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Home › Topics › Starting a Life Science Business › Business Planning & Commercialization

Tips

Develop a Reimbursement Strategy

Topics Starting a Life Science Business Business Planning & Commercialization Develop a Reimbursement Strategy

A reimbursement strategy answers the following questions:

  • Who will pay for your product or service? (For example, will it be covered by health insurance?)
  • How will you get paid?
  • How much will you get paid?

It is important to understand that obtaining insurance reimbursement for your product or service is a separate, important hurdle from obtaining FDA approval.

What to Consider About Obtaining Reimbursement from Insurance

  • Start early to get to know the major medical insurance companies and learn how to get reimbursed if your product is a medical device or treatment. This is especially critical if it will involve obtaining a new insurance code, which can be a long, challenging process. Even if you use an existing insurance code, you will need to understand the payers and their requirements.
  • Understand the economic incentives and 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 questions like these for medical products:
    • Who will review 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?

Resource

The NIH’s Technical and Business Assistance (TABA) funding consulting services, available to those with a Phase II SBIR, offers reimbursement strategy and services as one of its four areas of consulting. 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

From the start of your project, collect evidence to support reimbursement. Collect data on the variables needed for a cost-effectiveness analysis while doing your clinical trial. Don’t wait until you need the data later to convince payers.

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.

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Topic Home Expand All
Intro to Starting a Life Science Business
3 Articles
Overview of Starting a Life Sciences Business
Evaluate Your Business Skills
Finding a Sound Business Idea
Early Market Research
3 Articles
Case Example: Leslie Bowen, Early Market Research
Market Research Before Starting a Business
Tips for Biomedical Market Research
Business Planning & Commercialization
9 Articles
Writing a Business Plan
Develop a Reimbursement Strategy
Technical and Business Assistance and Other Commercialization Support
Case Example: Commercialization Advice
Other Post-SBIR Commercialization Support
Planning Your Research Environment
Technology Readiness Level
Design, Prototype, Testing, Manufacturing
Tips on Planning from Successful Biotech Entrepreneurs
Financial Skills, Planning, & Investors
6 Articles
Financial Planning
Tackling Financial Risk
Equity and Shares
Sources of Capital for Small Businesses
Case Example: Learning Investor Basics
Entrepreneur Financial Skills and Resources
Registering Your Business
3 Articles
Business Name, Tax IDs, and Insurance
Registrations for Your Business
Industry-Specific Requirements, Licenses, and Permits
Your Business Governance
4 Articles
Select a Business Structure
Cofounders, Partners, and Founding Team
Board of Directors
Roles You Can Play in the Business
Return to Starting a Life Science Business
End Resources

This project is funded by National Institute of General Medical Sciences (Grants 1R43 GM131458-01 & 2R GM131458-02)


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