Who should medtech companies be targeting when trying to sell their products? Is it the customer, the doctor the hospital or the payer? Who is your reimbursement target audience? The short answer is that it might be any one or more of these, depending on the situation.

Consider first the situation in hospitals. Almost always, the active support of the health professional who will use the product (for example, to monitor the patient’s condition or implant the product during a procedure) is essential to support its use. It is usually helpful if use of the product is also supported by professional guidelines. The health professional is the advocate for your product and is nearly always the key – and the first – customer. Without the health professional’s active support, market access is unlikely. This customer looks principally at benefits for the patient, although there may be a professional interest, such as ease of use, time taken to perform a procedure or ability to undertake a new procedure and offer a novel treatment.

Typically the health professional does not control a budget and increasingly must negotiate use of the product with the budget holder whose principal concern is the budget impact of using the product. The budget impact is net of any savings generated by the device—such as reducing the length of stay or procedure time—provided that these savings accrue to the budget holder. The budget holder will be interested in both patient benefits and cost. However, even if the additional benefits of using the new technology justify the additional cost, the budget impact must be sustainable. As in other aspects of life, not all worthwhile proposals are affordable.

The relevant budget may be held by the hospital or the body responsible for reimbursing the hospital for the care.

Diagnosis Related Group (DRG) systems are used in most countries in Europe as the basis for payment. In such a system, a hospital is typically reimbursed at a fixed rate for a hospital stay. In many cases, the reimbursement is ‘all in’, and will include your product. In these circumstances, if the proposed pathway using your product is significantly more expensive than the existing pathway, the hospital may not be able to meet the additional cost within the fixed reimbursement available. In a DRG system, the hospital budget holder can only look at costs within a single hospital stay: downstream costs and savings, even if accepted, are not relevant. Such benefits as avoided future hospital admissions, reduced costs of drugs after the patient has been discharged, fewer outpatient or office consultations, or reduced costs of care at home cannot be factored into the arithmetic with which the hospital budget holder works.

In some situations, devices used during a hospital stay are reimbursed as individual items. Examples are:

• in England: biological mesh, including synthetic equivalents, carotid stents, vagal nerve stimulators, and peripheral vascular stents;
• in France: cardiovascular devices, orthopaedic implants; and
• in Germany: spinal cord stimulators, aortic grafts.

Even where a device is reimbursed separately, payer approval may be necessary for example by the organisation holding the budget for reimbursing hospitals, such as a tax-funded Clinical Commissioning Group in England.

The payer’s longer-term vision

The payer, by contrast with the hospital, is responsible not only for current costs of treatment but also for future costs. Downstream costs, such as future hospital admissions, which are a charge on the payer’s budget will be factored into an assessment of affordability. In other words, the payer’s time horizon is typically much longer than a single hospital stay: in the case of osteoarthritis, diabetes, and heart disease, time horizons of years are normal. However, most organisations have annual budget cycles and must balance income and expenditure each year. This means that even if there is a strong evidence-based case for an acceptable return on investment over five or ten years, high initial costs (‘pay now to save later’) may make a proposal unaffordable.

There is a growing tendency for payers to use the framework of Health Technology Assessment (HTA) in order to assess whether a proposal for the use of a new technology is worthwhile. HTA systematically examines the safety, clinical efficacy and effectiveness, cost, cost-effectiveness, organisational implications, social consequences, legal and ethical considerations of the application of a device (or drug or procedure). It does not directly consider whether a technology should be reimbursed: this is a decision for the payer to take, on the basis of the findings of the HTA, but taking account of available funds and sometimes political considerations.

An illustration of this process is an application to be included on France’s list of reimbursable products (Liste des Produits et Prestations Remboursables, LPPR). A request for inclusion on the LPPR is evaluated by the national Committee for the Evaluation of Medical Devices and Health Technologies (Commission Nationale d’évaluation des Dispositifs Médicaux et des Technologies de Santé, CNEDiMTS). This organisation bases its decision on the evidence set out in the dossier submitted by the manufacturer. The device’s reimbursement tariff, which is additional to the hospital GHS (French DRG) tariff, is then negotiated with the healthcare products pricing committee (Comité Economique des Produits de Santé, CEPS).

To secure market access, you will need a strong costed clinical case for your reimbursement target audience. The focus will be the effect on the hospital if costs during the stay are not significantly raised. Otherwise, the case will address costs and benefits over a longer time frame.

The position with respect to the use of technologies outside hospital is similar in principle, but in the absence of a provider organisation such as a hospital, the process is generally two-step, involving the health professional and then the payer.

In summary, the health professional is always the gateway to the market: a hospital or payer will not force using a new technology on an unwilling clinician. Clinical acceptance is, however, rarely sufficient for adoption of your product. A budget holder will have to agree to pay for the product: the greater the cost increment compared with current practice, the higher the budget holder’s expectations are likely to be with respect to evidence of benefit. Your modelling of the incremental costs and benefits, within the relevant particulars of the reimbursement system in the market of interest, will suggest whether the hospital can realistically absorb the additional cost, or whether the hospital will need to approach the payer for an additional payment. The process is outlined diagrammatically in the figure below.

Figure 1