design for reimbursement in medical device development
TRANSCRIPT
Amber Hol Horeman BScMaster Science and Business Management Utrecht University
09-07-2015
DESIGN FOR REIMBURSEMENT
Overcoming the second valley of death in medical device development
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Content
1. Introduction
2. Hypothesis
3. Aim and objectives
4. Method
5. Results
6. Conclusions
7. Discussion
3
Short preview
What I have done Extensive research to medical device development and reimbursement.
What I have foundThe second valley of death poses a problem that can be solved by shifting from linear to parallel and cyclic development.
What I have madeA design for reimbursement framework to overcome the second valley of death.
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1. Introduction medical devices
Classification:
Based on risk
500,000 technologies
Majority in Class I
(Medtech, 2014)
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Medical device market EU
(Medtech, 2014)
6
Medical device development EU
(Medtech, 2014)
According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail.
Many patents filed, however implementation stays behind:
“Of the 10 medical device companies that come for reimbursement for their medical device at DBC Onderhoud, 9 medical devices do not make it.” - Senior advisor DBC Onderhoud
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Partial; 3%Complete; 13%
Not applicable; 13%
No ; 71%
Source: De wereld van de Medtech-starter by HollandHealthTech. 6–20 (2013) and (M.C.A. van Wijk, 2014).
Information gap
Expectations ≠ reality
100% expected reimbursement13% obtained reimbursement
Information gap between entrepreneur and reimbursement decision maker
Holland Health Tech survey
60 SMEs in medical devices
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2. Hypothesis
Focus on regulatory approval as the end goal by entrepreneurs creates a second valley of death in medical device development
Fundamental research
Product developmen
t
Regulatory approval
Clinical acceptanc
e
Reimbursement
Marketing
(M.C.A. van Wijk, 2014).
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Design for reimbursement Shifting development from linear process to parallel process
Frontloading important steps to estimate the chances of success or failure
(M.C.A. van Wijk, 2014).
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3. Aim and objectives
Aim: to provide insights and scientific justification necessary to optimise future business plans for the commercialisation of medical devices on the aspect of reimbursement.
Objectives:
- Review of current literature on reimbursement for medical devices;- Consultation of experts in the field- Create an encompassing overview of ‘design for reimbursement’ in medical device
development
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4. Methods literature
- Desk research- Literature review of:
- Peer-reviewed journals- Research reports- Reports of governmental institutions - Reports of industry associations - Company white papers- Websites institutions - Opinion articles - Presentations
- Case studies - Elana B.V.- Nightbalance B.V.
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4. Methods interviews
- Expert interviews- Semi-structured interviews - Interviews of one hour - One day of preparation per interview
Type of organisation # respondents
Technology Transfer Offices (TTO) 4Medical device developers 6Venture capitalists 3Healthcare insurance companies 4Other (university/government/bank/consultancy) 6 Total 23
5. Results
Research
Regulatory approval Implementation
First valley
Second valley
Design for reimbursement
23/23 recognized the the second valley of death.
15/23 problem for MDD
8/23 ‘valley of fools’
How to overcome it
“It is impossible to estimate the entire route to commercial success. However about 80% can be prepared and 20% can be filled in further along the road” – Experienced venture capitalist
Estimating the 80% with design for reimbursement framework
No longer linear, but parallel
Unmet need validation Business model/case
Product development
Regulatory approval
Clinical acceptance
Reimbursement and implementation
Value proposition both medical and societal
Potential reasons for failure
Identify previous attemptsBusiness modelIP protection
Business cases for stakeholders
Ensure FTO
Definition bruto margin
Identify possible embodiments Product design Prototype
development
Product pipelineProof of concept
Product engineering
Documentation of experiments according to standards
Benefit/risk ratio
Select country of application (CE/FDA)
Identify regulatory route and (clinical) data requirements
CE: Clinical safety and performance
FDA: Clinical safety and efficacy
Product pullMap stakeholdersIdentify and prioritise indications Select and involve KOLs Identify clinical data requirements
Involve patient organisations
Clinical trial design
Commitment of KOLs
Start clinical trials
Short term safetyInvolve medical
specialists association
Publications EfficacyEndorsement
by KOLs
Long term safety
Adaptation of guidelines/protocols
Possible routes of reimbursement Type of reimbursement (DRG,
global budget, per case, full activity)
Statistics-based cost- effectiveness
Identify reimbursement requirements
Cost-effectiveness analysis
Organise meetings to align stakeholder
Distribution
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4. Results reimbursement Type of reimbursement (DRG or medical device regulation)
Possible routes of reimbursement
Statistics-based cost- effectiveness
Identify strategic partners
Cost-effectiveness analysis
Organise meetings to align stakeholder
Distribution
Type of reimbursement (DRG or medical device regulation)
“For medical devices it is important to know if the device falls under the regulation medical devices or under specialistic medical care. Medical devices directly linked to a patient are usually reimbursed by a healthcare insurance company. The medical devices that a medical specialist uses for a treatment, such as surgery equipment, usually fall under a DRG”
- Coordinator Zorg Instituut Nederland
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Reimbursement in Europe Germany (€27 billion)
DRG system: German Diagnosis Related Group (G-DRG)
Conditional reimbursement: NUB (New Diagnostic and Treatment Methods)
Application: Each hospital must request a NUB itself
France (€16 billion)
DRG system: Groupe Homogène de Séjour (GHS)
Conditional reimbursement: ‘add-on list’, called the liste en sus.
Application: Manufacturer files requests valid for all hospitals
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Reimbursement in NL
The Netherlands (€4 billion)
DRG system: Diagnose Behandel Combinatie
Conditional reimbursement: conditional admission in basic insurance (4 -7 years)
Application: manufacturer applies himself by writing research proposal to investigate cost-effectiveness
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Reimbursement cases
ELANA B.V.
Brain bypass technique
DRG reimbursement
Nightbalance B.V.
Sleep position trainer
Medical device reimbursement
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4. Results reimbursement Type of reimbursement (DRG or medical device regulation)
Possible routes of reimbursement
Statistics-based cost- effectiveness
Identify strategic partners
Cost-effectiveness analysis
Organise meetings to align stakeholder
Distribution
Decides
Dutch curative healthcare system
€Provides care Pays premium
Purchases care
€€
€
- Consumer route- Care provider route- Insurance company route - Government route
SME
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4. Results Type of reimbursement (DRG or
medical device regulation)Possible routes of reimbursement
Statistics-based cost- effectiveness
Identify reimbursement requirements
Cost-effectiveness analysis
Organise meetings to align stakeholder
Distribution
Statistics-based cost- effectiveness
Identify reimbursement requirements
Cost-effectiveness analysis “PROMS needed for cost-efficacy study. Other elements of cost-
effectiveness are QALY, CQI (user experience index) and ZIZO indicators.”
“Make statistics-based calculations on cost--effectiveness to estimate the potential impact of the innovation.”
“Investigate the state of science and practice (comparables on the market) and find out the clinical
evidence requirements for reimbursement.”
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Results Type of reimbursement (DRG or
medical device regulation)Possible routes of reimbursement
Statistics-based cost- effectiveness
Identify reimbursement requirements
Cost-effectiveness analysis
Organise meetings to align stakeholder
Distribution
Organise meetings to align stakeholders
Distribution
“It is important to map the stakeholders and to contact patient organisations and KOLs in an early stage. Remember
it takes a lot of time to align all stakeholders.”
“Distribution it not something you should do yourself. You cannot afford this financially as a starter. Knowing your
own boundaries as an entrepreneur shows your strength.”
Unmet need validation Business model/case
Product development
Regulatory approval
Clinical acceptance
Reimbursement and implementation
Value proposition both medical and societal
Potential reasons for failure
Identify previous attemptsBusiness modelIP protection
Business cases for stakeholders
Ensure FTO
Definition bruto margin
Identify possible embodiments Product design Prototype
development
Product pipelineProof of concept
Product engineering
Documentation of experiments according to standards
Benefit/risk ratio
Select country of application (CE/FDA)
Identify regulatory route and (clinical) data requirements
CE: Clinical safety and performance
FDA: Clinical safety and efficacy
Product pullMap stakeholdersIdentify and prioritise indications Select and involve KOLs Identify clinical data requirements
Involve patient organisations
Clinical trial design
Commitment of KOLs
Start clinical trials
Short term safetyInvolve medical
specialists association
Publications EfficacyEndorsement
by KOLs
Long term safety
Adaptation of guidelines/protocols
Possible routes of reimbursement Type of reimbursement (DRG,
global budget, per case, full activity)
Statistics-based cost- effectiveness
Identify reimbursement requirements
Cost-effectiveness analysis
Organise meetings to align stakeholder
Distribution
Unmet need validation Business model/case
Product development
Regulatory approval
Clinical acceptance
Reimbursement and implementation
Value proposition both medical and societal
Potential reasons for failure
Identify previous attemptsBusiness modelIP protection
Business cases for stakeholders
Ensure FTO
Definition bruto margin
Identify possible embodiments Product design Prototype
development
Product pipelineProof of concept
Product engineering
Documentation of experiments according to standards
Benefit/risk ratio
Select country of application (CE/FDA)
Identify regulatory route and (clinical) data requirements
CE: Clinical safety and performance
FDA: Clinical safety and efficacy
Product pullMap stakeholdersIdentify and prioritise indications Select and involve KOLs Identify clinical data requirements
Involve patient organisations
Clinical trial design
Commitment of KOLs
Start clinical trials
Short term safetyInvolve medical
specialists association
Publications EfficacyEndorsement
by KOLs
Long term safety
Adaptation of guidelines/protocols
Possible routes of reimbursement Type of reimbursement (DRG,
global budget, per case, full activity)
Statistics-based cost- effectiveness
Identify reimbursement requirements
Cost-effectiveness analysis
Organise meetings to align stakeholder
Distribution
Product pull
Unmet need validation Business model/case
Product development
Regulatory approval
Clinical acceptance
Reimbursement and implementation
Value proposition both medical and societal
Potential reasons for failure
Identify previous attemptsBusiness modelIP protection
Business cases for stakeholders
Ensure FTO
Definition bruto margin
Identify possible embodiments Product design Prototype
development
Product pipelineProof of concept
Product engineering
Documentation of experiments according to standards
Benefit/risk ratio
Select country of application (CE/FDA)
Identify regulatory route and (clinical) data requirements
CE: Clinical safety and performance
FDA: Clinical safety and efficacy
Product pullMap stakeholdersIdentify and prioritise indications Select and involve KOLs Identify clinical data requirements
Involve patient organisations
Clinical trial design
Commitment of KOLs
Start clinical trials
Short term safetyInvolve medical
specialists association
Publications EfficacyEndorsement
by KOLs
Long term safety
Adaptation of guidelines/protocols
Possible routes of reimbursement Type of reimbursement (DRG,
global budget, per case, full activity)
Statistics-based cost- effectiveness
Identify reimbursement requirements
Cost-effectiveness analysis
Organise meetings to align stakeholder
Distribution
“An important trend to address is the shift from product push by manufacturers to product pull by patient
organisations and medical specialist organisations.”
Product pull
Unmet need validation Business model/case
Product development
Regulatory approval
Clinical acceptance
Reimbursement and implementation
Value proposition both medical and societal
Potential reasons for failure
Identify previous attemptsBusiness modelIP protection
Business cases for stakeholders
Ensure FTO
Definition bruto margin
Identify possible embodiments Product design Prototype
development
Product pipelineProof of concept
Product engineering
Documentation of experiments according to standards
Benefit/risk ratio
Select country of application (CE/FDA)
Identify regulatory route and (clinical) data requirements
CE: Clinical safety and performance
FDA: Clinical safety and efficacy
Product pullMap stakeholdersIdentify and prioritise indications Select and involve KOLs Identify clinical data requirements
Involve patient organisations
Clinical trial design
Commitment of KOLs
Start clinical trials
Short term safetyInvolve medical
specialists association
Publications EfficacyEndorsement
by KOLs
Long term safety
Adaptation of guidelines/protocols
Possible routes of reimbursement Type of reimbursement (DRG,
global budget, per case, full activity)
Statistics-based cost- effectiveness
Identify reimbursement requirements
Cost-effectiveness analysis
Organise meetings to align stakeholder
Distribution
Involve the right stakeholders
Unmet need validation Business model/case
Product development
Regulatory approval
Clinical acceptance
Reimbursement and implementation
Value proposition both medical and societal
Potential reasons for failure
Identify previous attemptsBusiness modelIP protection
Business cases for stakeholders
Ensure FTO
Definition bruto margin
Identify possible embodiments Product design Prototype
development
Product pipelineProof of concept
Product engineering
Documentation of experiments according to standards
Benefit/risk ratio
Select country of application (CE/FDA)
Identify regulatory route and (clinical) data requirements
CE: Clinical safety and performance
FDA: Clinical safety and efficacy
Product pullMap stakeholdersIdentify and prioritise indications Select and involve KOLs Identify clinical data requirements
Involve patient organisations
Clinical trial design
Commitment of KOLs
Start clinical trials
Short term safetyInvolve medical
specialists association
Publications EfficacyEndorsement
by KOLs
Long term safety
Adaptation of guidelines/protocols
Possible routes of reimbursement Type of reimbursement (DRG,
global budget, per case, full activity)
Statistics-based cost- effectiveness
Identify reimbursement requirements
Cost-effectiveness analysis
Organise meetings to align stakeholder
Distribution
“Continuous contact with Key Opinion Leaders (KOLs) is essential to convince the market. Select them carefully, ask for their commitment and be
aware of any conflicting interests they may have.”
Involve the right stakeholders
Unmet need validation Business model/case
Product development
Regulatory approval
Clinical acceptance
Reimbursement and implementation
Value proposition both medical and societal
Potential reasons for failure
Identify previous attemptsBusiness modelIP protection
Business cases for stakeholders
Ensure FTO
Definition bruto margin
Identify possible embodiments Product design Prototype
development
Product pipelineProof of concept
Product engineering
Documentation of experiments according to standards
Benefit/risk ratio
Select country of application (CE/FDA)
Identify regulatory route and (clinical) data requirements
CE: Clinical safety and performance
FDA: Clinical safety and efficacy
Product pullMap stakeholdersIdentify and prioritise indications Select and involve KOLs Identify clinical data requirements
Involve patient organisations
Clinical trial design
Commitment of KOLs
Start clinical trials
Short term safetyInvolve medical
specialists association
Publications EfficacyEndorsement
by KOLs
Long term safety
Adaptation of guidelines/protocols
Possible routes of reimbursement Type of reimbursement (DRG,
global budget, per case, full activity)
Statistics-based cost- effectiveness
Identify reimbursement requirements
Cost-effectiveness analysis
Organise meetings to align stakeholder
DistributionApproach insurance
companies
Unmet need validation Business model/case
Product development
Regulatory approval
Clinical acceptance
Reimbursement and implementation
Value proposition both medical and societal
Potential reasons for failure
Identify previous attemptsBusiness modelIP protection
Business cases for stakeholders
Ensure FTO
Definition bruto margin
Identify possible embodiments Product design Prototype
development
Product pipelineProof of concept
Product engineering
Documentation of experiments according to standards
Benefit/risk ratio
Select country of application (CE/FDA)
Identify regulatory route and (clinical) data requirements
CE: Clinical safety and performance
FDA: Clinical safety and efficacy
Product pullMap stakeholdersIdentify and prioritise indications Select and involve KOLs Identify clinical data requirements
Involve patient organisations
Clinical trial design
Commitment of KOLs
Start clinical trials
Short term safetyInvolve medical
specialists association
Publications EfficacyEndorsement
by KOLs
Long term safety
Adaptation of guidelines/protocols
Possible routes of reimbursement Type of reimbursement (DRG,
global budget, per case, full activity)
Statistics-based cost- effectiveness
Identify reimbursement requirements
Cost-effectiveness analysis
Organise meetings to align stakeholder
Distribution
“Try to get into contact with healthcare insurance companies together with clinicians that have
adopted the innovation. Contact points in healthcare insurance companies are participation funds linked to healthcare insurance companies or care purchasers within the insurance companies.”
Approach insurance companies
Unmet need validation Business model/case
Product development
Regulatory approval
Clinical acceptance
Reimbursement and implementation
Value proposition both medical and societal
Potential reasons for failure
Identify previous attemptsBusiness modelIP protection
Business cases for stakeholders
Ensure FTO
Definition bruto margin
Identify possible embodiments Product design Prototype
development
Product pipelineProof of concept
Product engineering
Documentation of experiments according to standards
Benefit/risk ratio
Select country of application (CE/FDA)
Identify regulatory route and (clinical) data requirements
CE: Clinical safety and performance
FDA: Clinical safety and efficacy
Product pullMap stakeholdersIdentify and prioritise indications Select and involve KOLs Identify clinical data requirements
Involve patient organisations
Clinical trial design
Commitment of KOLs
Start clinical trials
Short term safetyInvolve medical
specialists association
Publications EfficacyEndorsement
by KOLs
Long term safety
Adaptation of guidelines/protocols
Possible routes of reimbursement Type of reimbursement (DRG,
global budget, per case, full activity)
Statistics-based cost- effectiveness
Identify reimbursement requirements
Cost-effectiveness analysis
Organise meetings to align stakeholder
Distribution
Conclusion cyclic process
Unmet need validation
Business model/case
Product development
Regulatory approval
Clinical acceptance
Reimbursement and
implementation
“It is impossible to estimate the entire route to commercial success.”
“However about 80% can be prepared and 20% can be filled in further along the road”
Estimating the remaining 20% with cyclic design for reimbursement framework
Discussion
Selection of KOLs
Generalisation of medical devices
Future research competence-based risk assessment
Tornado model to indicate risks
Design for reimbursement
framework
Adequate allocation of resources
Take home messages
1. The second valley of death poses a problem to starting entrepreneurs in medical device development
2. To overcome the second valley of death clinical acceptance and reimbursement strategies should be incorporated from day one
3. The main pitfalls can be prevented by continuously checking the design for reimbursement framework as the shift from linear to parallel and cyclic development is a crucial step towards successful implementation
4. Case-by-case approach important in medical device development
Acknowledgement
THANK YOU
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Medical device expenditures EU
Breakdown of total healthcare expenditures in Europe
(Medtech, 2014)