A recent Frost and Sullivan report, "Analysis of the US Broadband mHealth Applications Market," estimates that the 2010 figures of $230 million market earned revenues are likely to reach $392 million by 2015. Impressive, and although 88% of Americans have a cellphone, according to Nextgov, very few are actually using health apps. According to the Pew Internet project, the number has stayed static, around the 10%-11%, for the last couple of years. So where is the shift in the market happening?

Hardly a week goes by that I am not alerted to some new health app, and there are different levels to them. Simple apps, which can be developed and launched by anyone and can report and manage my running speed and distance, calorie count, and personal fitness goals, have all gained traction. They are cheap, but longer term, they represent throwaway technology and their longer term efficacy is not fully evidenced, says director of the Global mHealth Initiative at Johns Hopkins, Dr. Alain Labrique. There is also an issue of safety and keeping the public’s best interests at the forefront rather than innovating for the next big thing.

There are very few barriers to building health apps for the marketplace, and the problem can be sorting the good from the bad. With The Washington Post estimating about 40,000 health apps, medical professionals and the public do not have the time or experience to critique these. Solutions such as Happtique, a curated app pharmacy with vetted programs to meet a certain criteria present a shift from the superficial to quality assured tools directed at healthcare delivery. Currently, outside developers present their apps to Happtique for review and certification. It’s a seal of approval that works alongside current FDA regulation.

Regulatory compliance, such as the U.S. FDA or EU certification, is the highest level of vetting and seems to be occurring in the managing of chronic conditions such as heart disease or diabetes. They are prescription-driven apps, and as Lee H. Perlman, managing director of Happtique, says, “it is intuitive to people, the idea of a prescription.” People are familiar with prescriptions, and instead of pills, the person gets information and connectivity. This connectivity opens up a tremendous opportunity for healthcare says Alex Butler, managing director of The Social Moon Consultancy.

These new types of apps are no longer free or a few dollars. They could be around $100 per month, such as the recently launched mobile diabetes management system from WellDoc. This application uses clinical, behavioural, and motivational applications to improve health outcomes and the associated costs. It does this not only by data collection but turning it into actionable knowledge using analytics, segmented use profiling, behavioral change, and just in time feedback.  “Personalised real time support” is what Butler calls this, with the real challenge in symmetry of data with electronic health records. Paul Dixey, managing partner at Bluelight Consultancy, tells me his concerns about these products are certainly around liability but also general data protection issues.

Most importantly, WellDoc has been involved in clinical trials that have shown to reduce significantly the blood sugar levels in diabetes patients. This evidence persuaded the FDA to give the system the green light to operate as a medical device.

Regulatory clearance is paramount for safety, as well as possibly taking these apps to the next level and gaining traction for scaling, attracting investment, and commercialization. These tools that deal directly with medical care can have no technical issues, and quality and safety have to be dealt with appropriately. WellDoc president and COO Anand Iyer realized that development and monetization was “not a quick ride and should be a high value system.” According to The New York Times, WellDoc is one of fewer than 10 companies to date that have gained clearance from the FDA.

Others agree, such as Sailesh Chutani, cofounder of Mobisante, a smartphone-based ultrasound tool. He believes the safety of the device is important, but approval “also sends a signal to the market that you have been vetted and cleared by the toughest regulatory agency in the world, and that also attracts investment.” Clearance obviously helps and two insurance companies have already signed up to pay the bill for patients whose doctors prescribe the WellDoc system.

The market for medical apps that go through FDA clearance is currently small, but is expected to dramatically increase by 2015, according to Bloomberg Businessweek. The long process of FDA clearance is also set to change. It is anticipated by industry experts that the approval process, and associated costs, will reduce significantly in late 2012 when the FDA is expected to issue detailed guidelines about mobile health devices and apps and their regulation. This should help potential customers decide what to buy and will start driving innovation and the market in general.

The U.S. and EU have different healthcare and regulatory models. Paul Dixey, also the author of "Are health apps medical devices," reports that there is no single EU central body for certification unlike the U.S. FDA. However, there is still a drive in the EU for developers to have apps certified in some way. The commercialization model is different because health insurance companies do not feature in the EU model of healthcare compared to the U.S.

Butler offers some further interesting thoughts on apps versus medical devices and their regulation. Traditionally, devices have been hardware that can be measured, but could software apps now be available on multiple platforms developed by different code by different developers. How do the FDA and EU regulators mange this?

Regulators are increasingly coming under pressure from developers to aid innovation and acceleration of the mHealth market commercialization. The Frost and Sullivan report specifically made connections between the “restrictions on market entry due to regulatory guidance and governance such as the Food and Drug Administration FDA mHealth guidelines may affect business models and growth.”  In 2011, the FDA released a first draft of guidelines for mobile apps making medical claims to apply for FDA approval, in the same way that medical devices must be proven safe and effective. In June 2012, the U.S. Congress stepped in with modified section 618 of the FDA Safety and Innovation Act to allow the FDA to move forward on planned regulation of mobile apps.

Some developers are not waiting for the new FDA guidelines and are already pursuing formal applications. There are some such as Joel White, executive director of IT Health Coalition, who believes that while regulation is a good thing the FDA model may not be the best fit for a fast growing and innovative industry.

The bottom line for health apps versus medical devices is patient safety, says Dixey. This view is echoed by Michael Sptiz, SVP, managing director of the Healthcare and LifeSciences division of ZEMOGA, when he says, “the biggest mistake in communications and tech is to leap on a solution before understanding the need.”