Posted by Kit Cangardel & Darya Volgina on November 21st, 2023.

As we covered in the previous articles on this topic, Part 1 and Part 2, the line between medical devices and consumer wearables is increasingly blurring. Consumer wearables become more medicalized in their functionality, and medical devices become more appropriate for consumer applications. There are many underlying causes for this shift, including the cost reduction of highly effective sensors and processors, increasing consumer health literacy driving demand, and the rise of chronic diseases increasing the utility of medicalized consumer interventions. These factors have incentivized actors throughout these industries to converge on more medicalized consumer wearables and devices.

In Part 1 of this series, we discussed the nature of the convergence, with a case study on the emerging consumer-facing role of continuous glucose monitors (CGMs) for non-diabetic users. In Part 2, we reviewed the implications for medical device companies who are exploring more consumerized applications for their products. In this installment, we explore opportunities for consumer device firms, who are the other side of the convergence.

We’ll explore the opportunity for consumer device firms from a number of angles. Starting with the new opportunity landscape, we give an overview of the shifting landscape for consumer device companies. We examine technical routes to market via R&D and partnership models we’ve seen evolving. We then focus on considerations for market entry: what consumer device firms will need to do, and to change, to take advantage of this opportunity. Finally, we give an overview of the strategic processes employed to assess and prioritize these opportunities.

The New Opportunity Landscape

As discussed in the previous articles, the cutting edge of today’s consumer health technology is undergoing a rapid transition, with emerging consumer preference for devices offering medical-grade data precision for certain applications. This extends far beyond fitness monitoring, positioning consumer devices at the forefront of holistic health management. As a result of this, the role of accurate and “scientific” health metrics has escalated as a driver of consumer choice.

This tendency is underpinned by many factors, both supply (e.g., increasing availability of sensors and accurate algorithms) and demand (e.g., consumer desire to use wearables to monitor their health in increasingly comprehensive and accurate ways). This is in the context of increasing prevalence of preventable chronic disease, with 6 of 10 adults in the US currently living with some type of chronic illness^[1], and 4 in 10 adults having 2 or more chronic diseases^[2]. Data from August 2022 indicates that an estimated 148 million people in the United States used some kind of technology designed for preventative health^[3]​​, including wearables, meditation apps, and mood boosters.

As of September 2022 via census-balanced survey of 3,213 US consumers (link):

• 39% of consumer use preventative healthcare tech every day
• 57% of consumers engaged in some type of preventative healthcare technology, such as wearables, meditation apps, and mood boosters (an increase from 53% in November of 2021)
• 43% using wearables like FitBit, Apple Watch, Oura
• 67% = share of high-income consumers using preventative health tech

This is part of a broader medico-social trend which has seen the transfer of agency from healthcare providers to individuals. Advanced wearable technologies are starting to facilitate this transition by making personalized health data more accessible to consumers. In the US, the trend is driven by growth from Gen Z, Millennials, and “Bridge Millennials,” especially those making >$100k per year and with a college education.

This represents a significant opportunity for the consumer wellness wearables sector to dive into more medically-oriented applications. Consumer device companies bring a different set of core competitive assets to the table versus their medical device peers discussed in previous articles: namely, a deep competence in go-to-market, well developed direct-to-consumer strategies, quick development cycles, and often, access to large pools of end users representing a broad and diverse set of use cases. All these factors can be used to their advantage.

Overview of Regulatory Context for Consumer Devices with Medicalized Applications^[4]

Previously in this series, we’ve covered instances of medical devices being used in more consumer-focused applications (for example the use of continuous glucose monitors such as Abbott’s FreeStyle Libre for wellness applications by non-diabetics) as well as consumer wearables being FDA-cleared as medical devices (such as the Apple Watch being cleared for AFib detection and monitoring).

Additionally, consumer wearables are increasingly including features which bridge the gap between healthcare and wellness, for example low heart rate detection and alerts which can be indicative of conditions such as Bradycardia, prompting users to visit their physician. In 2019 the FDA published guidance, the General Wellness Exception^[5], which proposes to not enforce regulatory compliance for products that are intended to promote general wellness, i.e., devices designed to maintain or encourage a healthy lifestyle. The guidance applies when the manufacturer does not make any reference to a specific disease or condition, instead focusing on claims such as physical fitness, stress management, sleep hygiene, or mental acuity. Later in this article we review examples of FDA clearance for devices and functionality that fall into the medical device classification. However, consumer device companies should review where on the medical-to-wellness spectrum their intervention is targeting, and ensure they are seeking the right level of clearance for the risk to end users given the latest guidance. This article is focused on the more medicalized applications, with associated product design, regulatory, and go-to-market strategy considerations.

Approaching R&D in This Space

As consumer health companies move into the medical device space, an area with significant strategic implications will be R&D investment: how will companies manage the significant and extended-term investment into R&D capabilities needed to transition to more medicalized product applications?

We have observed three primary tendencies in R&D investment and collaboration among companies exploring a foray into more regulated capabilities:

1. Use and development of existing consumer technology capabilities for medical device applications
2. Partnership with existing consumer-facing companies with specialist capabilities
3. Partnership with health systems for research

Use and Development of Existing Consumer Technology Capabilities for Medical Device Applications

Application of existing features to medical use cases, rather than development of capabilities, has been a key feature of consumer health companies moving into the medical device space. This allows companies to de-risk their investment into R&D of these capabilities, viewing expansion into regulated applications as an extension rather than a necessity. For example, Apple developed their photoplethysmography technology to measure heart rate through the Apple Watch, a key feature of the consumer wearable. Following release of the original Apple Watch in 2015, which already measured heart rate through photoplethysmography, 2018’s Series 4 watch was released with FDA approval for Atrial Fibrillation detection / monitoring, using the same photoplethysmography technology to detect irregular heart rate plus new added electrodes to support ECG generation.

Whoop is also investigating a move into the medical device space, as suggested by their posted open role for “VP, Medical Devices” within the SaMD team. They’ve also published several studies validating their existing capabilities, including sleep tracking, heart rate, and heart rate variability (HRV) tracking, pointing to likely exploration into medical applications of these features.

Partnership with Existing Consumer-Facing Companies with Specialist Capabilities

This brings us to our next emerging trend of partnership with existing consumer-facing apps. This type of partnership allows wearable companies to limit their R&D efforts into user experience and insights generation, instead relying on the existing app’s interface and brand to gain consumer trust. Finally, assuming the app is FDA-cleared prior to partnership, this also streamlines regulatory approval by allowing for 510(k) pathway submission rather than de novo.

A key example is when Apple introduced temperature sensing capabilities in the Series 8 and Ultra watch models in 2022, originally intending the sensor to be used in conjunction with Apple’s own Cycling Tracking app, which is not FDA cleared, to detect ovulation. However, in 2023, it was announced that Apple Watch had achieved FDA-clearance for use with birth control and ovulation tracking app Natural Cycles.

Oura Ring took the same approach in terms of partnership with Natural Cycles via 510(k)-pathway FDA clearance in 2022 for their temperature sensing feature. Both companies leveraged Natural Cycles’ existing de novo FDA clearance with their own thermometer, allowing for shorter time to clearance and significantly lower investment into FDA submission. They also piggy-backed on the existing brand and consumer trust that Natural Cycles had built, potentially leading to increased uptake, particularly of a newer entrant to the wearable space, Oura Ring.

Partnership with Health Systems for Research

Finally, we consider how consumer health companies approach their R&D. Many have partnered with or sponsored academic researchers and health systems to deliver clinical study validation of features, including Apple’s pivotal Apple Heart Study which was run in partnership with Stanford University, and FitBit partnering with MassGen and Harvard Medical School for their Atrial Fibrillation study.

Whoop has begun to take a novel approach: For validation studies of its features, Whoop has sponsored the lab of Dean J. Miller at the Central Queensland University in Australia, which has led to publication of several validation studies. While this approach could continue as they move to investigate medical applications of their capabilities, they also opened WHOOP labs in Boston – a dedicated research facility running Whoop-based studies across multiple focus areas including general fitness and women’s health. While it’s likely that this information is currently mostly being used to support product development, improvement, and introduction of new product features, the data could also be leveraged for true clinical studies to support FDA submission. It also allows for a more close-knit ecosystem of collaboration and fuels constant innovation.

Considerations for Market Entry

As consumer health companies jump into medical device waters, there are a number of new considerations that they must take into account. We will cover each of these in this section.

1. Regulatory and Compliance: First, there is a need for regulatory approval. We review the processes for FDA clearance that some incumbents in the space have followed to get their products to market.
2. Product and Design: Approaches to product and design will need to be modified and should be designed with specific use cases and end users in mind. As a consideration for product design and functionality, the data gathered must be optimized for this use, considering sensitivity, specificity, and actionability.
3. Data Privacy and Security: There are practical considerations in terms of data gathering and compliance with HIPAA and other data protection regulations.
4. Trust and Reliability: Finally, there is a changing paradigm in terms of consumer trust and brand integrity, with higher stakes – and hopefully higher rewards.

Regulatory

To achieve medical device classification and market products with evidence-based claims, consumer companies need to engage with the FDA. Among other things, this requires understanding Medical Device classification and clearance pathways, as well as significant and early investment into clinical studies to demonstrate evidence of safety and efficacy.

Let’s explore a case study that illustrates all the above: FitBit began a study in 2020 to test their passive ECG technology ahead of their April 2022 clearance, suggesting likely preparation for clinical studies ~3 years prior to approval. However, an important consideration is that FitBit gained clearance through the FDA 510(k) pathway based on Apple’s 2018 AFib detection de novo clearance as the predicate. The FDA allows medical devices that have a similar product on the market already to be exempt from a need for premarket notification through the de novo pathway. Implications include a shorter review time for 510(k) pathway devices (~190-210 days vs. ~390 for de novo) and a lower cost of application (~$22,000 vs ~$145,000 for de novo, though small businesses will pay significantly less). Refer to our Digital Therapeutics 101 white paper for an overview of 510(k) vs de novo clearance.

This case study demonstrates that consumer health companies moving into the medical device space will need to account for several years of evidence planning and gathering ahead of FDA submission. They will also need to consider the risks of the device and whether there is a predicate on the market. Finally, they will need to confer with regulatory experts to discuss considerations for clearance.

Product and Design

In transforming the development skills built in the consumer wearables industry into a more medicalized focus, manufacturers must pivot from a user-experience-focused approach to one grounded in medical device guidelines. This involves adherence to standards like ISO 13485^[6], instituting quality management systems to ensure devices meet rigorous safety and efficacy criteria. The shift is from a primary focus on aesthetic and convenience features with near-constant updates to one that prioritizes precision, reliability, consistency, and rigor in development.

In particular, the role of updates shifts significantly from consumer devices to medical devices: software forms part of the regulatory submission process, so the functionality of the regulated aspect of the product cannot change without additional regulatory oversight. The classic consumer technology development model of pushing an early “MVP” (minimum viable product) to market then regularly updating and pushing new features based on end user interactions is not at all feasible in the medical device context.

Overall, useability becomes even more important as a product and design consideration. Interfaces must be clear and intuitive to minimize user error and confusion, as user error can have significant consequences in medical device applications. Data presentation, particularly for critical health metrics, requires clarity and clinical relevance. The design must cater to a broad user demographic while considering varying health literacies, physical capabilities, and technological familiarity. In general, the transition from consumer wearables to medical devices demands a shift towards technical accuracy and user safety, superseding the consumer-centric model. A core challenge for companies or teams making this shift is to reflect this new emphasis in development processes, which can involve considerable overhaul of existing development infrastructure.

Data Privacy and Security

In the shift from consumer electronics to medical devices, data privacy and security are critical. This is an area where many consumer wearables firms already have considerable strength, with well-established processes to protect sensitive wellness data. However, the transition to medicalized applications ups the ante. Ethical data handling in the context of sensitive health information involves considerably higher risks, from a consumer trust and compliance perspective. Adhering to laws like HIPAA and GDPR are crucial – they set strict standards for patient data management, focusing on confidentiality and security.

Medical devices have often been the target of data breaches and attackers, due to the high value of the data. A 2019 study^[7] showed that at the time, only 2.13% of medical devices with a software component that were submitted for FDA clearance had a cybersecurity component to the application. More recently, a 2023 State of Cybersecurity for Medical Devices and Healthcare Systems^[8] report paints a similarly dire picture, with a 60%-plus increase in vulnerabilities targeting medical devices and healthcare software from 2022 to 2023.

As a result, considerable rigor is needed to comply with the demands of more medicalized applications, above and beyond the baseline requirements for compliance. A recent example is the Apple Watch collaboration with birth control and menstrual cycle tracking app, Natural Cycles^[9]. As part of the FDA 510(k) process, Natural Cycles must demonstrate compliance with the new cybersecurity requirements of the Federal Food, Drug, and Cosmetic Act (FD&C Act). This includes demonstration of how user data will be protected. In response, Natural Cycles launched a comprehensive privacy protection program, NC* Secure. Users must explicitly opt-in to share potentially sensitive data, such as overnight wrist temperature data, which can be an indicator of pregnancy status for users. In general, products entering the market with a medical application will need to develop a detailed approach to ethical and compliant data capture, storage, and use.

Trust and Reliability

The dynamics of trust and reliability of outputs change as the applications for these devices become more medicalised. The stakes are higher. In terms of the reliability of outputs, for any diagnostic function it’s critical to consider the balance between sensitivity and specificity for the intended application. These two fundamental concepts are used to evaluate performance, with sensitivity measuring the proportion of accurate positives of the test, and specificity measuring the proportion of accurate negatives of the test. Finding the right balance between these measures is critical for a trustworthy and reliable instrument. High sensitivity is preferred for initial screening tests, to catch as many true cases as possible, while high specificity is more desirable in confirmatory testing to ensure only those with the condition are identified.

In either direction, misdiagnosis leads to a negative user experience, leading either to unnecessary anxiety and treatment (in the case of false positives) or missed treatment opportunities (in the case of false negatives).

For example, as discussed, both the Apple Watch and Fitbit are cleared to detect atrial fibrillation (AFib). Studies assessing the positive predictive value (PPV), i.e. sensitivity, of AFib flags raised by these devices (using an ECG patch for confirmation) reveal significant differences: Apple Watch holds a PPV of 84%, whereas Fitbit shows a much higher PPV at 98%. This disparity underscores the tradeoffs between user experience and medical accuracy. A lower PPV might mean fewer false positives, potentially leading to a more positive consumer experience, but it also risks missing actual cases of AFib, which could have serious health implications. Conversely, a higher PPV, while more medically reliable, might lead to more false alarms, increasing anxiety and potentially undermining trust in the device. Striking a balance here is critical, as the perception and acceptance of these devices largely hinge on their ability to provide reliable health data without causing undue alarm or missing critical health issues.

Where to Start? Strategic Framing to Plan for Market Entry

The first step in planning to move from a consumer wellness focused product to the medical device space is to conduct a comprehensive assessment and gap analysis. This involves evaluation of all existing capabilities, resources, and competencies against the medical device opportunity space, solving for the key questions: 1) Where can our existing capabilities work to make a difference in an area of clear and ongoing opportunity?; 2) What additional capabilities will be needed to reach this opportunity? Key areas for this assessment include product design and development capabilities (hardware, software, manufacturing), quality control/QMS capabilities, clinical testing, and market understanding.

The assessment should start by examining the current product portfolio and technological expertise to identify potential applications in the healthcare sector. This could include evaluating the adaptability of existing technologies for medical use or the feasibility of developing new products. Following this, the company must rigorously compare its current operational and production processes, quality management systems, and design protocols against the regulatory standards set by bodies like the FDA or EMA. This gap analysis will highlight areas requiring enhancement, such as achieving ISO 13485 certification for medical device quality management systems or enhancing data security and privacy measures in compliance with regulations like HIPAA.

Once the gaps are identified, the company should formulate a strategic plan to shore up these deficiencies. This can involve investing in research and development for medical-grade product design, training staff on regulatory compliance, or establishing partnerships with established players in the healthcare sector for expertise and credibility. Additionally, as discussed, the company should plan for extensive clinical trials and validation studies to demonstrate the efficacy and safety of their products. Adopting a phased approach to entry – starting with less regulated markets or product categories – can also be a strategic way to gradually build up expertise and reputation in the medical device space.

Overall, the transition from consumer devices to medical devices requires a strategic, well-planned approach, emphasizing regulatory compliance, product efficacy, and patient safety. By systematically addressing the gaps in their capabilities and aligning their resources and strategies accordingly, companies can successfully navigate this complex and rewarding transition.

At Blue Matter Consulting, we’re experts in working with companies to navigate this process. Contact one of the authors at kcangardel@bluematterconsulting.com to discuss any aspect of this article.

Notes:

^[1] https://www.statista.com/topics/8951/chronic-disease-prevention-in-the-us/#topicOverview

^[2] https://www.cdc.gov/chronicdisease/resources/infographic/chronic-diseases.htm

^[3] https://www.pymnts.com/healthcare/2022/six-in-ten-us-consumers-now-get-preventative-healthcare-online/

^[4] We are not regulatory consultants, though we’d be happy to introduce you to some.

^[5] https://www.fda.gov/regulatory-information/search-fda-guidance-documents/general-wellness-policy-low-risk-devices

^[6] https://www.iso.org/standard/59752.html

^[7] https://bmjopen.bmj.com/content/bmjopen/9/6/e025374.full.pdf

^[8] https://h-isac.org/2023-state-of-cybersecurity-for-medical-devices-and-healthcare-systems/

^[9] https://www.biospace.com/article/releases/natural-cycles-receives-fda-clearance-to-integrate-its-birth-control-app-with-data-measured-by-apple-watch/