Breaking the Myths of Medical Device
Reimbursement | Global Strategy

One of the first questions we are typically asked when conducting our first meeting with a medical device company's CEO (typically also the entrepreneur) is: "Is there an existing reimbursement code for my device?"

However, reimbursement is comprised of three distinct aspects of the healthcare system:

(1) code, (2) coverage and (3) payment rate.

(depicted in the 'Reimbursement Pillars' diagram).

To many of our clients, a 'code' was initially seen as the only precondition for reimbursement (depicted by the blue symbol on the right). The perceived straight arrow connection between a code and reimbursement is depicted in the 'Myth' image on the right.

But, this is not the case. In order for a device to be reimbursed, the relevant decision-makers (typically health insurance companies or sickness funds, collectively referred to as 'payers') first decide whether the device is 'covered', and if so, how much they will pay for it (i.e., the applicable 'payment rate').

In many cases, the existence of a code is merely a technical convenience used to facilitate smooth communication between healthcare providers (i.e., physicians and hospitals) and payers. In fact, a device may be assigned with a code even though it is not covered, in which case, there is no reimbursement.

When medical device companies embark on the process of obtaining reimbursement for their new device, they typically think of a binary outcome: either their device obtains national reimbursement or it does not. This notion is depicted in the 'Myth' image on the right.

However, devices seldom move from 'no reimbursement' straight to 'national reimbursement'. More often, the company may first be reimbursed using grants that enable hospitals to spend money on certain technologies or for certain patients. Similarly, certain charity funds may allocate some of their budgets to finance specific medical devices or technologies for the benefit of their members. Although such funding resources may require more documentation and manual labor (calling the fund, sending letters, appealing decisions, etc.), it might be the only way for a company to establish its first commercial user base and gather the required evidence, before moving on to the next stage.

We are often asked by potential clients where they should first launch their product. In order to answer such a strategic question, one has to carefully analyze the different potential markets, map the reimbursement and regulatory landscape in each potential market, identify potential distributors and verify the support of the local medical community - all in relation to the specific product in question.

Many people are under the impression that each country employs different criteria when considering which products will be reimbursed. This assumption is depicted in the 'Myth' image on the right.

This myth may be correct in some esoteric cases, but in 99% of the cases, reimbursement decision-makers in all countries would consider the following two criteria:

• Will the use of the new medical device provide significant clinical benefits compared with the best utilized alternatives?
• Will the use of the new device provide economic benefits compared with the current medical pathway?

Therefore, if we are able to generate evidence demonstrating compliance with the above two criteria, your device will be reimbursed in all countries. The challenge is to develop the right clinical and economic claims and substantiate them with evidence.

Pro Tip: The Budget Impact Model

Substantiating "economic benefits" usually requires a formal Budget Impact Model (BIM). This tool shows a payer exactly how adopting your device will change their total spend over 1–3 years. Without a BIM, "economic benefit" is just a theory to a payer.

Many of our clients initially see the commercialization process of their product as a serial process, starting with R&D, followed by regulatory related activities and, just prior to product launch, ending with reimbursement related activities. This serial process is depicted in the 'Myth' image on the right

However, reimbursement activities may impact both R&D and regulatory aspects, as depicted in the 'Fact' image on the right and in the following real-life examples.

🛑 The Regulatory Success Trap

Many CEOs celebrate an FDA clearance only to realize they have no path to payment because their clinical trial endpoints didn't address payer requirements.

Don't let your clearance go to waste. Schedule a pre-clinical strategy review →

Strategic early planning can prevent the pitfalls described in the following cases. See how our reimbursement services integrate these considerations into your development roadmap.

We hope that the above examples have helped to clarify the reimbursement process. If you have any reimbursement related questions, or would like to speak with one of our consultants, just let us know.

Mediclever can assist by developing an appropriate reimbursement strategy, by guiding you through the development of the required evidence and by leveraging its contacts in North American and European healthcare markets in order to apply for, and obtain, reimbursement for your product.