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Chapter 7

BIO375H5 Chapter 7: Chapter 7


Department
Biology
Course Code
BIO375H5
Professor
Abraham Yang
Chapter
7

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Reimbursement Planning Activity
Reimbursement planning activity begin in the early stages of product development
o When market assessments are being made
Most smaller companies do not explicitly consider reimbursement planning because it is a complex area of analysis
o Instead, they implicitly look at it through
Market research
Potential pricing and revenue forecast
Competitive assessments of the market
Most start-up device companies focus on approval of the device. They don't have the resources to engage a full-time reimbursement
professional, or spend the $500,000+ on launching a complete reimbursement program that addresses all three pillars of reimbursement
o What are the 3 pillars of reimbursement?
Coverage
Coding
Payment
There is a value and need for active and explicit reimbursement planning, since healthcare costs are increasing and pricing pressures affect
reimbursement
The smaller companies that do not have an experienced reimbursement personnel in the company are advised to consult reimbursement and
regulatory experts at an early stage to assess the specific steps of reimbursement activities to achieve maximum value of their product
Start-up device companies should focus on only one specific issue among the three coding
The first review of reimbursement issues arises when a patient population is identified as being the most appropriate target for the new product
Based on the population demographics, identify the payer mix and start planning the reimbursement strategies to target a specific payer
During the product development phase of clinical trials, collect data related to the FDA approval and also cost and economic data related to
reimbursement
The reimbursement data should satisfy the value position that will be evaluated by the payers + it should be able to meet the technology
evaluation criteria
NOTE: Most devices and diagnostics can be described by existing codes, are covered, have appropriate payment, and will not go through a
detailed and formal technology evaluation by the payer
Reimbursement planning can be valuable to the marketing function of a company
Market research is used during product development to assess market perception of pricing, acceptance, awareness of product, and the
possibility of reimbursement or coverage by payers
Marketing efforts in the early product development stages are focused around awareness (aiming to influence the coverage decisions by
increasing awareness of the product technology or novelty and its value proposition
Just as there are meetings with the FDA during product development, companies can meet payers in informal and formal meetings to convey
information and data on clinical usage of their product. They can also get guidance on development parameters or product characteristics
Economic usage data requested by payers (if collected during clinical trials) can increase the development cost. BUT, these costs can be
recouped in the faster rise in sales due to quick acceptance of coverage, coding, and appropriate pricing
Economic and clinical outcome data could also help in achieving a suitable pricing level for the product
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