We recently spoke to Sajini about a concept called the “valley of death” that we’ve been witnessing and hearing a lot about lately. Roughly defined, the “valley of death” is the place medtech companies can find themselves when they’ve received U.S. FDA clearance or approval but are struggling to secure reimbursement. Here, she talks to us about how companies can either avoid this fate, or how they can halt the descent into or get out of the “valley of death” if needed.
In your experience, why do medtech companies find themselves in the so-called “valley of death”?
The first is FDA strategy. Their product classification may not be favorable for reimbursement, especially when compared to competitors.
The second is not considering reimbursement strategies as part of the early stage planning. We find that companies will often focus on the regulatory strategy for their clearance or approval, they will hire a sales force and select their markets and give their product a catchy name, but they may not consider the reimbursement implications of their regulatory category or their catchy name. They do not include sales force education to sell safely, and they may not identify the key payor markets for their product or the clinical outcomes requirements by those payors. This can result in many surprises after product launch. For instance, accounts may ask several questions about the coding, coverage and payment. That could put the sales force at risk. In addition, market adoption may be delayed without the short-term and long-term coding, coverage and payment strategies that a company like ours could provide.
Another reason is a lack of key stakeholder support, such as support from professional societies. And that is very important for coding and coverage initiatives.
Finally, companies could simply lack the clinical data. Many of the clients that we have assisted have lacked well-designed clinical studies that are published in reputable journals. For those reasons, the payors may determine their therapies are investigational.
Are the companies that lack enough clinical data primarily those seeing the 510(k) pathway, since the PMA pathway has more rigorous requirements?
Yes, we see it more typically with those seeking 510(k) clearance, but the PMA pathway is also important to look at. We have worked with companies to help them include payor-desired outcomes in their FDA studies, which they might not have done otherwise. The initial outcomes might be suitable for the FDA decision but not necessarily for the payor coverage, and as a result, after product launch, companies have to conduct additional studies. It is critical that reimbursement considerations be integrated into every stage of product development.
So how do you get companies out of the valley of death? What is your counsel to them?
For the FDA strategies, we have a strategic partnership for this reason with an FDA law firm in Maryland called FDA Imports. We work together to assist our clients to adopt the best and most appropriate FDA strategies. Of course, if they come to us after the fact, we can also counsel them on reconsidering their FDA strategies so they can go back and get a better and more appropriate category similar to their competitors . Often clients will try to adopt the cheapest way to enter the market, but that may not be the best way to get reimbursement.
For reimbursement strategies, we encourage our clients to begin reimbursement planning at product conception, so the products that are developed are the ones that have a clinical need and are reimbursed by payors, or have the potential to be reimbursed by payors. We do this by planning early on with our panel of current medical directors that has worked with us for 20 years. The GIRS payer panel provides counsel on the clinical data and cost data needed to support coverage and payment after launch. We also encourage clients to operate medical technology hotlines to outsource the risk of answering complex questions and to assist accounts to overcome denials of coverage, which is common early on in a product launch. We also encourage and support them to educate their sales force on a regular basis and to set up a compliance program.
With regards to clinical data, we help clients develop payor dossiers that organize their studies according to the types of studies that are important to each payor. That way, when the information is in front of the insurance companies, it is in the order of importance that they are looking for and published in the right journals. Even early on, our panel of medical directors will review the product, clinical and cost outcomes, and study designs with us – blinded – and give their advice on the payer- desired outcomes for coverage.
To develop stakeholder support, we assist with the education of the professional societies, and we work with the payor and the professional societies to meet the payor’s needs. So, for example, there was one case of coverage where Mutual of Omaha actually called on a plastic surgery society and asked what the membership’s experience was with the human tissue we were supporting. We had educated the professional society before Mutual of Omaha reached out to them by providing them the clinical data on the technology, not knowing that Mutual of Omaha would call them. But Mutual of Omaha did call, and the society sent a survey out to its membership and got the responses back and gave it to the payor. Happily, we got coverage because of those efforts!
Have the healthcare policy changes that have happened over the last several years impacted reimbursement of medical technologies in the U.S. ? Has it become harder? Is it the same?
As the years pass by, the bucket for reimbursement gets smaller, and the threshold for data requirements gets higher, never lower. For instance, if you look at the Medicare Hospital Outpatient Prospective Payment System (OPPS) every year the threshold for pass-through increases – it never lowers.
When we do our landscape assessments, we look five years into the future. And in the U.S., we do see value-based reimbursement and greater scrutiny and requests for economic data. Companies need to be on their toes and consider reimbursement at every stage of product development, right from the conception, when they are thinking about regulatory strategies, the marketing and sales, and clinical strategies, and after product launch. They need to have the reimbursement track along with all the others, and then they need to integrate them together for market success.
What are the best practices for ensuring positive reimbursement?
I think that the regulatory, clinical, marketing and sales initiatives need to be implemented and integrated with reimbursement initiatives at every stage of product development. In addition, a sound and effective compliance program needs to support the company’s marketing, sales and operations. Based on our experience, those are the main considerations for market uptake of new medical technologies in the U.S.