Annual lecture presented by Mark McClellan 6th July 2015

1. © Mark McClellan. All rights reserved. No part of this presentation may be reproduced or transmitted in any form or by
any means without permission in writing.
Regulation, Reimbursement, and
Evidence on New Medical Technologies:
Experiences and Future Directions
In the United States
Mark McClellan, MD, PhD
Senior Fellow and Director,
Initiatives on Value and Innovation in Health Care
Brookings Institution

2. 2
Overview
• Big Themes
• Regulatory Reform: Evidence for Approval
– Faster Processes
– Better Development Science for Greater Efficiency
• Evidence for Approval vs Evidence for Payment
– FDA/CMS Parallel Review Experience
– Evidence Before Coverage vs Conditional and Adaptive Review
– Value-Based Payment
• Better Postmarket Evidence from Medical Practice
• Value-Based Reforms in Provider Payment and Benefits: Increasing
the Value of All Health Care
– Value-Based Benefit Design and Tiering
– Value-Based Provider Payment
• A Path Forward for Value-Based Payment for Medical Technologies

3. 3
Rising cost, time, and uncertainty of drug
development – and investment decline
Source: Health Affairs, February 3, 2015 Source: Scannell et. al, Nature Reviews Drug Discovery, March 2012.

4. 4
Declining medical device revenue growth
and R&D investment (US,EU)
Source: Pulse of the Industry – Medical Technology Report 2013, Ernst & Young

5. 5
• Fast Track
– Drugs with the potential to address unmet medical needs
– Increases communication between developer and FDA and “Rolling Review”
• Priority Review
– Drugs with the potential to provide a significant advance in medical care
– FDA completes review within 6 months (instead of typical goal of 10 months)
• Accelerated Approval
– Drug for a serious or life-threatening disease that offers a benefit over current
treatments
– Early approval based on a “surrogate endpoint”
– Phase IV confirmatory (post-market) trials required as a condition of approval
• New: Breakthrough Therapy Designation
Year Fast Track Status Priority Review Accelerated Approval
2014 17/41 (41%) 25/41 (61%) 8/41 (20%)
2013 10/27 (37%) 10/27 (37%) 2/27 (7%)
2012 14/39 (36%) 16/39 (41%) 4/39 (10%)
Expedited regulatory review of drugs in US

6. 6
FDA’s Breakthrough Therapy Designation (BTD)
• First proposed at an event held by Brookings and Friends of
Cancer Research in 2011 and enacted into law in 2012
• New, expedited pathway for development of promising drugs
– For drugs intended to treat a serious or life-threatening disease where
preliminary clinical evidence suggests substantial improvement over
existing therapies
– Encourages close collaboration between sponsor and FDA to
accelerate development
– Unlike Fast Track, requires clinical evidence to get designation
• FDA commits to providing drug sponsors with timely advice
and interactive communications related to development
– Review of plans for interim analyses of trial data
– Review of proposals for alternative clinical trial designs that may lead
to smaller or more efficient trials.
– Appointment of a cross-disciplinary project lead that serves as a
scientific liaison between the review team and sponsor

7. 7
What Constitutes “Substantial Improvement”
for Qualification to Breakthrough Designation?
• No single threshold that clearly defines “substantial
improvement”
– Threshold varies depending on a range of contextual factors including:
therapeutic area, patient population, and existing therapies.
• Small number of breakthrough requests outside of
hematology, oncology, and virology – hard to do
comprehensive analysis given different endpoints and other
considerations
• A sub-analysis for oncology and hematology grants found that
effect sizes in successful requests varied significantly.
– For cancer that had available therapies for comparison, improvement in
objective response rate ranged from 38% to 400%.
– For those that did not, improvement in ORR ranged from 29% to 87%.
Source: FDA – Center for Drug Evaluation and Research

8. 8
Opportunities for More Efficient Product Development
• Clinical trial innovation
– Central IRB and more efficient consent mechanisms
– Ongoing trial networks with standard protocols and data infrastructure to
reduce costs and time needed to implement and conduct trials: ISPY for
breast cancer; Lung Cancer Master Protocol (Lung-MAP) simultaneously
testing 5 drugs and over 200 medical centers
– Adaptive trial designs: pre-specified interim analyses to guide subsequent
trial modifications and allow smaller, shorter, more efficient trials
• More meaningful patient participation
– Validated and reliably collectable patient-reported outcomes
– Risk-benefit assessment frameworks with patient participation
• Pre-competitive collaborations among companies and between
public and private sectors to improve development
– Public-private: EU Innovative Medicines Initiative, CASMI, Biomarkers
Consurtium, Reagan-Udall Foundation projects
– Private: Transcelerate Biopharma and other collaborations on disease
modeling, markers, methods for efficient study design
• Synergies with Breakthrough Therapy Designation

9. 9
Increasing development of “first in class” drugs
†Lanthier et al. An Improved Approach To Measuring Drug Innovation Finds Steady Rates Of First-In-Class Pharmaceuticals, 1987–2011.
Health Affairs. 32(8): 2013
* Innovation in the Biopharmaceutical Pipeline: A Multidimensional View. Analysis Group. January 2013; access online September 29,
2014.
First-in-class trends:
• In 2014, first-in-
class drugs were
41% of FDA’s NME
approvals
• An estimated 70%
of drugs currently in
development are
first in their
therapeutic class*
†
●
●
2014
17
41

10. 10
Evidence for Approval Does Not Equal
Evidence for Broad Payment
• Growing concern for product developers in US and abroad
that approval does not mean rapid coverage and payment
– Drugs
– Devices
• Aligned Evidence Development Goals for Faster Coverage:
Parallel Review Experience
– Designing studies to address payer concerns
– Faster review process for coverage decision
• Addressing Narrow/Restricted Coverage
– Statutory protection
– Conditional or adaptive review
– Coverage with evidence development
– Enable payment to reflect variations in value

11. 11
FDA/CMS Parallel Review Pilot Program
• Announced in 2011 as a two-year pilot, extended through 2015
• Intended to streamline the review process for device
manufacturers who were seeking both:
– Pre-marketing application approval by FDA
– A national coverage determination (NCD) by CMS
• Under the program, a device manufacturer is able to begin the
NCD process with CMS while still undergoing the FDA review
process
• Potential for expansion to include drugs and biologics

12. 12
Experience to Date
• Renal Denervation Device - Medtronic
– Intended to treat uncontrolled hypertension
– Announced January 2014 that the device had failed to meet its
primary efficacy endpoint
• Cologuard – Exact Sciences
– Screening tool for colorectal cancer
– Approved by FDA and granted an NCD in October 2014
– In press statements, Exact Sciences estimated that parallel
review reduced expected 9-year development timeline by 3
years

13. 13
0
5
10
15
20
25
30
35
40
45
NumberofApprovals
Other Approvals
Accelerated Approval
Sources:
• Jonathan J. Darrow, S.J.D., J.D., M.B.A., and Aaron S. Kesselheim, M.D., J.D. N Engl J Med 2014; 370:e39June 26, 2014DOI:
10.1056/NEJMp1402114
• 2014 Novel New Drugs Summary. Silver Spring, MD: U.S. Food and Drug Administration, Center for Drug Evaluation and
Research, 2015. (Accessed June 30, 2015, at
http://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/DrugInnovation/UCM430299.pdf.)
Use of Accelerated Approval in the US
* * 2015 through Q1

14. 14
EMA’s Conditional Marketing Authorisation
• Goal: to speed access to certain types of drugs with promising but
limited evidence
• Intended for products that treat:
– Unmet medical need for seriously debilitating or life-threatening
diseases
– Rare or orphan diseases
– Emergency threats
• One-year, renewable market access
• Sponsors must demonstrate that benefit to patients receiving early
access to the product outweighs potential risk, and high likelihood
that additional and comprehensive clinical data will be supplied
• Sponsors agree to complete ongoing studies or perform new clinical
studies to further confirm benefit-risk
– Additional data collection or pharmacovigilance requirements as
necessary
• If totality of evidence from ongoing studies merit full approval,
product is given traditional market authorisation
• 9/38 new drug authorisations in 2013

15. 15
EMA’s Adaptive Pathways Pilot Program
• Approval program intended for very narrow indications or well-
defined patient subpopulations in which there is serious unmet need
– Intended to build on existing EMA processes for compassionate use,
conditional MAs, and pharmacovigilance registries
• Approval could take one of two forms:
– Full approval for use in the target subpopulation, with population or
indication expansions approved later based on additional evidence
– Early approval contingent on additional postmarket studies and
collection of real-world data
• Pilot began in December 2014
– 34 drug applications
– 8 chosen to move forward with drug-specific meetings held this spring
– Products will be reviewed as part of multi-stakeholder discussions and
parallel HTA review
– Results will help EMA “develop an understanding of how future adaptive
pathways might be designed for different types of products and
indications”

16. 16
US proposals for limited population ‘special
medical use’ approval pathway
• No specific adaptive pathways in US drug regulation
– Breakthrough designation and other regulatory pathways can be (and
are) used for specific subpopulations, e.g. based on genomic profile
– For drugs targeted to a narrow higher-risk subpopulation but that could
be used in a more prevalent chronic condition, off-label use concerns
generally have often resulted in more clinical study requirements prior to
approval
– May be changing with tighter preauthorization reviews by payers for
costly drugs
• Potential limited application: Antibiotic Development to Advance
Patient Treatment (ADAPT) Act as part of in 21st Century Cures
legislation
– Allows earlier approval based on limited population data, traditional or
alternative endpoints, could be data from Phase 2
– Requires special label: “This drug is indicated for use in a limited and
specific population of patients.”

17. 17
Medicare’s Coverage with Evidence Development
• CED utilizes postmarket data collection commitment to support
potentially earlier and broader coverage
– Many clinical trials do not extensively study Medicare beneficiaries aged
65 and over
– CED allows provisional coverage of novel devices or procedures in
order to provide patient access and generate more evidence on the
device or procedure
– Data on Medicare beneficiaries’ outcomes are collected through
registries
– Full coverage can be granted if the product or procedure is shown to be
effective in the Medicare population, e.g. as part of a National Coverage
Determination (NCD)
• Applied infrequently – major recent application is Transcatheter Value
Replacement and Repair (TVT) Registry

18. 18
Lessons from the STS/ACC TVT Registry
• Tracks patient safety and real-world outcomes of transcatheter valve
procedures
– Developed and maintained by Society of Thoracic Surgeons (STS) and
American College of Cardiology (ACC)
– Includes FDA-required post-approval studies and additional data
development on Medicare patients
– 280 hospitals performing TVT procedure are participating
• Significant clinical data submission required for payment
– Patient characteristics, procedure indications, procedure experience,
short- and longer-term outcomes
• Likely enabled earlier/broader Medicare coverage, and results have
helped confirm patient risk-benefit and potentially support expansion
of indications
– Initially created for TAVR, but expanded to include other FDA
postapproval studies and CED data collection (e.g., Abbott Mitraclip for
mitral valve)

19. 19
Performance-Based Payment
• Requires ability to shift drug treatment decisions and use
• Payment Based on Evidence
– Drug payment (or rebate) directly tied to evidence of clinical impact of
treatment
– Indication-specific pricing if clinical impact varies across identifiable
patient types (Peter Bach, JAMA 2014)
– Requires valuation of drug based on evidence for clinical benefits,
toxicity, and risk
• Could rely ASCO Value Framework or other qualitative rating tool
based on evidence
• Payment Based on Results
– Drug payment (or rebate) varies by clinical impact of treatment in
particular patients
– Examples: Velcade for multiple myeloma in UK (Garber McClellan NEJM
2007), Italian drug payment mechanism
– More suitable for drugs where clinical response is reliably measurable in
short time frame (e.g., measures of reduction in disease burden,
progression-free survival in metastatic disease, other biomarkers)

20. 20
Reforms in product development complement
rising demand and opportunities for better
evidence from practice
• Evidence is not complete at approval
– Uncertainty remains (long-term outcomes, treatment heterogeneity, etc)
– Jeff Shuren (FDA CDRH): “…our strategic priority is striking the right
balance between premarket and postmarket data collection.”
– Rising demand for evidence on comparative value of interventions in
clinical practice
• Growing opportunities to learn more about safety,
effectiveness, and value from actual practice
– Registries and practical research networks are developing increasingly
sophisticated electronic data
– Better development science is enhancing availability of better predictors
of benefits/risks (biomarkers) and longer-term outcomes that can be
tracked in post-market settings
– Analytic techniques for observational research are improving (e.g., high-
dimensional PS matching)
– But substantial data and methods issues remain

21. 21
Emerging Infrastructure for Postmarket Evidence:
FDA Sentinel
• Congress established a postmarket risk identification and
analysis system to link and analyze safety data from multiple
sources in 2007
– 25 million patients by 2010; 100 million patients by 2012
• Intended to improve FDA’s capability to identify and evaluate
safety issues in near real time
• Required FDA to develop Sentinel through public-private
collaboration on a common strategy and methods for broad-
based active surveillance
– Distributed analysis network
– $15 million/year core operating costs
– 178 million patients tracked, >4 billion drug dispensings

22. 22
Sentinel Partner Organizations
Institute for
Health
Lead – HPHC Institute
Data and
scientific
partners
Scientific
partners
Source: Richard Platt,
Harvard Pilgrim Health Care
Institute

23. 23
Site 1
Coordinating Center
PCORnet Secure Network Portal
1
52 Enroll
Demographics
Utilization
Etc
Review &
Run Query
3
Review &
Return Results
4
6
Site N
Enroll
Demographics
Utilization
Etc
Review &
Run Query
3
Review &
Return Results
4
1. User creates and
submits query (a
computer program)
2. Individual sites
retrieve query
3. Sites review and
run query against their
local data
4. Sites review results
5. Sites return results
via secure network
6. Results are
aggregated
Source: Richard Platt, Harvard Pilgrim Health Care Institute

24. 24
Examples of active surveillance impact

25. 25
Current Capabilities of the Sentinel System
• Different levels of active surveillance activities
– Complex Modular Program (MP) Assessments
– Prospective Routine Observational Monitoring Program Tool
– Drug Safety Studies Protocol Based Assessments
• Substantial publicly-available outputs
– 4 FDA drug safety communications
– 26 Presentations by FDA
– 48 Methods reports / white papers, 70 Peer-reviewed articles
– 137 Assessments of products, conditions, product-outcome pairs
• Next steps
– Incorporation of additional clinical data (lab results, patient severity)
– Analogous system for medical devices

26. 26
Establishing a Medical Device Surveillance
System
National Planning Board
Report (Feb. 2015):
Recommendations and
roadmap for a public-
private collaboration to
implement a National
Medical Device
Postmarket Surveillance
System

27. 27
Moving Beyond Safety to Value: Challenges to
Postmarket Comparative Effectiveness Research
• Data:
– Meaningful clinical detail on patients
– Meaningful outcome measures including cost
– Sufficient power
• Methods
– Observational
• Descriptive: disease history, prep for research
• Causal analysis: propensity scores/matching,
instrumental variables
– Randomized
• Individual
• Cluster
• Sustainable financing

28. 28
The goal of PCORI’s National Patient-Centered
Clinical Research Network Program is to improve the
nation’s capacity to conduct CER efficiently, by
creating a large, highly representative, national
patient-centered clinical research network for
conducting clinical outcomes research.
The vision is to support a learning US healthcare
system, which would allow for large-scale research to
be conducted with enhanced accuracy and efficiency.
PCORnet: The National Patient-Centered Clinical
Research Network
Courtesy of

29. 29

30. 30
Multiple Networks Sharing Infrastructure
• Each organization can participate in multiple networks
• Each network controls its governance and coordination
• Networks share infrastructure, data curation, analytics, security, software
development
Health
Plan 2
Health
Plan 1
Health
Plan 5
Health
Plan 4
Health
Plan 7
Hospital 1
Health
Plan 3
Health
Plan 6
Health
Plan 8
Hospital 3
Health
Plan 9
Hospital 2
Hospital 4
Hospital 6
Hospital 5
Outpatient
clinic 1
Outpatient
clinic 3
Patient
network 1
Patient
network 3
Patient
network 2
Outpatient
clinic 2
Source: Derived from Curtis, Brown, and Platt,
Health Affairs 2014

31. 31
Spending on health care vs other national priorities
Sources: Office of Management and Budget President's FY 2014 Budget, Congressional Budget Office 2013 Long-Term Budget Outlook, and the
Bureau of Economic Analysis.
Note: Medicaid data includes the exchange subsidies after 2000. Historical series recalculated reflecting revised historical GDP data.
0%
5%
10%
15%
20%
25%
1973 1978 1983 1988 1993 1998 2003 2008 2013 2018 2023 2028 2033 2038
PercentofGDP
Fiscal Year
Long-Term Federal Spending Projections, 1973-2040
Other Noninterest Outlays
Medicare, Medicaid, CHIP,
and Exchange Subsidies
Social Security

32. 32
High-Value Innovation in Health Care
LIKELY COST INCREASING – USUALLY REIMBURSED
• Effective treatments for unmet health needs
POTENTIALLY COST DECREASING – OFTEN NOT REIMBURSED
• Innovations to better target use of medical technologies to
patients who will benefit
• Wireless and web-based personal health tools and supports
• New delivery sites, methods and better-integrated provider teams
• More efficient care delivery
• Non- medical strategies for health improvement

33. 33
Key Features of Medicare Prescription Drug Coverage
(Medicare “Part D”)
Medicare Part D Experience
• Broad range of benefit design and
coverage options allowed (subject to
minimum standards for “actuarial
equivalence”) and extra financial help
for low-income beneficiaries
• Comparative cost and quality
information available
• Fixed subsidies based on income and
health status: strong incentives for
beneficiaries to choose lower-cost plans
that met their needs
• Steps to address adverse selection:
subsidies; risk adjustment; reinsurance;
risk corridors; late enrollment penalties

34. 34
Key Features of Medicare Prescription Drug Coverage
(Medicare “Part D”)
Medicare Part D Experience
• Broad range of benefit design and
coverage options allowed (subject to
minimum standards for “actuarial
equivalence”) and extra financial help
for low-income beneficiaries
• Comparative cost and quality
information available
• Fixed subsidies based on income and
health status: strong incentives for
beneficiaries to choose lower-cost plans
that met their needs
• Steps to address adverse selection:
subsidies; risk adjustment; reinsurance;
risk corridors; late enrollment penalties
• Beneficiaries chose “tiered” benefits
that enabled much more savings based
on their drug choices than traditional
Medicare insurance design

35. 35
$1
$41
$64
$76
$84
$92
$104
$108
$123
$136
$150
$1
$34
$52
$47
$57
$64
$71
$61
$68
$74
$85
$-
$20
$40
$60
$80
$100
$120
$140
$160
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total Spending in Medicare Part D ($ Billions)
2006 Trustees Report 2014 Trustees Report
Source: Medicare Trustees Report, 2006 and 2014
Note: Numbers for fiscal years

36. 36
Key Features of Medicare Prescription Drug Coverage
(Medicare “Part D”)
Medicare Part D Experience
• Broad range of benefit design and
coverage options allowed (subject to
minimum standards for “actuarial
equivalence”) and extra financial help
for low-income beneficiaries
• Comparative cost and quality
information available
• Fixed subsidies based on income and
health status: strong incentives for
beneficiaries to choose lower-cost plans
that met their needs
• Steps to address adverse selection:
subsidies; risk adjustment; reinsurance;
risk corridors; late enrollment penalties
• Beneficiaries chose “tiered” benefits
that enabled much more savings based
on their drug choices than traditional
Medicare insurance design
• Costs much lower than projected

37. $2,169.00
$2,129.35
$1,908.70
$2,045.07
$2,262.41
$198.60
$306.87
$353.62
$496.68
$724.94
$-
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
2010 2011 2012 2013 2014
Medicare Drug Spending, Per Member Per Year for
Express Scripts Plans
Traditional Drugs
Specialty Drugs
Source: Express Scripts Drug Trend Reports, 2010-2014

38. 38
Per-Beneficiary Spending Growth in Medicare

39. 39
Key Features of Medicare Part D and Implications
Medicare Part D Experience
• Broad range of benefit design and
coverage options allowed (subject to
minimum standards for “actuarial
equivalence”) and extra financial help
for low-income beneficiaries
• Comparative cost and quality
information available
• Fixed subsidies based on income and
health status: strong incentives for
beneficiaries to choose lower-cost plans
that met their needs
• Steps to address adverse selection:
subsidies; risk adjustment; reinsurance;
risk corridors; late enrollment penalties
• Beneficiaries chose “tiered” benefits
that enabled much more savings based
on their drug choices than traditional
Medicare insurance design
• Costs much lower than projected
Implications for
Health Care Reform
• Tiered design enabling patients
to share in savings provides
stronger incentives for switch
to lower-cost care
• Transparent information is
critical for success
• Low-income beneficiaries
receive additional copay
assistance
• Other reforms may help
promote tiers based on value
not cost

40. 40
Types of Alternative Payment Models for
Health Care Providers
Payment linked to quality
and cost for a specified
episode of care
Type of Payment: Case-
level
Episode
Based
Payment linked to quality
and cost for a specified
population
Type of Payment: Person-
level
Whole
Person
Examples:
• Elective procedure
episodes
• Hospital admission
episodes
• Primary care
medical home
Examples:
• Comprehensive care
for frail patients
• Accountable care
organizations
• Capitated care with
perf. measures

41. 41
Medicare’s Payment Reform Strategy

42. 42
Growth of Accountable Care Organizations
Over Time: Medicare and Non-Medicare
0
100
200
300
400
500
600
700
800
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
Q12014
Q22014
Q32014
Q12015
#ofACOs
Medicare Non-Medicare Total

43. 43
Growing (Preliminary) Evidence on
Accountable Care Organizations
Medicare ACOs
7.8 million beneficiaries
405 MSSP ACOs
19 Pioneer ACOs
First year results:
Higher measured quality
Approx. one-quarter beat cost benchmark
1-2% overall savings vs benchmarks
Second year results:
11/23 Pioneers earned shared savings
~1% overall savings vs benchmarks
Substantial improvement on quality
measures
Commercial
ACOs
16+ million beneficiaries
(Over 300 plans)
Typically larger payment and benefit
reforms than Medicare ACOs
Early results (not consistently analyzed):
Improvement in measured quality
Variable reported savings, 2-12%
Medicaid ACOs
Over 40 ACO contracts in 19
states
Limited results so far, but promising
impacts for some high-risk beneficiaries

44. 44
Future of Payment Reform
Medical Homes for
Primary Care
• Supports care coord,
prevention, chronic
disease mgmt, and
other key primary-care
activities
• Rewards reductions in
primary care-related
cost trends
Bundled Payments for
Specialty/Intensive Care
and Post-Acute Care
• Combine payments across
providers involved in
specialty care
• Rewards greater efficiency
and quality within the
episode of care
ACO/Shared Accountability Payments
• Reimburses population-level improvements in
quality and overall per-capita costs
• Encourages coordination across the continuum of
care
• Can reinforce/ support “piecewise” accountable-
care reforms
• Timely and consistent
methods for sharing data and
analytics to improve
performance
• Meaningful, consistent
performance measures
derived from care data
• Rapid evaluation of reforms
and expansion of successful
reforms
Performance-Based Payments for Drugs, Devices
• Reimburses improvements in results and reductions in
costs for devices and drugs
• Supports targeting treatments to patients likely to benefit,
not greater volume

45. 45
Obstacles to Value-Based Payments
Stem From Fee-for-Service Payment System
• Operational obstacles
– Development of benchmarks and performance measures
– Longitudinal data tracking
– Negotiation over shared savings and losses
• Legal/regulatory obstacles
– Medicaid Best Price drug rebate requirements
– Medicare Part B Average Sales Price impacts
– Anti-Kickback Law implications (perception of no clear safe harbor) if
product developers provide in-kind support to promote use or if volume
of product use decoupled from payment
– Beneficiary Inducement Civil Monetary Penalties for providing
assistance to beneficiaries in using product effectively
– FDA restrictions on “off-label” manufacturer communications about
medical products may limit ability of product developers to collaborate
with providers to promote higher-value use
– FDA adverse event reporting requirements
• Path forward using “safe harbors” for provider payment reform
– CMS, OIG, DOJ have developed “safe harbors” for accountable care
organization providers who shift sufficiently from FFS payment, and
concept could be applied here

46. 46
Advancing Results-Focused Regulation and
Reimbursement for Medical Technologies
• Further financing reforms for providers and patients based
on clinical outcomes, experience with care, costs
– Provider contracts based on measures of patient-level value
– Benefit design based on measures of patient value
• Enable aligned value-based contracts for medical products
in settings where providers have non-FFS value-based
contracts, e.g., extend ACO regulatory safe harbors to
technology payments for at-risk ACOs
– Address “best price” payment requirements
– Address anti-kickback and consumer benefit restrictions
• Risk mitigation in financing reforms: better risk adjustment
for predictably higher-cost patients, reinsurance, partial FFS
• Better measures of quality and cost to facilitate patient and
provider choices – derived from data systems used for care
• More support for patient engagement

47. 47
Future of Medical Technology Regulation and
Reimbursement in the US – and the World
• Development science and regulatory science are enabling more
efficient and personalized product development
– Growing importance of postmarket evidence
– Recognition of significant variations in risk and benefit based on patient
characteristics and preferences
• Reimbursement changes for technology can be driven by
growing pressure for personalized care and value-based
financing reforms
– Europe, rest of world have more implementation of results-based payment
for technologies due to tighter pricing… but may miss health and value
benefits from broader results-based payment reform
– US has been slow to shift to direct value-based payments for
technologies, but provider reimbursement and benefit tiering are creating
new pressures
– Overall value-based payment for providers linked to value-based benefit
reforms for consumers may do more to promote higher-value innovation,
freeing up needed resources from inefficient health care practices