The path to commercial success for device companies is fraught with complexity. Often developers of novel products do not consider the obstacles they will encounter as part of the commercialization of their product. Yet, reimbursement and payment are absolutely critical to their success.
Not only do these companies have to obtain FDA market approval, they also need to receive positive coverage decision from payers. While the most obvious payer is CMS (Centers for Medicare and Medicaid Services), companies should also plan to work with the many private insurers in the country.
Regulatory and Commercialization strategies must be supported by the reimbursement strategy
A well-thought-out strategy informs the regulatory pathway and the design of the product. In the end, a product no-one wants to pay for cannot be successful and will fail to help the patients for whom it was designed.
To be successful, a medical device company has to become familiar with the concept of health-economics and the many relevant stakeholders that can positively or negatively influence the successful commercialization of your product:
- Patients: a patient community demanding your product.
- Physicians: physicians eager to prescribe the device because they see the possibility of improved outcomes for the patient.
- Hospitals and clinics: willing to change internal procedures, train personnel, purchase inventory, to improve their financial performance.
- Professional Medical Societies: modifying or adding the use of your device to the existing standard of care
- CMS and AMA: to create the required codes in support of the novel device.
- Payers: who accept the health economic data supporting the new device and issuing positive coverage decisions.
No different than anywhere else, in the US, no reimbursement can be obtained without a billing code. These codes are issued by CMS and AMA (American Medical Association).
The US healthcare system provides separate reimbursement and payments for physicians and healthcare facilities.
Physicians will receive different rates depending on where the procedure was performed (hospital, clinic or office). The AMA sets the physicians reimbursement rates and codes.
Different facilities are treated differently for reimbursement purposes. Hospitals, Outpatient Hospital Centers and Stand-alone Ambulatory Surgical Centers work from different reimbursement schedules.
Because CMS covers all adults over 65, manufacturers will try and obtain CMS coverage of their device. Furthermore, many individual private insurers follow CMS’s lead. Manufacturers can try and fit under an existing code. Or they can request a new code (in case the existing code does not allow sufficient reimbursement for the new device).
Health Economic Data
Providing health economic data to the various stakeholders requires that manufacturers carefully collect this data in support of their product. You must plan for this early on. The results should be available for dissemination as soon as the regulatory approval has been obtained. Therefore, it is important to collect, analyze and interpret the Health Economic Data beforehand.
Unfortunately, we often see that the data presented to the various stakeholders is woefully inadequate, leaving the payers to issue negative coverage decisions.
As hospitals receive only a single payment per DRG code, they have a major incentive to ensure patients do not return. Reducing length of stay, readmission rate or procedure time are powerful incentives. Only data proving these benefits will convince the stakeholder.
It’s obvious that carefully designed studies must provide the kind of Real-World Evidence stakeholders crave. The real-world environment is quite different from the RCT study that supported your FDA approval.
Medical Device companies must align their regulatory, reimbursement and commercialization strategies to speed up time to market and improve chances of success.
When entering foreign markets these requirements often overlay the requirements of your domestic market. Sometimes the domestic and foreign market requirements are extremely disparate. And in that case it becomes nearly impossible to shoehorn the device made for one market into another. Unless you purposely design the device to meet both markets from the very get-go.
Companies wanting to commercialize products in multiple markets should pay extra attention to streamline their strategies across the different markets they want to enter.