Will Obamacare Tax Your iPhone as a Medical Device?

Food and Drug Administration official addresses concerns that the agency will impose heavy regulations on consumer devices in health IT rulemaking and discusses possibility of iPhone tax under Obama's health care law.

A senior official at the Food and Drug Administration yesterday strongly pushed back against congressional concerns that the federal government could begin taxing and regulating consumer mobile devices like iPhones and iPads through expanded federal oversight of health technologies.

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Christy Foreman, director of the FDA's Office of Device Evaluation, sought to assure members of a House subcommittee that the agency's regulations for mobile health devices and applications will not extend to general-purpose products like smartphones and tablets sold at retail.

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Similarly, Foreman said that there are no plans underway to extend a medical-device tax provided for in President Obama's healthcare law to smartphones and other mobile products geared for general consumer usage, even if those devices facilitate an increasing number of health-related applications. Further, the provision in the law that exempts retail medical devices would further shield consumer mobile product from the tax.

On the regulatory side, several Republican members of the Energy and Commerce Committee said they were worried that a set of draft guidelines the FDA issued in July 2011, if not sufficiently narrowed, could be applied to a wide swath of apps and devices.

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Tax Would Apply to Small Amount of Mobile Apps

In her testimony, Foreman affirmed that the guidelines, whic

h the FDA intends to finalize by Sept. 30, the end of the federal government's fiscal year, would apply only to "a small subset of mobile apps."

"Just as importantly as what our policy proposes is what our policy does not propose," Foreman said. "It would not regulate the sale or general consumer use of smartphones or tablets. It would not consider entities that exclusively distribute mobile medical apps, such as the iTunes App Store or the Android Market, to be medical-device manufacturers. It would not consider mobile platform manufacturers to be medical-device manufacturers just because their mobile platform could be used to run a mobile medical app regulated by the FDA."

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Likewise, Foreman explained that developers of mobile apps would not have to submit new versions of their products to the agency for reevaluation if they have only made "minor, iterative product changes." Also excluded from the more stringent FDA oversight would be health-oriented apps that carry scant risk, like a pedometer app, or apps that function as electronic health-record systems.

Thursday's hearing was the third session that the Energy and Commerce Committee convened this week to examine health IT issues, reserving the final day for administration officials after hearing from members of the medical and technology communities earlier in the week.

The purpose of the hearings, according to committee Chairman Fred Upton (R-Mich.), was to bring to light the impact that new regulations and taxes could have on the fast-moving field of health IT, particularly in the arena of mobile apps and devices.

"Most Americans have no idea that their smartphone, tablet or the mobile apps that have become part of their daily lives could be subject to added red tape or a new tax under Obamacare," Upton said in announcing the hearings.

Committee Democrats, noticeably exasperated, criticized the hearings as a political vehicle to air grievances with the president's healthcare law and the separate FDA rulemaking on mobile devices and apps.

"[T]his tax issue is a non-issue. We did not need to hold one day of hearings on this, let alone three," said California's Henry Waxman, the committee's ranking Democrat.

When his time came to question the witnesses, Waxman asked Foreman specifically about the prospect of an "iPhone tax" under Obamacare, specifically the portion of the law that provides for taxes on medical devices.

Mobile Devices Not Medical Devices

Foreman reminded the committee that hers is a public-health agency with no jurisdiction over tax matters, but nonetheless expressed confidence that smartphones and tablets would not be affected by that provision in the law by virtue of the FDA's guidelines for device classification.

"They would not be regulated as a medical device, therefore not subject to the medical device tax," she said.

With regard to the FDA's work developing regulatory guidance for health IT apps and devices, Waxman brought Foreman through a long list of examples in a bid to get the FDA on record with a commitment to regulatory restraint:

Waxman: Is FDA currently proposing or does it intend in the future to regulate ordinary smartphones and tablets?

Foreman: No it does not.

Waxman: What about mobile platforms in general, such as the iPhone, BlackBerry, Android phones, tablet computers or other computers that are typically used as smartphones or personal digital assistants?

Foreman: No.

Waxman: What about the entire mobile network?

Foreman: No.

Waxman: Each new mobile device released on the market?

Foreman: No.

Waxman: All health IT?

Foreman: No.

Waxman: An iPad application to help track the number of steps walked per day?

Foreman: No.

Waxman: An iPad application that reminds one that it's time to refill a prescription?

Foreman: No.

Waxman: Software that enables a physician to search a medical textbook?

Foreman: No.

Waxman: Apps to allow parents to access online services such as personal health records to document procedures their baby has undergone and drugs their baby was given?

Foreman: No.

Waxman: I don't think you can be any clearer.

Could Mobile Tax Intention Change?

But the stated intent of an agency doesn't always hold up over time, suggested Morgan Griffith (R-Va.).

"In regard to the questions that--the list of examples that Waxman listed out, while the FDA does not currently have any plans, do you believe that the FDA could, if it so chose to do so, regulate those examples down the road if it had a change of heart?" Griffith inquired.

Foreman allowed that the FDA, acting under its statutory authority in the Federal Food, Drug and Cosmetic Act, could, but that it would require compelling evidence of a health risk to do so.

"We have no intent to," Foreman said. "The only thing that would change our mind is if there was a strong safety signal, that we became aware of a device that we were not regulating appropriately under enforcement discretion, but not regulating it. That would cause us to reconsider our position. But absent strong safety signals, no, we would not change our mind."

Kenneth Corbin is a Washington, D.C.-based writer who covers government and regulatory issues for CIO.com. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.

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