To effectively introduce a new product to market and ensure it is widely adopted, medtech companies must consider the many facets of their go-to-market strategy from the earliest days of product development.
This was the message of the Fogarty Institute’s third-annual educational workshop focused on commercialization. The three-part seminar series, being presented virtually to adhere to COVID restrictions, is spearheaded by Marga Ortigas-Wedekind, FII’s chief commercial strategy officer.
She kicked off this first installment with a presentation on “Commercialization – the Ultimate Way of Starting with the End in Mind,” where she shared insight on how to successfully introduce an innovative medical technology and the many activities needed to make the product available to patients.
Shawn Becker, MD, founder and president of Silvercat Advisors, followed, taking a deeper dive into the complex topic of reimbursement. Shawn has 25 years of experience launching and growing innovative health care technologies and services and 11 years acting as a member of executive management team for pre-IPO companies. He combines his clinical background with his business acumen to provide strategic reimbursement and market access counsel for medical device, diagnostic and digital health companies.
Adopting a commercialization mindset early on
Startups often tend to focus on the initial product design phases, with the assumption that if they develop an innovative device that solves a large unmet need, they are well on their way to being acquired. Unfortunately, that is not the reality, as data shows that the companies which have executed on a commercialization strategy early are more likely to exit either via an IPO or acquisition.
“We’ve seen that 68% of the companies that have been acquired over the past six years were at a commercialization stage” said Marga. “No matter how valuable and novel your technology is, acquirers don’t want to have to do all the heavy lifting – they expect that you’ve done the work to be a revenue-generating company.”
That’s why a commercialization mindset is key as you are building your company and developing your product. Marga reviewed the steps needed to take the product from design to market to ensure it’s widely received, citing the “whole product” concept that was popularized by Geoffrey Moore. “The components of getting products to market are numerous and can be overwhelming – from getting patents to regulatory clearance to reimbursement to clinical publications, and so on. The key is to think through where you want to go, know what your destination is, and work backwards from there, considering the waypoints along the road and understanding that your strategy will need to shift as your technology and company progress,” said Marga.
Navigating the reimbursement landscape
As medtech entrepreneurs know, one important aspect of commercialization is the reimbursement strategy. Shawn shared an overview of the U.S. payer system and the reimbursement process, augmented by insightful case studies. It becomes complex to consider who will ultimately pay for medical devices and services with a staggering number of individuals and entities involved.
That’s partially because the health insurance market is fragmented, divided between public and private payers, and there are even more entities within each group. Public payers are Medicare, segmented into multiple Medicare Administrative Contractors (MACs), and Medicaid, which is administered by each state. Then one must consider the many different types of health plans offered by commercial payers, with the goal being to obtain coverage across all the different insurance “products,” from high-premium to high-deductible plans. Or if the device targets a particular segment, for example the elderly, the entrepreneur may want to focus on Medicare patients.
Shawn then described the three pillars, or the “three Cs:” coverage, coding and contracts. While all three must be aligned to ensure consistent, reliable reimbursement, obtaining each pillar requires a different series of complex processes, involving multiple groups, individuals and steps.
“Reimbursement is a key factor to achieving a successful medical technology launch and should be one of the first elements a company considers when developing a product,” said Shawn. “Companies need to develop a strategy for how their products will be paid and ensure that the payment rate is going to be sufficient and profitable for their business and stakeholders.”
Stay tuned for future topics that will be covered in the workshop mini-series, including sales and marketing considerations with Jamie Lewis and Chad Hoskins of Outset Medical on June 19; and commercial readiness with Mika Nishimura of nVision (Boston Scientific), and getting your clinical publication strategy in line with Judy Lenane of iRhythm Technologies on June 25.