Designing medical devices with reimbursement and economic outcomes in mind is a key strategy for success. Unfortunately, it's a strategy that's not always practiced, according to Mark Domyahn, senior director of global healthcare economics at St. Jude Medical.
At the recent MD&M Minneapolis conference, Domyahn discussed several tips for designing with reimbursement in mind as well as the importance of making sure that all stakeholders—from R&D to regulatory affairs to clinical to marketing—consider reimbursement during the development process to ensure optimal economic outcomes.
Consider Reimbursement When Designing the Product. All too often, the topic of reimbursement comes up just prior to product launch—at which point it may be too late, according to Domyahn.
The best course of action, he advised, is to start talking about reimbursement when designing the product and the clinical trial. At these early stages, it's much easier to change course and also design with reimbursement in mind. "The sooner you factor in some of these healthcare economic and reimbursement considerations, the better," Domyahn said.
Key healthcare economics and reimbursement considerations when designing products include:
- What does the product do/what problems does the product solve? Is it addressing a physician preference or does the product fundamentally change access?
- What are the value propositions of the product? Is it clinical, economic, or both? And which audience is it for—the physician, hospital, or payer?
- Who is the product for (in terms of patient population)?
- Is the product truly novel, an iteration, or me-too?
- What is the expected price of the new product?
- What is the high-level strategy of the product? Basically, what's the end game: Are we trying to play the price game, gain market share, or change the market?
- Where is the product in the development timeline?
- What are the regulatory and clinical strategies?
- What is the competitive landscape?
Know the Differing Requirements for Regulatory Approval and Reimbursement. It seems obvious, but a lot of people fail to realize that regulatory approval and reimbursement are relatively unrelated. When it comes to regulatory approval in medtech, the path of least resistance is often the most attractive, for example. Given the increasingly challenging regulatory environment, many companies simply look to satisfy the minimum requirements for CE Mark or FDA approval. "This may be the most viable strategy, but it tends to work against reimbursement," Domyahn said. "When you're proving you're as good as—or no worse than—an existing product, it's hard to justify with a straight face going to a payer and saying: You need to pay me more money for something that's just as good as, or technically no worse than, [another product]."
Furthermore, while FDA's blessing is necessary for reimbursement, it doesn't guarantee squat in terms of payment. "FDA's bar is safe and effective; payers' bar is medically reasonable and necessary. The gap between those used to be relatively small, but I would argue that today it's [bigger] and continues to widen," Domyahn noted. "FDA doesn't write checks; CMS does. Payers have a higher standard."
Perform Coding Assessments Early. Because coding determines payment levels, it's imperative to get a jump on coding assessments as early in the process as possible. "Coding is really important as you're designing products: Do we fit into existing codes or do we have to get one created? [The latter] is a much different process that takes a lot of time," Domyahn said. He added that companies don't have the luxury of just picking the codes the product falls under. Instead, the medical device has to satisfy the description of the code to qualify.
Consider Coverage When Designing a Product. Domyahn also stressed the importance of considering whether a new product falls within a covered benefit from the targeted payer(s). After all, he noted, Medicare, by law, can only cover so many areas, and preventative medicine and cosmetic procedures, for instance, don't make the cut. He also emphasized the need to examine existing medical policies. "If you're going to design the next TAVR device, there's a policy on that. You may want to think about looking at it to see if there are parameters in terms of physician or hospital requirements that the product might need to take into account to fall under that policy," Domyahn advised. "Once a policy is established, it's really hard to change; it takes a lot of clinical data."
Understand the End Game Throughout the Entire Product Lifecycle. Everyone from marketing to R&D to clinical to regulatory to reimbursement has to get in a room and land on the same page—early—when it comes to new product development, Domyahn commented. "I can't state that enough. What do we want to do with this product in the market? I can't provide input to R&D unless I know what marketing wants to do and what the competitive landscape looks like," he said. "Start with the end game—what do we want to accomplish—and then we can work backward from there."
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