Is regulation a serious hindrance to progress in healthcare innovation?

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It is really a choice of perspectives.

Vinod Khosla once said, “not all difficult problems are valuable, but all valuable problems will be difficult.” The argument for “regulation” in healthcare is obvious: public safety. From an entrepreneur’s perspective, the high bar of regulation perhaps serves as a filter to difficult ideas not valuable enough and a litmus test of one’s vision for his/her startups.

Healthcare industry is no different from other highly regulated industries like the automobile, food, and aerospace industries. Human suffering is often at the end of a failed system. However, we have seen many unicorn-like startups in the past decades succeeded in many of these highly regulated industries.

Some examples include Uber/Lyft, Airbnb, Space X, Tesla.

When a new product becomes essential to a large number of consumers, cost-cutting, delivering equal or higher quality goods, improves accessibility, that is when the regulation will eventually back off and be changed based on newcomers, “updated”, “amended”, and etc.

It is very worthwhile to read about the strategies employed by these successful startups to innovate in a highly regulated field. The fights are fierce, from diplomacy to lawsuits. Links to a few are below:

How Uber and Lyft bent the rules and won

Airbnb’s newest weapon against regulation: The real estate industry

Tesla Takes On Michigan

Regulators will never 100% catch up with new technologies because a philosophy behind many rules and policies is to maintain the status quo (for safety, incumbent businesses, social status, etc.). That’s why the 510(k) clearance is easier when there are prior comparison products but establishing entirely new regulation with the regulatory body seems impossible (but it can be done). Recent FDA changes have resulted in a lot of debates. (Stay tuned for our upcoming blog on this by legal experts soon.)

Just like Uber/Lyft replaced taxi drivers, for healthcare, new companies driven by emerging technologies like AI, 3D printing, blockchain will replace major labor forces in healthcare, including doctors. Things can get ugly because of the power of incumbent organizations, but as past examples have shown, in a free market world, when the fight is between maintaining status quo vs. market demands, the latter will win, sooner or later. More accessible, low-cost, high-quality healthcare startup will win the fight.

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