We are soon to publish a Special Report on big regulatory changes for healthcare technology in Europe.
Our Special Report focuses on three big pieces of technology regulation which the EU has recently approved, each of which will have significant impacts on Europe’s healthcare sector: the EU AI Act, the European Health Data Space, and the Cyber Resilience Act.
One of the recurring topics from the conversations I had with various experts when researching this was what the impact on innovation will be.
Many people in the business world implicitly assume that there is a more or less absolute trade off between regulation and innovation; that any additional regulatory requirements that are imposed on a technology or a sector will — regardless of how necessary they are — increase barriers to entry and make every-day operations more cumbersome and innovation more difficult.
This idea has some bearing. The EU AI Act in particular is going to be quite cumbersome for companies developing and deploying AI systems in healthcare. The significant additional regulatory requirements are going to create quite a burden, especially for smaller companies. And this means there will inevitably be some impact on barriers to entry and competitive dynamics, potentially dampening innovation.
“Companies won’t be able to have just one person working on it. Compliance will cross many departments including IT, risk, legal and privacy,” Maureen Daly, Partner at multinational law firm Pinsent Masons told us.
But there are some important caveats to the idea of an absolute trade off between regulation and innovation.
Firstly, a lack of clarity or lack of agreement on what is (or will) be legally required of firms can be an even bigger barrier to innovation and investment than regulation itself. In the US there is currently no federal regulation and so businesses are instead seeking guidance from non-profit organisations such as the Coalition for Health AI on best industry practices.
Second, certain types of regulation can be designed to mandate or encourage practices that will actually enhance innovation. This is the case with the European Health Data Space, which has been designed to make it much easier for personal health data to be shared across the EU. Given that difficulties in harnessing data is widely regarded to be one of the biggest bottlenecks on innovation in healthcare, this will hopefully improve both delivery of healthcare services and health research.
And finally, regulations can sometimes lead to innovation in an even more direct way.
The Cyber Resilience Act mandates that all medical device manufacturers will, before going to market, have to submit a plan specifying how they will monitor, identify, and address cybersecurity vulnerabilities on an on-going basis once the product is on the market, and make updates and patches for their devices available. Whilst this does create an additional burden for manufacturers, it is a burden that could itself lead to new innovations in combating cyber attacks.