Wellness AI Devices: Regulation, Enforcement, and Strategic Implications

A comparative analysis of Australia’s TGA and the U.S. FDA, and how developers, enterprises, and investors can prepare

Comparing TGA and FDA Approaches

Regulatory Frameworks

Australia’s Therapeutic Goods Administration (TGA) and the U.S. Food and Drug Administration (FDA) both regulate software and AI technologies when these meet the legal definition of a medical device. Both use a risk-based, technology-neutral framework, but they differ in execution.

The TGA classifies devices by evaluating factors such as intended purpose, user type, and the seriousness of the condition being addressed. It introduced updated classification rules in 2021 to capture emerging AI-based diagnostic tools, while excluding very low-risk software that focuses on general wellness. The TGA applies a principles-based model where manufacturers are responsible for proving safety and performance. It offers flexibility in how these requirements are fulfilled, making the system more adaptable to emerging technologies.

The FDA also uses risk classification and evaluates intended use closely. In the case of Whoop, the FDA ruled that the company’s blood pressure estimation feature qualified as a regulated medical device because it provided information that could be used in diagnosing hypertension. Since the feature had not received regulatory clearance, the product was deemed to be marketed unlawfully.

While both agencies prioritise risk-based review, the TGA’s approach is broader and more adaptable, whereas the FDA applies narrower statutory definitions with more rigid enforcement.

Enforcement Action: Tone and Consequences

The FDA’s warning letter to Whoop was direct and legally forceful. It concluded that Whoop’s product was adulterated and misbranded under federal law and stated that marketing the product without authorisation was unlawful. The letter also warned of possible legal actions including product seizure, injunctions, and financial penalties if the company did not take corrective action.

The TGA, by contrast, focuses on education, collaboration, and progressive compliance measures. Its strategy includes formal notices, improvement plans, and educational outreach before escalating to penalties or product suspension. The TGA’s 2025 review emphasised transparency, stakeholder consultation, and increased clarity in rules rather than immediate punishment.

In summary, the FDA favours a strong enforcement-first posture, while the TGA prefers a consultative and phased approach, particularly when working with emerging technologies and software-based devices.

AI Wellness Claims: Where the Line Is Drawn

Both regulators face the challenge of distinguishing between general wellness tools and regulated medical devices. In both jurisdictions, the key determining factor is the intended use of the product.

In Australia, apps that are designed solely to support general health or wellbeing are not regulated. However, if an application is used to diagnose, treat, or monitor a health condition, it falls under TGA oversight. The TGA is currently reviewing some previously exempt categories, such as digital mental health tools, due to increasing complexity and the growing use of AI.

The FDA uses similar principles but applies them more strictly. In the case of Whoop, the company presented its feature as a wellness tool, but the FDA determined that providing blood pressure estimates constitutes a diagnostic function. The agency concluded that the feature crossed into medical device territory and therefore required regulatory approval.

Both regulators agree that products must remain clearly outside the scope of clinical claims to qualify for wellness exemptions. As AI capabilities become more advanced, the line between wellness and medical functionality becomes easier to cross, even unintentionally.

Why Increased Regulation is a Net Positive

Benefits to the Public

Increased regulation leads to safer, more reliable, and more transparent products for consumers and healthcare providers. As AI-enabled tools play a greater role in health decisions, regulatory scrutiny ensures that claims are supported by evidence, performance is validated, and risks are managed.

A stronger regulatory framework provides mechanisms for identifying and correcting issues early through premarket testing and post-market surveillance. This helps prevent unsafe or misleading products from remaining on the market. It also builds public trust, as users can have confidence that approved products have met rigorous standards for safety and effectiveness.

Benefits to Industry

Stricter standards encourage better design, more robust validation, and overall product improvement. Companies that comply with regulatory requirements can differentiate themselves in a competitive marketplace by showing their commitment to quality and safety.

Regulation also facilitates access to international markets. Approval from authorities like the FDA or TGA signals credibility and often serves as a foundation for entry into other jurisdictions. High standards help remove lower-quality competitors, improving the reputation and performance of the entire industry.

Although compliance requires investment, it reduces long-term risk. It minimizes the chances of recalls, litigation, or reputational damage. In the long run, regulation benefits responsible innovators and creates a more trustworthy digital health ecosystem.

Strategic Planning Recommendations

For Developers and Startups

• Begin engaging with regulators early in the development process. Do not assume your product is exempt based on its branding alone. If the product influences health outcomes or clinical decisions, it may be regulated.

• Incorporate regulatory planning into your product design timeline. Account for the need for clinical validation, data management, and traceability.

• Seek expert guidance. Regulatory consultants or in-house specialists can provide clarity on classification, documentation, and submission requirements.

• Use regulatory approval as a competitive advantage. Products that meet compliance standards will be more trusted by healthcare providers and consumers.

For Enterprise Health Tech Firms

• Maintain in-house compliance and regulatory affairs teams that monitor changes in laws and guidelines. Ensure your teams are prepared for new obligations around AI transparency, version control, and performance reporting.

• Regularly review all product claims and marketing materials. Language that implies clinical value may reclassify a product as a medical device.

• Align early with major markets. Designing to meet FDA or TGA requirements from the beginning will reduce cost and complexity when entering international markets.

• Establish robust post-market monitoring systems. Real-world data will be increasingly important for evaluating performance and maintaining compliance.

For Investors

• Assess whether a company has a clear and credible regulatory strategy. Lack of a plan is a red flag, particularly for products that involve health insights or AI functionality.

• Be cautious of companies marketing medical-grade features under the label of wellness. The regulatory exposure can be significant.

• Favour companies that have engaged with regulators or are already in the process of obtaining approvals. This demonstrates maturity and reduces investment risk.

• Stay informed on changing regulations. The wellness category is evolving quickly, and regulatory oversight is expanding.

Conclusion

The boundaries between wellness products and regulated medical devices are becoming increasingly blurred, particularly as AI plays a larger role in generating health-related insights. Both the FDA and TGA are increasing their oversight of these technologies, requiring clarity of intent, evidence of performance, and truthful marketing.

This trend is positive for both public safety and industry integrity. Regulation ensures that consumers are protected, that medical claims are evidence-based, and that companies compete based on quality rather than hype. It also sets a global standard for trust and interoperability.

Success in this landscape requires early planning, strong compliance systems, and ongoing regulatory engagement. Companies that integrate these principles from the beginning will be in a far stronger position to innovate, scale, and lead.