Return to site

Reimbursement for new medical technologies

Part 1

In response to my previous posting about health economics, Ivor Campbell commented that sometimes even great technologies with an apparently sound economic case for adoption can struggle to find traction.  He mentioned conservatism, incentives, penalties and reimbursement all as factors that influence whether a new device will be welcomed enthusiastically onto the market.

Considering reimbursement, and specifically for part one I’ll consider reimbursement in Europe. 

Someone from a top-five pharma company once told me that for a new drug (or device) to get onto the market it used to have to be safe and effective.  These are the basic regulatory criteria.  Then as the medtech/pharma space became more crowded the criteria expanded to become: safe, effective and differentiated.  So you have something that works, is safe and is tangibly better than the competition.  But for anybody to use it somebody has to pay, so the criteria became: safe, effective, differentiated and reimbursable.  Even this is probably simplistic but as a bare minimum it’s a reasonable rule of thumb.

Every single device, disposable, drug or resource used in the provision of health and social care has to be paid for by somebody; and as resources become stretched ever tighter so the criteria for paying become more stringent.

Here in the UK, reimbursement within the NHS is complex and it helps to have a basic understanding of the processes, amounts and tariffs when evaluating a business case for adoption.  Individuals within the NHS are usually very helpful but you do need to get to the right person and ask the right questions, and that can be hard!  They do however also publish very good information if you know where to look.  For example here is a “Simple Guide to Payment by Results” for the NHS in England and there is a wealth of information on tariffs, reimbursement, supplier management and financial structure on the NHS Business Service and Government NHS Consultation webpage

Reimbursement across Europe varies from country to country.  Most use a Diagnosis Related Groups (DRG) system to set the price for any particular medical procedure including the various devices, drugs and disposables used for that procedure.  The NHS tariffs mentioned above are a good example of this.

Most also use a system of Health Technology Assessments (HTA) to evaluate new technologies or products and to decide which will be formally approved for use in a procedure and therefore potentially reimbursable.  HTAs are designed to ensure that any approved device offers the best combination of outcome and value so the payers (in Europe a combination of state supported schemes and both compulsory and voluntary private health insurance) are assured that any device that has passed an HTA is clinically and economically effective.

There can be considerable variation in the approval process for reimbursement and in the type and volume of data required in different European countries; France and Germany for instance are quite different.  It’s also an ever-changing landscape as healthcare systems evolve and respond to their individual countries’ current health and social care priorities and policies.

The take home message for selling medical devices in Europe is that there can be a bit of a misapprehension about the meaning of a CE marked device.  Having a CE mark means that you can sell your device in Europe, it absolutely does not mean that anyone will buy it!  To get European traction you have to understand the DRG and HTA systems and the payers in each of your target markets. Set up the relevant trials to gather the necessary clinical and economic data and use your extended networks, SDI and Global Scots to lobby as many people as you can think of to get your device approved for reimbursement.

There is huge potential value in an integrated effort between the healthcare providers, in the UK that is the NHS, to clearly articulate unmet need within the context of Diagnosis Related Groups, the academic base to innovate solutions to meet the need and the medtech industry to commercialise and scale the solutions.  There also has to be funding and infrastructure for accelerated HTAs to rapidly validate the clinical and economic fitness for purpose of the various solutions and push them into the healthcare system quickly.  In terms of achieving this, I can only speak for what’s happening here in Scotland where we are beginning to understand the value of collaboration between the industry, the academic base and the NHS to accelerate healthcare innovation.  We are making progress towards an integrated, resourced approach but how to deliver it is complicated.  I’m confident we’ll get there but it won’t happen overnight.

To help companies understand and address the various European markets, Scottish Enterprise, Scottish Development International and Enterprise Europe Network run some excellent market boot-camps which often include sessions on reimbursement and the chance to network with some real experts from the countries of interest.  I have been to a couple and I can’t recommend them highly enough; Scottish Enterprise is running a Scandinavia Exporter Boot Camp on 1st March in Edinburgh which I’m sure will be to the usual high standard.

Just to finish, and with my Crucible hat on for a minute, medical device innovators need to consider reimbursement as a design input when specifying a new medical device.  Consider your target markets and learn as much as you can about the criteria for approval to reimburse in each of the countries.  If there is anything at all that you can do at the earliest stage to make your device ultimately more attractive to as many payers as possible then design it in.  It’s relatively easy to make a device sellable, success depends on making it buyable.

In part two I will talk a bit about my understanding of reimbursement in the US, the world’s biggest medtech market.

Peter Estibeiro, CEO, Crucible Medtech Ltd.

All Posts

Almost done…

We just sent you an email. Please click the link in the email to confirm your subscription!