiac data but with limited medical usefulness
due to a lack of medical approval) as well as cardiac implants which offer a
more accurate but less safe approach.
Effectiveness must have a role to play in future
Electronic skin patches for cardiovascular monitoring must
strike a compromise between data quality and patient comfort. A patient can
remain active while wearing the device, minimising additional issues caused by
remaining in a hospital bed for too long. However, they also typically produce
simpler data sets than the full 12-lead standard monitor and offer less control
over the quality of the data produced. These competitive landscapes drive
positive product development but it is often the central regulatory and funding
bodies that have the power to drive change.
Previously, these mobile cardiac telemetry products have
benefited from a favourable reimbursement scenario in the US, defined under a
Category 3 CPT code for "extended Holter monitoring". This code
entitles them to twice the amount of reimbursement as "event monitoring"
and more than eight times the amount afforded to generic "Holter
monitoring" (both Category 1 CPT codes). If the reimbursement situation
were to change, the entire revenue structure for these devices will change with
it. Should reimbursement strategies be allowed to shape developments rather
than consumers and effectiveness?
Diabetes management reveals a confusing system
One of the biggest revenue generators in the electronic skin
patches market has been continuous glucose monitoring (CGM) for diabetes
management, which posted annual revenues of over $2.5bn in 2018. The US Food
and Drug Administration (FDA) has given four companies approval to sell CGM
products, three of the four companies offer a skin patch with a small needle to
test glucose levels in interstitial fluid. Only one organisation offers a
subcutaneous implant which is then read using a skin patch as a communication
hub. In such a closed market, regulations and reimbursements are shaping its
The three large players offering a needle-based skin patch
have benefited from multiple geographies now offering partial or full
reimbursement for CGM products under national healthcare schemes. Yet each of
the three products is treated under a single regulatory category and receive
the same reimbursement per device, regardless of performance, longevity or
functionality. This opens up the potential for a closed market which favours
devices because of simplicity and cost rather than effectiveness.
The fourth player is a new market entrant with lower revenue
but offers a much longer-lasting CGM solution with significant differentiation
from its rivals, but because of limited regulation and reimbursement, however,
it may struggle to break the market stranglehold from larger players with
New entrants need to be encouraged
This reimbursement and regulatory environment provide an
even bigger barrier to entry for new and innovative electronic skin patches. If
the product is to be offered as a medical device, it must go through regulatory
approval processes, either showing equal performance to existing equivalents or
going through a de novo process to prove its efficacy and safety.
These hurdles often result in new electronic skin patch
devices being pushed towards the consumer health market, where regulatory
roadblocks aren't as stringent but offer less long-term returns than in direct
healthcare. This is already proving to be the case with the promising area of
temperature sensing for fever and fertility monitoring, as well as other
patient monitoring devices.
Healthcare Sensors Cambridge Event
This is exactly why IDTechEx has been tracking the emergence
of electronic skin patches and the reimbursement and regulatory landscape back
to 2010, across 26 application areas and over 100 market players, in its report
Electronic Skin Patches 2019-2029. The report forecasts the market through
2019-2029 and aims to help innovative healthcare organisations make more
informed business decisions before deciding how to roll-out one of the hottest
technologies in patient monitoring. In addition to detailed reports on this
topic, IDTechEx are hosting an event: Healthcare Sensor Innovations 2019, in
Cambridge, UK which is a conference and table-top exhibition focusing on the
latest developments in the use of wearables and sensors in continuous
monitoring of individuals and point-of-care diagnostics.
Register here: www.IDTechEx.com/Cambridge