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Medical Device Market Access: Optimising Medical Device and Diagnostic Launches In Developed Markets


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Slides from the IHS webcast: Optimising Medical Device & Diagnostic Launches in Developed Markets on 7th February 2012

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Medical Device Market Access: Optimising Medical Device and Diagnostic Launches In Developed Markets

  1. 1. Optimising Medical Device & Diagnostic Launches in Developed Markets IHS Webcast, 7th February 2012 Speakers: Gustav Ando Cameron Lockwood Gaelle MarinoniCopyright © 2012 IHS. All Rights Reserved.
  2. 2. The content of this webcast is based on the findings of our latest study: Optimising Medical Device & Diagnostic Launches in Developed Markets Download an extract from this studyCopyright © 2012 IHS. All Rights Reserved.
  3. 3. Agenda  Opening  Methodology  Study Background  Medical Device and Diagnostic (MDD) Premarket Approval Process  MDD Reimbursement Framework  MDD Procurement Framework  Case Study  Conclusions  Closing  Q&ACopyright © 2012 IHS. All Rights Reserved.
  4. 4. Methodology Primary Research  48 in-depth qualitative interviews with key stakeholders, including representatives from industry, insurance, government and health services across 9 developed markets  Interviews lasted between 30 and 60 minutes  Interviews focused on national opportunities, barriers and market dynamics in the context of regulations, pricing, reimbursement and procurement for MDDs Secondary Research  IHS Global Insight proprietary Healthcare and Pharmaceutical services: – World Markets Healthcare – World Markets Pricing and Reimbursement – World Markets Forecasting  Literature reviews  Government and other relevant agency websitesCopyright © 2012 IHS. All Rights Reserved.
  5. 5. Study BackgroundCopyright © 2012 IHS. All Rights Reserved.
  6. 6. Medical Devices: Top of the Healthcare NewsCopyright © 2012 IHS. All Rights Reserved.
  7. 7. Research Relevance  Within each market considered, the regulatory environment for MMDs is extremely complex and fragmented  This is especially the case in the pricing, reimbursement and procurement arenas, where multiple negotiations can take place not only at the national but also regional and local levels  With increased regulatory scrutiny and cost-containment pressure across markets, market access for MDDs is set to worsen further  The pharmaceutical industry will also be concerned by these increased market access barriers as the advent of personalised medicine and the market arrival of combination products mean the two industries cannot afford to operate in silos any longerCopyright © 2012 IHS. All Rights Reserved.
  8. 8. MDD Market Sizing • The global market for MMDs was estimated to be worth USD350 billion in 2010. The US is the largest MDD market in the world, followed by Japan. Europe accounts for 30% of the world’s market. • Over the next five years, MDD sales growth is expected to slow in Spain and drop into negative territory in Germany, France and Japan. Growth is expected to remain robust in Australia and Canada. • Overall market growth is driven by sales of durable goods, a trend that is expected to continue over the next five years, with the exception of Germany. Sales of Medical Goods - Historical Data and Forecasts Sales (million LCUs) 2000 2005 2010 2015 Germany Spain France Australia Canada Japan Graph source: IHS Global Insight World Markets Forecasting.Copyright © 2012 IHS. All Rights Reserved.
  9. 9. MDD Premarket Approval ProcessCopyright © 2012 IHS. All Rights Reserved.
  10. 10. Premarket Approval Overview  The major markets differ in the criteria, timelines and clinical trial requirements associated with the premarket approval process.  Europe and Australia do not require MDD manufacturers to submit efficacy data to gain market approval, which is in contrast with other regulatory frameworks.  The lack of efficacy requirements in Europe and Australia has shortened the MDD development process for these markets. It is likely that it also eases the regulatory review process and lowers barriers to market entry.  Disparate regulatory requirements translate into divergent timelines for licensing approval across the major markets. Australia EU Canada US Japan Average Market 6-9 10 19 30+ 30+ approval Process length (months) Source: Northwestern University, USCopyright © 2012 IHS. All Rights Reserved.
  11. 11. In-Vitro Diagnostics  At present, ‘home brew’ tests, also known as in-house or laboratory- developed tests, fall entirely outside the purview of EU regulations  In the US, these tests are regulated by the Clinical Laboratory Improvement Amendments (CLIA) of 1988. However, CLIA focuses on quality of the testing process rather than utility or validity of the test itself  Regulations both in the US and the EU are expected to become more stringent, as regulators play catch-up with the emerging marketplace for this new science  In Europe, a revision of the in vitro diagnostic medical device (IVDMD) Directive is expected for early 2012, with implementation foreseen for 2015  In Australia, a new regulatory framework for IVDMDs was introduced in July 2010 to bring them under the scope of the medical device frameworkCopyright © 2012 IHS. All Rights Reserved.
  12. 12. MDD ReimbursementCopyright © 2012 IHS. All Rights Reserved.
  13. 13. Reimbursement Framework: Inpatient vs Ambulatory Setting  Across the major markets, hospitals mostly operate through global budgets or activity-based funding (DRG system) for inpatient activity. Both funding mechanisms have their limitations for the uptake of innovative MMDs.  Under a DRG system, MDDs can be reimbursed as part of a procedure or on their own.  DRG systems can act as a cost-containment tool as tariffs may not adequately reflect actual costs. They also create incentives to shorten length of stay to increase activity and adapt activity based on profitability.  The major markets differ in their MDD reimbursement frameworks for the ambulatory setting, applying fee-for-service, prospective payment and global budgeting systems. Under a fee-for-service system, practitioners are reimbursed retrospectively based on the nature & volume of their activity.Copyright © 2012 IHS. All Rights Reserved.
  14. 14. HTA Environment for MDDs  The major markets differ in terms of whether HTA is a routine part of coverage and/or reimbursement decision-making, or whether it is commissioned or performed on a case-by-case basis.  They also differ as to whether specific HTA frameworks have been developed for MDDs or whether these remain ad hoc.  Some markets exploit HTA for specific functions – in one instance in Italy, an institution has established an HTA programme for evaluation of reimbursement rate top-ups for innovative/high-cost technologies.  Finally, markets differ to the extent that they incorporate some form of economic evaluation into HTA.  There are clear signs that the HTA process will become more methodological and tailored to the MDD industry, with the requirement to demonstrate cost-effectiveness. This hurdle will require a rethink of clinical trial strategies.Copyright © 2012 IHS. All Rights Reserved.
  15. 15. MDD Procurement FrameworkCopyright © 2012 IHS. All Rights Reserved.
  16. 16. MDD Procurement Overview  MDD purchasing may take place: - At individual hospital level - Between groups of hospitals - Via central/regional government agencies - Through dedicated, commercial companies  In some markets, these procedures vary in accordance with public procurement law and/or the type of MDDs.  In Europe, procurement tends to take the form of public tendering, depending on product type and/or specific cost thresholds.  While there was a trend toward decentralisation of purchasing in the late 1990s and early 2000s, in an atmosphere of cost containment, and in a bid to improve transparency, there has been a move back toward centralised purchasing.Copyright © 2012 IHS. All Rights Reserved.
  17. 17. Case Study: JapanCopyright © 2012 IHS. All Rights Reserved.
  18. 18. Japan: Market Facts Japan is the second largest medical device market in the world and an import-dominated market. Japan is addressed late, if at all, in MDD manufacturers’ launch sequence strategy. Many manufacturers do not file for approval in Japan. Medical technologies are approved in Japan three years after the US and five years after the EU. Approximately half the MMDs marketed in the US and in Europe are not marketed in Japan.Copyright © 2012 IHS. All Rights Reserved.
  19. 19. Japan: Premarket Approval Process  Authorities involved: – Pharmaceuticals and medical devices Agency (PMDA) – Ministry of Health, Labour and Welfare (MHLW)  Legislation: – Pharmaceutical Affairs Law (PAL)  Requirements: – Marketing Authorisation Holder License – Manufacturing Licence – Accreditation Japan: MDD Conformity Assessment Procedures Classification General Controlled Other Specially MDDs MMDs controlled controlled MDDs MDDs Regulatory Notification Certification Approval Approval Requirements QMS Audit N/A RCB* PMDA PMDA Approval/Certificat N/A RCB MHLW MHLW ion QMS Compliance Not required Necessary Necessary Necessary * Registered Certification Body Source: PMDACopyright © 2012 IHS. All Rights Reserved.
  20. 20. Japan: Premarket Approval Process Premarket Timeline Clinical Trial Requirements Approval Criteria Safety and 8 months Usually required for ‘new’ or performance ‘administrative ‘improved’ (unless can review time’ demonstrate safety/efficacy without clinical data)  Japan suffers from a device-lag. The Japanese regulatory approval process for a new MDD takes just over 21 months compared to just over 10 months in the United States.  Japan has committed to an overhaul of its market approval framework, intending to shorten the timeframe between submission and approval down to 14 months for a regular review and 10 months for a priority review by 2013.Copyright © 2012 IHS. All Rights Reserved.
  21. 21. Japan: MDD Reimbursement Authorities involved: – MHLW: • Economic Affairs Division of the Healthy Policy Bureau • Medical Economics Division of the Health Insurance Bureau – Central Social Insurance Medical Council (Chuikyo): • Insured Medical Device Expert Committee • Medical Fee Survey Expert Committee – Health Insurance Claims Review and Reimbursement Services – All-Japan Federation of National Health Insurance Organisations Provider reimbursement (national schedules): – Fee-for-service (retrospective) – Outpatient/inpatient setting – Diagnosis Procedure Combination (prospective) – Inpatient setting MDD reimbursement: – Specified insured medical materials or special treatment materials (STMs) – reimbursed individually – Non-special treatment materials (non-STMs) – reimbursed as part of procedureCopyright © 2012 IHS. All Rights Reserved.
  22. 22. Japan: MDD Reimbursement MDDs Reimbursement Categories A1 Non-STM – commonly used, commodity MDDs (syringes) A2 Non-STM – high-end, multiple use MDDs (MRI) B STM – existing functional category C1 STM – existing product, new function C2 STM – new product, no existing functional category F Not eligible for coverage  Reimbursement application to the MHLW’s Healthy Policy Bureau, Economic Affairs Division.  Reimbursement application processing time is ca. 20 days for Class A1- B, ca. 80 days for Class C1, ca. 100 days for Class C2 MDDs.  Cost-effectiveness is not a formal criterion in reimbursement decision- making in Japan.Copyright © 2012 IHS. All Rights Reserved.
  23. 23. Japan: MDD Pricing MDD Pricing A1 Direct negotiations between distributors and providers A2 Direct negotiations between distributors and providers B Reference pricing C1 New product premium pricing method (existing similar functional category) C2 New Product pricing method (no existing similar functional category) F Not eligible for coverage  Price Control: – R-zone: twice yearly price adjustments – FAP – Revision of the medical fee schedule every two yearsCopyright © 2012 IHS. All Rights Reserved.
  24. 24. Japan: MDD Procurement  In the public sector, tendering is mandatory for MDD contracts above a value of 100,000 SDR (Special Drawing Rights, ca. USD66K).  In the private sector, purchasing tends to be based on physician preferences with existing provider/distributor relationships a paramount to commercial success.  Complex distribution channels with primary and potentially secondary dealers, which vary depending on: – Device price – Hospital size – Manufacturer – Additional services such as stock management, inventory consignment saleCopyright © 2012 IHS. All Rights Reserved.
  25. 25. Japan: MDD Market Analysis ‘Reference pricing’ within Rapidly ageing product classes sets population reimbursement rates Predominately fee-for- No fragmented Premiums to service reimbursement reimbursement reimbursement rates framework decision-making often denied Pros Reimbursement Cons Price premiums of up to Importance of dealer 50% of high-priced networks (opportunity to classifications outmoded reference markets bring value-added (established 1983) services but requires Physicians (with adaptation to unique Unique licensing influence over business environment) requirements under purchasing) traditionally regulatory regime not so cost conscious Significant delays in Cost-effectiveness approval timelines criteria not yet formal part of reimbursement General cost assessments containment of fee schedulesCopyright © 2012 IHS. All Rights Reserved.
  26. 26. ConclusionsCopyright © 2012 IHS. All Rights Reserved.
  27. 27. Summary of Conclusions  Developed markets present various degrees of attractiveness for MDD launches, which are directly correlated to the complexity and differentiation of national marketing approval processes and P&R environments.  From a marketing approval perspective, Europe and Australia are the most attractive markets. Regulatory requirements are not as stringent as in other countries, resulting in more predictable processes and faster timelines. However, regulatory requirements are not aligned with the information needs of payers, which frustrates market access.  From a P&R perspective, the landscape is fragmented in most countries, which is both a source of opportunities and challenges. While it improves the odds to secure some degree of market access, it also requires large amount of resources, know-how and adequate logistics.  The regulatory landscape for MDD is in constant evolution and poised to become stricter in the medium term. This adds to the challenge of designing effective launch strategies in an industry that tends to be characterised by fast innovation.Copyright © 2012 IHS. All Rights Reserved.
  28. 28. Resources Get a free extract from this study: Download extract Visit the IHS Healthcare & Pharma Blog: © 2012 IHS. All Rights Reserved.
  29. 29. Copyright © 2012 IHS. All Rights Reserved.