Publication Type
Working Paper
Version
publishedVersion
Publication Date
11-2024
Abstract
As of June 2024, the U.S. Food and Drug Administration (FDA) has approved 950 medical artificial intelligence (AI) devices. The current regulatory framework freezes AI algorithms after approval, requiring new submissions for updates to ensure compliance with Good Machine Learning Practices (GMLP). This approach imposes a significant administrative burden, while hindering the ability of AI algorithms to learn from new data. To address these challenges, the FDA has explored a novel pathway known as Predetermined Change Control Plans (PCCP), allowing developers to outline future changes during initial submissions and exempting approved changes from regulatory review. Yet, the impact of this exemption on GMLP compliance remains uncertain. In this paper, we model the strategic interaction between a developer and a regulator in a two-stage game with asymmetric information. The developer may choose to follow or deviate from GMLP in developing and retraining the AI algorithm, whereas the regulator reviews the marketing-clearance application for approval. Our analysis shows that, contrary to intuition, less review can actually lead to greater compliance. This scenario arises, even without considering the administrative burden saved, when (1) auditing capability is moderate and (2) the potential for efficiency improvements through retraining is substantial. Conversely, reclearance is valuable when regulatory review effectively detects noncompliance or when efficacy improvements from retraining are unlikely. We also show adaptive algorithms offer advantages over frozen algorithms in terms of not only improved device efficiency but also greater compliance. Interestingly, these advantages are particularly salient when regulatory oversight has limited ability to detect noncompliance.
Keywords
Medical artificial intelligence, Health policy, AI development, Inspection games
Discipline
Artificial Intelligence and Robotics | Health Information Technology | Operations and Supply Chain Management
Research Areas
Operations Management
Areas of Excellence
Digital transformation
First Page
1
Last Page
66
Identifier
10.2139/ssrn.5009572
Publisher
Institute for Operations Research and Management Sciences
Citation
LAI, Jiayi; XU, Liang; FANG, Xin; and DAI, Tinglong.
Regulating adaptive medical artificial intelligence: Can less oversight lead to greater compliance?. (2024). 1-66.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/7644
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2139/ssrn.5009572
Included in
Artificial Intelligence and Robotics Commons, Health Information Technology Commons, Operations and Supply Chain Management Commons
