Time-to-Adoption. Paradigm. David Barone Boston MedTech Advisors. November More Experience Better Results
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1 Time-to-Adoption Reimbursement as a Marketing Strategy Paradigm David Barone Boston MedTech Advisors November
2 Time-To- Market Acceptance is Increasing Time- -To-Marke et Efficacy Safety New technologies must demonstrate Cost enhanced outcomes Effectiveness and cost effectiveness to be covered. Outcomes Outcomes Efficacy Efficacy Safety Safety Time-To-M Market Ac cceptance e 1980 s 1990 s 2000 s 2
3 Considerable Implications Need additional funds and financing rounds Valuations are impacted Slowing business development initiatives Prospective distributors sit on the sideline Increased risk of new competitors 3
4 Healthcare Expenditures Are Mounting Private 55% Public / Government 45% Aging New technologies Higher cost of technology Demand for more care and new technology will continue to drive costs (p) Annual cost per capita $356 $7,498 $12,782 Total Expenditures 75 billion 2.2 trillion 4.1 trillion % of GDP 7.2% 16.2% 19.6% Ref: Kaiser Family Foundation, Sep
5 Net Cash Flow (Medicare) Political Pressures 5
6 Market Response: Managed Care Greater control of Access Coverage Payment 6
7 The Reimbursement Process I. Coding II. Coverage III. Payments Classifies patient conditions, services and supplies ICD-9 (~500) CPT (~8,000) HCPCS (~15,000) Drugs and Biologics Defines when products & services are eligible for payment Determines payment processes and amounts Medicare Fees: Standardized Public Non-negotiable Commercial Payers: Non-standardized Confidential Negotiable 7
8 Code = Coverage Coverage = Payments 8
9 Obtaining a New CPT Code Criteria 1. FDA approval for the specific use of the device / drug 2. Truly new service / procedure 3. The clinical efficacy has been well-established 4. The service is widely yperformed across the country 5. Used by many physicians or other healthcare professionals Requirements Peer-reviewed literature Published articles Documenting improved health outcomes Specialty societies support 9
10 FDA and Payers are Looking for Different Benefits FDA Does the product do what it claims? Safety and efficacy Data generated in controlled setting Academic focused review / KOL Scientific method Substantial equivalence or comparison to placebo Intermediate or short-term term outcome No cost considerations Payers Does the product / procedure improves outcomes? Everything listed on the left, plus Reasonable and necessary Use in real world / general, nonacademic and routine conditions Professional societies input is important No standard methodology for determining coverage Long term health outcomes Cost is often key consideration 10
11 Effect of Increased Medical Expenditures on Health Health H4 H3 C D H2 B H H1 A Medical Expenditures Ref.: Health Policy Issues, PJ Feldstein,
12 Your insurance just called. They don t cover having a bad day 12
13 Goals of Reimbursement Strategy Improving product development, regulatory and clinical studies/ plans Identifying proactive steps to remove or mitigate t the effect of payment barriers Ensuring that customers of the product can obtain maximum m reimbursement for the corresponding service Explore revenue generation options until full reimbursement is available (can take a few years) Sales & Distribution Customer Support Publication Plans Design Features Reimbursement Strategy Clinical Studies Competitive Analysis Barriers to Entry Pricing 13
14 Pre-Product Development Questions Timing - during product development, and in conjunction with clinical, regulatory and sales and marketing planning Product / clinical positioning Who will receive the product and who will be paying for it Who will actually do the procedure and in what settings What indications are most appropriate Target population Anticipated i t quality and/or efficiency i benefits How will the product meet FDA safe and effective and payers reasonable and necessary requirements? If reimbursement exists, will it cover providers expense Reimbursement strategy Available codes and coverage guidelines Need to modify existing codes or establish new codes Modifications to coverage guidelines Justifications to payment increase Address payers needs when planning studies What data represents evidencebased? What will determine the amount they pay? 14
15 Reimbursement Planning Development Similar to Another Product Confirm existing codes and coverage Expansion of Existing Technology Modify coverage, coding and payments to include the new product New / Innovative Technology Create new coverage, coding and payment structure for the product Evidence FDA approval with 1-2 studies Randomized same indications suffice for inclusions in existing coverage controlled study (2-4); cost effectiveness data; Registry data Timelines (post FDA approval) 6 12 months 1 2 years 2 5 years 15
16 National or Local Coverage Decisions NCD Risk assessment: all or nothing decision Positive decision leads to consistent t coverage nationwide Risk of non-coverage decision or restricted access to treatment Private payers often follow national decisions LCD No risk of all or nothing decision More flexibility in the process Standards of coverage vary Inconsistent LCD can lead to initiation of NCD 16
17 Validate your Reimbursement Early Manufacturers may erroneously conclude that initial coverage suggests their device has been approved by a payer, when in fact, the payer may initially reimburse because it didn t identify the product as new or with expanded indications. The product simply falls below the reimbursement radar. 17
18 Post Marketing Activities Cultivate support from KOL Seek position statements t t from specialty societies Educate employers and beneficiaries Improve the quality of evidence through additional studies (teaching and community settings) Document economic costs Family, employer Complications Models estimating impact on societal healthcare costs Develop payers education packets specific to disease and patient population treated Follow legislative initiatives 18
19 Pre-Reimbursement Marketing Continue to develop supportive evidence Develop installed base in segments not/less sensitive to third-party payers Early adaptors Provider networks not affected by third party payers (e.g. VA, Kaiser) Inpatients Workers compensation Self pay Participation in covered clinical research (Coverage with Evidence Development) Local payers Local opinion leaders Significant providers Use miscellaneous codes or modifiers Do not Induce utilization 19
20 Development Old Thinking Clinical Studies Regulatory Reimbursement Development New Thinking Clinical Studies Regulatory Reimbursement 20
21 Decision to purchase and decision to use are not the same 21
22 Thank You David Barone Boston MedTech Advisors, Inc Washington Street Dedham, MA Ph Fax Boston MedTech Advisors Europe, GmbH Am Pastorenwaldchen 2 D Dortmund, Germany Ph Fax
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