In September, the U.S. Food and Drug Administration (FDA) announced that fitness tracker manufacturer Fitbit (NYSE:FIT) and eight other companies would be part of a new digital health software precertification pilot program aimed at fostering innovation and streamlining the process of getting regulated products to market. This could be good news for Fitbit. Let's take a look at why.

Partnering with the tech industry to design a robust precertification process is a new approach that will certify a company rather than the FDA reviewing each individual product. The idea is that companies that meet certain criteria could release software-as-a-medical-device (SaMD) products with an accelerated review process or directly to market depending on the risk of the product.

As part of the pilot program, Fitbit and the other companies will:

  • Provide access to key performance indicators.
  • Provide post-market data.
  • Be available for consulting and/or visits from the FDA.
  • Provide information on the company's quality management system.

The pilot program will last a year, and the FDA hopes to be able to finalize the details for each step of the process.

A process flow chart showing how the FDA pre-certification process might work. Where a company is pre-certified its product could move directly to market or go through a streamlined premarket review.

Image Source: FDA's Software Pre-certification pilot program webinar.

The program aligns with other agencies that regulate medical devices globally. The box in the lower left of the picture above, which isn't easily readable, is  titled "IMDRF-SaMD types." It's a risk framework based on patient impact created by the International Medical Device Regulators Forum (IMDRF).

Fitbit applauded the program in a press release. "As Fitbit takes a more integrated role in personal healthcare, we are hopeful this will allow us to accelerate FDA regulated features and software development, bringing new capabilities that could positively impact health outcomes to market more quickly," co-founder and CEO James Park was quoted as saying.  

Doctor holding a chest X-ray.

Image source: Getty Images.

What's in it for Fitbit?

Fitbit was selected as one of the nine companies out of over 100 applications to participate in the pilot program. This sets up Fitbit as one of the recognized leaders of digital health in the eyes of the FDA. Through this program, Fitbit can also provide feedback to the FDA on how to best work with corporations to bring innovative digital health products to patients quicker.

One of the criteria for being selected as part of the program was that the company is developing or planning to develop software as a medical device (SaMD). Fitbit's work on sleep apnea could yield such a product and Fitbit should gain some important insights from the FDA that could lead to approval of such an SaMD product in the future.

Another benefit would be if Fitbit could get FDA pre-certification. This would provide a huge opportunity to develop more medically focused software products that could be a new revenue stream for the company. While the FDA hasn't promised any of the participating companies precertification, the act of participating should at least provide Fitbit with valuable insight.

What about the competition?

A number of Fitbit's competitors were also chosen for the pilot program, including Apple (NASDAQ:AAPL) and Samsung. While Alphabet's life sciences start-up, Verily, is not currently a competitor, it might be in the future if its health-related software products were incorporated into the Android operating system.

Of these companies, Apple is probably the biggest direct threat to Fitbit with its $10 billion research and development budget and longtime interest in improving healthcare. The iPhone maker is attacking healthcare on several fronts. The company is working on non-invasive real time glucose monitoring, is reported to be developing electronic health record capability, and working on software that could detect issues with your heart.

While Apple's progress is impressive, the breadth of healthcare issues is enormous and has plenty of room for numerous tech companies to succeed. In 2015, it was estimated that healthcare costs for the U.S. totaled $3.2 trillion. Additionally, Fitbit is not new to the healthcare game. Fitbit's Aria scale is an FDA regulated medical device and the company has partnered with Medtronic and Dexcom to make diabetes management easier for patients.

Lastly, Park is laser-focused on enabling the company to improve people's health. Earlier this year, he said, "... we have a firm vision for the future. Devices are a means to an end. Leveraging our brand, community and data, Fitbit is in the business of driving positive health outcomes."

Being selected as one of the participants for this important FDA initiative gets Fitbit one step closer to fulfilling the company's vision.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Brian Withers owns shares of Alphabet (A shares), Alphabet (C shares), Apple, and Fitbit. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Fitbit. The Motley Fool owns shares of Medtronic and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.