A reimbursement strategy answers the following questions: Who will pay for your product or service (for example, will it be health insurance?), how will you get paid, and how much?
- FDA approval does not necessarily mean that payers will provide reimbursement. These are separate processes. The first hurdles to clear before a successful product launch, safety, efficacy, and manufacturing controls, are needed for FDA approval. Reimbursement is another hurdle that is not FDA-related.
- Entrepreneurs starting businesses to produce medical devices, pharmaceuticals, or other treatments need to start early to get to know the major medical insurance companies and learn how to get reimbursed. This is especially true if it is a treatment that will involve getting a new insurance code since it can be a long, challenging process to obtain one. Even if you will use an existing code, you will need to understand the payers and their differing requirements that will allow insurance claims to use your product to get paid.
- Understand the economic incentives/constraints of the users or prescribers and how they will get paid. Many products in medicine and biotechnology are business-to-business products rather than business-to-consumer. Address these questions for medical products:
- Who will be reviewing your evidence for clinical and cost-effectiveness and what data do they need?
- Who are the most relevant payers for the target population?
- Will the product get line item reimbursement or be bundled with something else?
- If covered by insurance, will deductibles or co-pays be a barrier for patients? If not covered, will patients be willing to pay?
NIH’s Technical and Business Assistance Funding (TABA) Consulting Services, which is available to those with a Phase II SBIR, offers Reimbursement Strategy and Services as one of its 4 areas for Consulting Services. Awardees can apply for up to $50,000.
Source: NIA and NHLBI Entrepreneur Workshop Series: Opportunity Assessment and Licensing and Partnering Agreements. February 9, 2021.
Reimbursement Strategy Tips
Tip 1: From the start of your project, collect evidence to support reimbursement. Don’t wait until you need the data later to convince payers. Collect data on the variables needed for a cost-effectiveness analysis while doing your clinical trial.
Tip 2: Check whether incentives to purchase your product or service are aligned for the different stakeholders. For medical products, the incentives for payers, providers, and patients may be misaligned. For example, patients have to believe a treatment is safe and worth the side effects, payers have to be willing to pay for it, and providers have to view the evidence as strong and make it fit in their workflow.