Medical Products Bill to introduce risk-based framework for software and AI regulation

NEWS  - eHealthNews editor Rebecca McBeth

The Medical Products Bill will create a modern regulatory framework for software used in healthcare, targeting therapeutic applications and not administrative tools, says associate minister of health Casey Costello. 

Costello spoke at the Digital Health Leadership Forum in Wellington on May 12 where she said the new legislation will regulate software and artificial intelligence only when used for therapeutic purposes such as diagnosis, treatment guidance or disease monitoring. 

General administrative and operational tools, including clinical administration systems and AI scribes, will remain outside the regulatory scope, she confirmed.

The Medical Products Bill replaces the Therapeutic Products Act, which the government repealed in 2024, and is expected to be introduced in 2026.

"Good regulation enables innovation rather than stifling it," Costello told the forum. 

"The bill will replace an outdated regulatory framework with a modern, flexible one that supports both safety and, importantly, innovation."

She told the more than 200 attendees that the framework aligns with international definitions and takes what she described as a "targeted and proportionate approach" to oversight. 

It allow for a “flexible, risk-proportionate approval pathway” designed to accommodate innovative and evolving technologies.

"It provides certainty for industry, supports exports and enables the safe uptake of digital health tools across the system," said Costello.

She also said that cyber security, privacy and data protection are key to public confidence in the health system and digital health organisations must meet appropriate standards for security, privacy and assurance.

"Innovation must go hand in hand with accountability," Costello said. 

"This is not slowing innovation, it is about making sure digital services are trusted, resilient and sustainable, especially as technology becomes more embedded in care delivery."

The Digital Health Leadership Forum was co-led by HiNZ and the Digital Health Association.

Image: Associate minister of health Casey Costello speaking at the Digital Health Leadership Forum in Wellington on May 12

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