Practical Advice for Medical Devices Firms | Page 7
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Know the marketplace
Is the device a quantum leap forward in technology? Examine existing
literature on competing forms of treatment and determine whether the
new device has specific advantages. Understand the strength of existing
or potential competitors and the potential for competitors to rapidly
develop a competing or identical product. A new medical device must
provide added patient benefit, and there must be enthusiasm for the
product from physicians, patients, and hospitals. Particular attention
must be paid to the entities th at will ultimately purchase the device,
often hospitals or physician offices. In addition, it must be determined
whether or not there will be a professional (generally physician) fee
associated with use or application of the product. The potential for
marketing directly to patients also must be considered.
Understand the reimbursement environment
A poor reimbursement strategy can severely limit the profitability of a
device. Many manufacturers gear their efforts at obtaining FDA approval.
However, this does not guarantee financial compensation for physicians
or hospitals. The FDA is a primarily concerned with safety, whereas the
Center for Medicare and Medicaid Services is interested in improving
health outcomes relative to competing technologies. A new device
manufacturer must know what the competitive and reimbursement
environment is for their product and understand what the payment rates
are for other various therapeutic options used to treat the same disease.
Revenue generation for a new medical product is based on its ability to
provide new diagnostic or therapeutic clinical benefit or to replace
existing technology at a lower price. With increasing financial constraints,
government and private medical payers such as the Center for Medicare
and Medicaid Services, the Agency for Healthcare Research and Quality,
the Medicare Coverage Advisory Commission, and the Blue Cross/Blue
Shield Technology Evaluation Center are increasingly demanding value
before authorizing payment.
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