international reimbursement strategies reimbursement overvi… · source: medical device...

INTERNATIONAL REIMBURSEMENT STRATEGIES:

OVERVIEW OF REIMBURSEMENT STRATEGIES IN

EUROPE, JAPAN, AP AND LM

Mike Sanchez, M.A., CCA

Reimbursement Advisor

Independent Consultant

Copyright Michael Sanchez 2010

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INTRODUCTION

Reimbursement mechanisms for medical technology are

highly complex in most countries, with different systems

applicable to private and public healthcare, to different

product categories and even to different regions of the

same country…

for a medical technology company to be successful, it must

devote significant time and resources to keeping abreast of

the latest developments and devising strategies to best

address the requirements.

Source: Global Trends in Reimbursement of Medical Technology (Clinica Reports, CBS948, July 2007):

http://www.1jra.com/Reimbursement%20report%2007%2020071.pdf


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http://www.1jra.com/Reimbursement report 07 20071.pdf


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HEALTHCARE SYSTEM MODELS

Beveridge Model Named after William Beveridge, who designed Britain's National Health

Service. In this system, health care is provided and financed by the

government through tax payments, just like the police force or the public

library. In Britain, you never get a doctor bill!

Many, but not all, hospitals and clinics are owned by the government

Some doctors are government employees, but there are also private

doctors who collect their fees from the government

These systems tend to have low costs per capita, because the government, as

the sole payer, controls what doctors can do and what they can charge.

Countries using the Beveridge plan or variations: Great Britain, Spain, most of

Scandinavia, New Zealand, Hong Kong, and Cuba

Source: Reid, T.R. (2009). The Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care. The Penguin Press.

ISBN 978-1594202346.


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Bismarck Model Named for the Prussian Chancellor Otto von Bismarck, who invented the

welfare state as part of the unification of Germany in the 19th century.

It uses an insurance system ("sickness funds“) usually financed jointly by

employers and employees through payroll deduction.

Unlike the U.S. insurance industry, though, Bismarck-type health

insurance plans have to cover everybody, and they don't make a profit.

Doctors and hospitals tend to be private in Bismarck countries

Although this is a multi-payer model tight regulation gives government much of

the cost-control clout that the single-payer Beveridge Model provides.

The Bismarck model is found in: Germany, France, Belgium, the Netherlands,

Japan, Switzerland, and, to a degree, in Latin America.


ISBN 978-1594202346.


5


National Health Insurance (NHI) Model This system has elements of both Beveridge and Bismarck. It uses private-

sector providers, but payment comes from a government-run insurance

program that every citizen pays into.

The single payer system tends to have considerable market power to

negotiate prices (E.g., Canada's lower prices from drug companies)

NHI plans also control costs by limiting the medical services they will pay for,

or by making patients wait to be treated.

These universal insurance programs tend to be cheaper and much simpler

administratively than American-style for-profit insurance

The NHI model is found in Canada, Taiwan, and South Korea


ISBN 978-1594202346.


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Out-of-Pocket Model This is the kind of model followed in most poor countries. There is no wide

public or private system of health insurance. People mostly pay for the services

they receive 'out of pocket'.

Most of the nations on the planet are too poor and too disorganized to

provide any kind of mass medical care.

Almost all countries with such a system have much lower life expectancy and high infant

mortality rates.

The basic rule in such countries is that the rich get medical care; the

poor stay sick or die.

Only the developed, industrialized countries -- perhaps 40 of the world's 200

countries -- have established health care systems.

In rural regions of Africa, India, China and South America, hundreds of millions

of people go their whole lives without ever seeing a doctor.


ISBN 978-1594202346.


7


The American Model The U.S. has elements of all four models in its fragmented national health care

system. For example:

For Veterans and military personnel, we're like Britain’s Beveridge Model,

where the government acts as both the payer and provider.

For working Americans who get insurance on the job, we're like Germany’s

Bismarck model, although in the U.S. health insurers can be for-profit

For Americans over of 65 on Medicare, we're like Canada’s NHI Model,

where government is the insurer and the private sector provides the care

For the uninsured, we’re like the Out-of-Pocket model of various poor

countries with little access to quality health care unless you can pay

The United States is unlike every other country because it maintains so many

separate systems for separate classes of people.

All the other countries have settled on one model for everybody.


ISBN 978-1594202346.


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RELATION BETWEEN HEALTHCARE SYSTEM AND

UTILIZATION OF MEDICAL TECHNOLOGY

The reimbursement system and the magnitude of health care

resources provided have a considerable influence on the

accessibility of medical technology. In Europe for example,

The relative usage of coronary stents has been greater in countries

with a social health insurance-based funding system.

Likewise there is generally a greater usage of implantable

cardioverter defibrillators in countries where funding is primarily from

social health insurance source

Patient access to these technologies varies across Europe and

appears related to the type of healthcare funding system in place.

Source: European Heart Journal (2004) 25, 611–616


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REGIONAL OVERVIEW


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UNITED STATES

The U.S. healthcare system, a blend of multiple public

payers and private third party payers, represents a

manufacturer's largest market opportunity for most

products and has the most stakeholders impacting the

reimbursement process…

Manufacturers must understand the payer mix for their

product relative to the payer mix for the US market to assure

that the reimbursement strategy aligns to the particular payer

sector that will be the most prominent decision-maker.




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EUROPEAN UNION

In Europe, reimbursement systems vary between each

country and different systems are applicable to private and

public healthcare, to different product categories and even

to different regions of the same country…

The European Union has “one-stop” for regulation but 25 stops for

reimbursement. Throughout Europe there are few regulatory hurdles,

but rising reimbursement hurdles. Additionally, Reimbursement is used

politically as a means of price curbing and slowing access to the latest

technology, which leads to frequent overhauls of the systems in an

attempt at achieving the best value for money.

European Union Case Study to follow




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JAPAN

In Japan, a country with one of the oldest populations in

the world, healthcare resources have been stretched for

many years, leading to various attempts to curb

spending…

Japan sources most of its medical technology from indigenous

suppliers. Despite this, the sheer size of the market and the

country’s return to economic growth make it increasingly

attractive for foreign suppliers. There are still a great many

[reimbursement] hurdles to selling products in Japan. What’s

more the regulatory approval system in Japan is one of the

slowest in the world.




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JAPAN: RESPONSIBLE GOVERNMENT AGENCIES

Ministry of Health, Labor & Welfare (MHLW) is the sole agency responsible for regulation and payment of medical devices:

Pharmaceutical and Medical Devices Agency (PMDA) is a third-party regulatory review agency under MHLW

Health Insurance Bureau (HIB) sets rates and approves reimbursement coverage

Central Social Insurance Medical Council (Chuikyo) is an outside advisory body to HIB on reimbursement/coverage decisions

Ministry of Finance (MOF) approves the healthcare budget proposed by MHLW, may adjust line-item expenditures for devices, etc.

Ministry of Economy, Trade and Industry (METI) supports development and competitiveness of Japanese Med Tech industry

Source: Medical Device Reimbursement in Japan (Paul Barry, Presented to MassMEDIC, April 10, 2008)

MHLW

Applicant

Dossier

Expert

Committee Chuikyo

6. Public Announcement: Listing in NHI Reimbursement

Eco Affairs Div

Health Policy Bureau

Med Economics Div

Health Insurance

Bureau

Shonin (Regulatory)

Approval

1. Application for

reimbursement

2. Hearing

5. Notification of Approval

3. Expert

opinion

4. Listing

decision

Source: Medical Device

Reimbursement in Japan (Paul

Barry, Presented to MassMEDIC,

April 10, 2008)

JAPANESE PRODUCT PRICING CLASSIFICATION

SYSTEM

A1 Covered under technical fee. Product reimbursement is

included in technical fee. Commodity-type products,

e.g., sutures, gauze.

A2 Covered under technical fee. Product itself gives

technical fee. High-end products such as MRI, CT, etc.

B “Me-too” product reimbursement category. Existing

technical fee and separate device fee, with predicates in

the market.

C1 “New products” that are based on existing products/

therapies. Technical fee exists for procedure, but new

functional category needed to account for incremental

improvement in technology.

C2 “New products/therapy.” New technical fee and device

reimbursement category must be created.


TIMING OF JAPANESE REIMBURSEMENT

A1 Automatically after 20 days of filing

A2 1st day of every month, when filed before 10th day of

previous month

B 1st day of every month, when filed before 10th day of

previous month

C1 4X / yr – Jan 1, Apr 1, July 1, Oct 1 (submitted at least 4

months prior); Provisional coverage prior to final listing

C2 4X / yr – Jan 1, Apr 1, July 1, Oct 1 (submitted at least 4

months prior); Provisional coverage prior to final listing


CHINA

Access to the Chinese market is very difficult due to the

size of the country and the complexity of the regulatory

and reimbursement systems…

Pricing of medical devices in China is primarily up to the

manufacturer but government agencies and provincial bureau

are starting to put into place more rules and regulations to limit

prices all the way through the chain from the manufacturer’s

price to the end user price; in many cases the patient pays for

the device.




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CHINESE AGENCIES INVOLVED IN

REIMBURSEMENT

Ministry of Health

Administers rural health insurance system

Administers public hospitals

Bidding/tendering system

Ministry of Labor and Social Security

Administers urban health insurance system

Provincial Health and Pricing Bureaus

Review regional purchases of large scale medical devices

Establish reimbursement rates for medical devices

Source: China’s Medical Device Market (Presentation: Jay Biggs, U.S. Department of Commerce, Office of Health and Consumer Goods)

CHINESE MEDICAL DEVICE REIMBURSEMENT

China’s reimbursement system for medical devices is at an early stage of development

Policies and procedures are not uniform and may vary significantly from region to region

There are several Chinese agencies involved, but they do not necessarily work in harmony

With 22 Provinces, four Municipalities and five Autonomous Regions, an important component of the medical device pricing structure takes place at the Provincial and City level.

Source: China’s Medical Device Market (Presentation: Jay Biggs, U.S. Department of Commerce, Office of Health and Consumer Goods)

LATIN AMERICA

All countries in the Latin American region legally

recognize the right to health care, but almost one out of

two inhabitants is excluded from social security systems.

Because of diverse historical processes, each country in Latin

America has developed its own system of social protection.

Even if some are partly covered by other public or private

systems, a large number is still excluded for financial (poverty),

geographical or cultural reasons. Although the private sector is

growing in Latin America, the majority of healthcare is public-

based.

Sources: Overview of the exclusion of social protection in health in Latin America and the Caribbean, ILO/PAHO report to the ILO

Tripartite meeting on the extension of social protection in health to excluded groups in Latin America and the Caribbean, Mexico, 29

November - 1 December 1999.

RESHAPING HEALTH CARE IN LATIN AMERICA: A Comparative Analysis of Health Care Reform in Argentina, Brazil, and Mexico, Edited

by Sonia Fleury, Susana Belmartino, and Enis Baris


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MEXICAN EXAMPLE

“Everyone has the right to health protection “ Art 3 Constitución

México (Dr. Antonio José Caso, México)

Social Security Institutions (Public Sector)

1. Instituto Mexicano del Seguro Social (IMSS)

2. Instituto de Seguridad Social para Trabajadores del Estado (ISSSTE)

3. Secretaría de Salud (Hospitales generales, Regionales, Institutos,

etc.)

4. Seguro Popular

5. Otras instituciones paraestatales (PEMEX, Secretaria de la Defensa,

Marina etc.)

6. IMSS Oportunidades

Source: INEGI. XII Censo General de Población y Vivienda, 2000. Base de datos de la muestra censal


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MEXICAN EXAMPLE

In Mexico, the penetration rates in the adoption of new

technologies on Health (Medical devices) are much lower in

comparison with other countries in the region

Public Sector: not enough infrastructure for the implementation

of new health technologies (medical devices)

Few doctors trained in the use of new technologies

Currently the Mexican population has little access to medical

devices

Source: Is Equity of Access to Health Care in Latin America Achievable? (Presentation by Antonio Caso MD, Med. Post Graduate

Professor and Distance Learning Coordinator, Post Graduate Division, Faculty of Medicine, National University of Mexico, Mexico D.F,

Mexico)


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CASE EXAMPLE:

THE EUROPE UNION


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ECONOMICS OF HEALTH CARE IN EUROPE

Access to medical technology differs across Europe. Differences in

funding and reimbursement systems create barriers for the

adoption of new and innovative medical technology.

Rising costs pressures due to the continued introduction of

new and innovative technologies.

Government pressures to remain within budgetary and

spending limits.

Governments pressures for greater efficiencies by introducing

health care reforms.

Despite different funding mechanisms, all health care systems in

Europe are experiencing conflicting pressures

Source: European Heart Journal (2004) 25, 611–616


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STRATEGIC CONSIDERATIONS FOR DEVICE

COMPANIES

There are no easy answers but device companies need to have a

strategic reimbursement plan in place for the European Union

countries in addition to their regulatory strategy

Which markets should we address and why?

What should our pricing strategy be?

What clinical data needs to be developed?

What cost data needs to be collected?

How de we ensure market adoption of a new technology?

Source: UK Medical Device Access – Hurdles and Opportunities (Presentation by Synergus, Minneapolis, MN, Nov. 11, 2010)


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EUROPEAN UNION

Competing goals of cost containment and improved health care

lead to increased consideration of cost and value of technology.

Competitive pressures: The cost and value of technology

Understanding the value of technology allows full economic

and cost benefits for the medical device to be considered

Enables competing products to be reviewed on the basis

of total cost including purchase price and long-term health

costs and benefits

Ultimately improves the quality of medical care for patients

Source: Medical Devices In Europe: Market Overview; MassMEDIC Presentation by N. Gerard Zapiain, U.S. Department of Commerce October 19, 2007

EUROPEAN UNION

Understanding the value of technology through Health Technology Assessment (HTA)

HTA evaluates the cost and benefits of a medical technology

Cost impact and benefit cannot always be evaluated in a pre-market setting

Data must be collected using “real” market experience

The value of technology takes into account long-term health benefits

In most cases, once the true value of long-term health benefits are considered a higher technology medical device with a higher purchase price, will actually have a lower total cost

Source: Medical Devices In Europe: Market Overview; MassMEDIC Presentation by N. Gerard Zapiain, U.S. Department of Commerce October 19, 2007

HEALTH TECHNOLOGY ASSESSMENT (HTA)

Health technology assessment (HTA) is a

multidisciplinary process that:

Summarizes information about the medical, social, economic

and ethical issues related to the use of a health technology in a

systematic, transparent, unbiased, robust manner.

Its aim is to inform the formulation of safe, effective, health

policies that are patient focused and seek to achieve best

value.

Source: EUnetHTA


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HTA EXAMPLE: THE UK

National Institute for Health and Clinical Excellence (NICE)

Evaluation Pathway Programme focuses specifically on the

evaluation of innovative medical technologies

The Medical Technologies Advisory Committee (MTAC) supports

the Evaluation Pathway Programme

The National Health Service (NHS) wants NICE to bring together

knowledge and guidance (e.g., “Technology Appraisals”)

TA process is slow (124 are currently pending)

NICE encourages industry and stakeholder inputs to the TA

process, which is relatively transparent

Source: http://www.nice.org.uk/aboutnice/whatwedo/aboutmedicaltechnologies/MTACmembers.jsp


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http://www.nice.org.uk/aboutnice/whatwedo/aboutmedicaltechnologies/MTACmembers.jsp

HTA EXAMPLE: THE UK

National Institute for Health and Clinical Excellence (NICE)

TAs take into account a balance between clinical outcomes and

cost effectiveness

Political pressure may remove cost element from NICE TAs

(Recent cancer drugs not recommended by NICE)

Once NICE guidance is published, health professionals are

expected to take it fully into account when deciding what

treatments to give people.

NHS funding is mandatory within 3 months of NICE guidance by

law. However, this does not happen in reality

Source: http://www.nice.org.uk/aboutnice/whatwedo/aboutmedicaltechnologies/MTACmembers.jsp


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http://www.nice.org.uk/aboutnice/whatwedo/aboutmedicaltechnologies/MTACmembers.jsp

NICE EXAMPLE: DRUG ELUTING STENTS

Drug-eluting stents (DES) are recommended for use in

percutaneous coronary intervention for the treatment of coronary

artery disease, within their instructions for use, only if:

the target artery to be treated has less than a 3-mm calibre or

the lesion is longer than 15 mm, and

the price difference between drug-eluting stents and bare-

metal stents is no more than £300.

DES initially recommended by NICE in 2003 over Bare Metal

Stents (BMS). Then, BMS market prices plummet. DES is re-

evaluated in 2008, and is no longer considered cost-effective if

the price premium is < £300 ($ differential in U.S. is thousands)

Source: http://www.nice.org.uk/nicemedia/pdf/TA152Guidance.pdf


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http://www.nice.org.uk/nicemedia/pdf/TA152Guidance.pdf

IN SUMMARY

Reimbursement and healthcare systems varies

globally by each country

HTAs are commonplace

Cost pressures are driving reform and constant

changes in country specific reimbursement funding

requirements

Strategically, companies must be prepared with both

clinical and cost effectiveness data regardless of the

country


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CONTACT INFORMATION

Committed to helping your company make

intelligent, informed decisions that includes

sound reimbursement advice

Michael Sanchez, M.A., CCA

Reimbursement Advisor

Independent Consultant

651-472-3442

[email protected]


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mailto:[email protected]

http://www.reimbursement.vpweb.com/

international reimbursement strategies reimbursement overvi… · source: medical device...

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