Medical Device Link.

US MARKET

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Understanding the device and its market

The United States (US) medical device market is a competitive environment with some significant potential market-entry barriers. The first factor to consider when seeking to enter the market is the care settings in which the device is to be used. These can include hospital inpatient and hospital outpatient departments, the doctor’s office, the clinical laboratory, long-term care institutions, home health care and ambulatory surgery centres.

Once each potential care setting has been identified, there needs to be a thorough understanding of the purchaser, the user and the influencer, and which entities are financially responsible for purchasing and using the device. These stakeholders include doctors, laboratories, hospitals, pharmacy benefit managers, group purchasing organisations (GPOs) and patients.

The next step is to assess whether the device will be a doctor preference technology or a commodity item that is manufactured and distributed at lower cost. Doctor preference items, which have high clinical impact and are innovative technologies, rely on doctor demand to increase adoption and utilisation.

Once these decisions have been made, a strategy should be developed to speed adoption of the device. This can include targeting clinical journals and making contact with health-care leaders and speciality societies. This type of visibility is essential for companies seeking to optimise their success in the US market.

Device approval

It is the responsibility of the US Food and Drug Administration (FDA) to protect public health by allowing only safe and effective products to enter the market, and to monitor products for continued safety after they are in use. It is important for medical device manufacturers to determine whether or not FDA clearance is needed for their product. They also need to evaluate whether their device is an innovative technology or an extension technology to thereby understand how FDA would classify the device. This assessment will require research on the classification of predicate devices and technologies. Based on the likely classification of the device, companies need a clear understanding of the associated approval process and knowledge of the materials and information required to complete the appropriate form(s). One useful source is the FDA web site (www.fda.gov); another is the report mentioned at the end of this article.

Device reimbursement

The reimbursement environment in the US is complex and companies seeking to gain access in this market will need indepth knowledge of the reimbursement processes and payment systems. The US government represents the single largest payer of health care through a variety of programmes including Medicare and Medicaid. Useful information on the Centers for Medicare and Medicaid Services can be found on the US Department of Health and Human Services’ web site (www.cms.hhs.gov). Private payers, which consist primarily of employer-based health insurance plans, often rely on the government for reimbursement guidance. Thus, it is essential that device companies monitor on a regular basis Medicare and large private payer decisions to stay informed of any coverage decisions or legislation that may affect medical device reimbursement.

In addition to monitoring public and private payers, it is also necessary to identify any predicate technologies that may provide insight into potential coverage, coding and payment for the device. Companies should also consider having programmes in place to facilitate reimbursement at the time of launch. This will affect how the new technology is received and adopted by all stakeholders from payers to patients. These programmes can include a reimbursement hotline, coding and reimbursement guidelines, help with prior authorisation, and cost-effectiveness and utility data for payers.

Device distribution

The final step is for companies to examine the distribution pathways of similar devices and technologies already on the US market and the best distribution approach for their products. Thought must be given to whether the technology will require development of a direct sales force or whether there is potential for the device to be contracted through a GPO. Some of the major GPOs include Premier Inc (www.premierinc.com), Novation (www.novationco.com) and MedAssets HCSA (www.medassets.com). The Health Industry Group Purchasing Association is a useful source of information in this area(www.higpa.org).

Power in good planning

Companies that focus their strategy and planning around the issues outlined above will not only secure effective market access, but also optimise their outcomes in the US medical device market.

The strategies outlined in this article are covered in depth in a report produced by Boston Healthcare Associates,“Commercialization of Medical Devices in the United States,” published in April 2007. To order a copy, contact the United Kingdom’s (UK) Department of Trade and Industry Publications, quoting the Unique Reference Number (URN) 07/987, tel. +44 845 015 0010,
e-mail: publications@dti.gsi.gov.uk, www.dti.gov.uk/publications

Opportunity for support

UK Trade and Investment (UKTI) is the UK Government’s lead organisation providing support for UK companies seeking to develop international business. It offers a range of services, backed-up by a network of trade advisors worldwide, who can provide market intelligence, advice on regulations, sales leads and financial and practical support.

UKTI is leading a mission of UK medical technology companies to Washington, District of Columbia, USA, on 1–3 October 2007, to coincide with the international meeting of Advamed, an industry association for medical technology companies in the US. Delegates will have the opportunity to meet with representatives from FDA, Centers for Medicare and Medicaid Services and other industry thought leaders. For more details, contact Anne Avidon.

Anne Avidon is US Lead Officer for Health Care and Medical Devices, UK Trade and Investment, One Memorial Drive, Cambridge, Massachusetts 02138, USA, tel. +1 617 245 4572, e-mail: anne.avidon@fco.gov.uk