The mobile health industry is getting impatient. Experts representing mHealth companies and investors testified before Congress Tuesday, saying a two-year wait for final guidance from the Food and Drug Administration on how it will regulate medical apps is putting a chill on the sector.

"There's an awful lot of business frozen on the sidelines waiting for what that guidance says," Bradley Merrill Thompson, a lawyer with the mHealth Regulatory Coalition, told the House Subcommittee on Communications and Technology.

In the hearing, the first of three on health IT scheduled this week in Washington, industry experts also warned that fledgling app companies could suffer if a 2.3 percent excise tax on medical devices that went into effect this year applies to FDA-regulated apps. The tax, which falls on revenues, not profits, could make mHealth startups less appealing to investors, a panelist warned.

"Revenues are ploughed back into the company for growth, therefore the 2.3 percent tax on startup companies...increases the amount that must be invested before companies become cash-flow positive," said Dr. T. Forcht Dagi, a neurosurgeon and partner at HLM Venture Partners. He said some companies might opt to release apps in other markets, where they wouldn't be taxed.

Waiting since 2011

The FDA released draft guidance on mobile health apps in July 21, 2011, suggesting its regulatory focus would be clinically riskier technologies, such as apps that let radiologists make diagnoses off X-ray images on their iPads.

Through a series of meetings and workshops with the industry last year, the watchdog agency also hinted its final rule would be "de-regulatory" — that is, it would explain what low-risk apps, such as educational tools, drug reminders, body-mass index calculators and diabetes management guides — it would overlook, according to written testimony from Richard Jarrin, senior director of government affairs for chipset-maker Qualcomm.

But two years later, there hasn't been a final ruling, and the uncertainty is making the industry uncomfortable.

Ben Chodor, the CEO of Happtique, which certifies health care apps, testified that some doctors and companies could be reluctant to develop or release apps until they see final guidelines. "They're not going forward because they're waiting," he said.

Still, not everyone is holding back. In his written testimony, Jarrin said 500 new health apps are released every month, up from about 400 a month last year.

All told, there are about 27,000 unique health apps available on Apple and Google app stores, of which 7,000 are meant to be used by health care professionals, according to Jarrin.

But a survey by mobihealthnews found the FDA has cleared fewer than 80 apps by its 510(k) regulatory process, even though about 5 percent could be considered medical devices and thus subject to FDA oversight, he said.

"We're looking for clarity from the agency," Jarrin said, pointing out that the industry most wanted to see clear-cut examples of low-risk apps it would consider devices, but did not plan on regulating.

What's the reason for the FDA's delay? Thompson, speaking as a self-described "nerdy lawyer," speculated that the FDA was taking its time to come up with the "final definition for all time" answer to app regulations, but was having problems because the industry moves too fast to keep up with.

"What they need to do is get a final version out there, and use the guidance process to update it periodically," he said. A previous discussion between the FDA and industry representatives suggested creating a website where they could give real-time guidance updates, he said.

Taxing matters

A big worry was how, and if, the medical device tax, which was created by the Affordable Care Act, would affect the industry. Rep. Greg Walden, an Oregon Republican who chairs the subcommittee, wondered if the tax would lead future entrepreneurs away from medical apps into making another Angry Birds instead.

"The specter of costly and time-consuming regulation, to say nothing of the 2.3 excise tax, looms large over this industry," he said.

Jonathan Spalter, chairman of Mobile Future, argued that the excise tax, should it be applied to apps regulated as devices, would "stifle innovation."

The memo for the meaning also raised a more dire prospect, of whether smartphones or even networks would be subject to the medical device tax or other regulations.

But Rep. Henry Waxman, a Democrat from California, said the FDA in its draft guidance clarified that it had no intention of regulating app stores or smartphones, and that most health apps would not be subject to the device tax because of a retail exemption, included in the ACA and which applies to products like contact lenses and wheelchairs sold directly to the consumer.

Role for FDA

Most of the panelists seemed to welcome the FDA to take a role in regulating apps, rather than shunting off responsibility to another agency or even creating a new one just for mHealth. "We favor sticking with the agency," Thompson said. In fact, Thompson in his testimony encouraged the FDA to step up enforcement on some products, such as a recently announced home urinalysis product that will let consumers use their iPhone camera to help interpret the results of a urine test strip.

The company, which Thompson did not name, apparently puts a disclaimer on its website saying it's not intended to be a medical device. But Thompson said as the app will retail for $20 with the test kit, it's unfair to stand-alone products that do much the same thing, just not on consumer mobile devices, and which have to go through FDA's clearance process.

"Companies that employ a quality system will probably have to charge more than that to make a decent return. How can a company lawfully compete with those that are willing to try to avoid FDA regulation with a simple disclaimer?" Thomspon asked in his written testimony.

"Yes, FDA has not published its final guidance on mobile medical apps. But it certainly doesn't need to publish that guidance to enforce the statute and a 26-year old regulation that requires FDA compliance for a urinalysis test," he added.