Well done! You have received approval from the FDA to market your device in the United States and/or internationally; this in itself is quite an achievement! So now, what next? Getting FDA clearance does not necessarily guarantee a revenue stream, acceptance within the medical community, or strong sales. If potential customers can’t or won’t pay for your product out-of-pocket then reimbursement and payment become critical elements of your business model and key to achieving revenue streams that sustain your team and allow it to grow.
Reimbursement is a broad term describing how commercial insurance plans or the government pay for the items or services provided by medical professionals or purchased by the insured related to health conditions. Innovators may naively spend precious capital on designing, developing, and testing features for which payers and healthcare providers will not pay. Reimbursement fits into the product development cycle in several areas, first during a Needs Analysis, (identifying who your customers, end users and stakeholders are, what solutions they really want, why they would acquire the product, and who will pay for it), and then within the context of your regulatory and product evaluation strategies. Skipping the Needs Analysis and waiting to consider reimbursement until after FDA clearance significantly elevates your project’s risk.
Minimize this risk by including payers in your market research during your Needs Analysis. Payers include relevant health care providers, insurance companies, health funds, and network experts who are local specialists in reimbursement and health economics. Their early input will inform your understanding of the current reimbursement landscape for a technology that ‘looks like and feels like’ yours, what payers will and won’t pay for, and will provide an early opportunity for your team to ‘pivot’, i.e. make changes to the product before development begins. As the development process continues, the reimbursement strategy is executed alongside regulatory and product evaluation strategies.
Here are some quick Do’s and Don’ts of the reimbursement process and planning:
- Do – start early! Don’t – delay developing your reimbursement strategy until just before your product launch.
Remember your reimbursement strategy could affect your product design and specifications.
- Do – consider all reimbursement factors when you select the most appropriate first application for your product; Don’t – choose your product application only on the basis of R&D, regulatory criteria, or marketing strategy.
If your reimbursement strategy does not align with the intended-use claim approved by the FDA for your product, you will need to modify your claims to the FDA. Do – leverage your clinical testing strategy to gather reimbursement related data; Don’t – focus only on the regulatory aspects.
Think about reimbursement strategy prior to initiating clinical trials. If trials will be needed to obtain a reimbursement code, they can be integrated into trials planned for your regulatory strategy. By planning ahead you can maximize clinical activities while maintaining high ethical and regulatory standards.
- Do – Develop your regulatory and reimbursement strategies in parallel; Don’t – think of them as a serial process.
Remember, a short regulatory pathway does not necessarily result in an optimal reimbursement.
A business model that includes a reimbursement strategy of, “We’ll get a code for it” is a red flag. Obtaining a new reimbursement mechanism (code, coverage, and payment) can take many years and even then, payment is uncertain. The importance of incorporating a reimbursement strategy early in product development cannot be understated. Incorporating reimbursement early in the product development process is necessary to ensure that a great technology is not just available for use, but is actually used and turned into a value for patients who can most benefit from it. These Do’s and Don’ts can help you avoid some common mistakes, reduce costs, and reach market sooner!
Shailly Jariwala, PhD, is a TREAT Entrepreneur Fellow. Prior to TREAT, she received a doctorate in biomedical engineering at Syracuse University and was a postdoctoral fellow at Pennsylvania State University.