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Product Positioning and Reimbursement

Charles Schneider

Comparative effectiveness research examines clinical outcomes, or the clinical effectiveness, of alternative therapies for the same condition. For purposes of medical technology development, such
studies dramatically could affect the way in which future treatment options receive coverage, coding and payment within the United States.

Industry representatives fear that such studies would be developed as a means to limit market access for new technologies, or be used as a tool to reduce payment for new innovations. Stakeholders are keenly interested in the outcome of proposed federal legislation, and would do well to consider comparison studies that best position their product for long-term success.

AHRQ’s Leadership in Comparative Effectiveness

In December 2007, the Agency for Healthcare Research and Quality (AHRQ) within the US Department of Health and Human Services issued its draft guide describing comparative effectiveness research. AHRQ supports health services research initiatives to improve the quality, safety, efficiency,
effectiveness and cost-effectiveness of healthcare. The agency’s guide, Methods Reference Guide for Effectiveness and Comparative Effectiveness Reviews, provides researchers a recommended
framework for completing such studies.1 In summary, the guide challenges researchers to consider the reasons for such research, how information may be used to better inform decision-makers and weighing the strength of available evidence. AHRQ counsels researchers to consider heterogeneity, with subgroup analysis or the use of metaregression techniques to account for variances between groups and studies. For medical technology innovators, the inclusion of detailed, specific data points is critical when preparing for better product placement in the future. More precise data could include comparisons between studies; more detailed analysis of patient demographics, patient selection and treatment pathways likely to be used before, during and after the use of the subject intervention; and evaluation of differences among competing technologies and techniques to name a few items
that require consideration.

Within orthopedics, AHRQ has completed comparative effectiveness reviews of drug treatments for arthritis, prevention of fractures in men and women who have low bone density tests or osteoporosis,
as well as completed an assessment for the use of analgesics for osteoarthritis. The agency currently is examining the comparative effectiveness of operative versus non-operative treatments for rotator cuff tears.

A Federal Reaction to Healthcare Costs

In March, Sens. Max Baucus (D-MT) and Kent Conrad (D-ND) introduced the Comparative Effectiveness Research Act of 2008 (S. 3408).

The stated purpose of this pending legislation is to “…improve health care delivered to individuals in the United States by advancing the quality and thoroughness of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be
prevented, diagnosed, treated, and managed clinically through research and evidence synthesis, and the dissemination of research findings with respect to the relative outcomes, effectiveness, and appropriateness of the medical treatments, services and [other] items…” If enacted, S.3408 would amend Section 1181 of the Social Security Act to provide funding for such studies. In addition, the legislation would authorize the establishment of a separate, not-for-profit research organization to be called the Health Care Comparative Effectiveness Research Institute and create a comparative
effectiveness research fund. As of press time, there has been no activity related to the bill. The institute would contract with federal agencies, AHRQ and appropriate private entities to conduct the research, including systematic reviews, observational studies, clinical trials and randomized controlled trials.
Research findings would be peer-reviewed and publicly disseminated in ways patients and healthcare providers can easily understand. As outlined, a multi-stakeholder board of governors, including the secretary of HHS, the directors of AHRQ and the National Institutes of Health and 18 additional
members representing diverse public and private sector expertise and interests would provide guidance.

Comparative effectiveness research likely will be used by payers in the future to establish more specific coverage decisions, or perhaps to base future benefit levels on the selection of certain
technologies or treatment options. Such activities are consistent with recent trends in physician incentives introduced through Medicare’s pay-for-performance program under section 501(b) of the Medicare Modernization Act, state legislative mandates for hospital reporting, and the National Committee for Quality Assurance outcomes reporting by health plans as a condition of accreditation clearly signal the need for medical technology innovators to ensure quality training programs are administered, and outcomes reporting that show technologies are as good as—or better than—alternative treatment options.

Reimbursement Barriers to Entry

While provider payment is of significant concern, manufacturers that include comparisons within clinical trials and decide to sponsor quality research also may use such studies to create reimbursement barriers to entry. Product positioning through comparative effectiveness research will become an effective tool for use with public and private payers and, likewise, will become a significant
talking point with hospital administrators, value analysis committee members, healthcare providers and regulators searching for objective outcomes which support product pricing and the cost of these technologies. Properly completed, such studies may allow the manufacturer to leverage the success of their technology and eventually secure placement within the treatment paradigm.

Industry Considerations

At least four opportunities exist for manufacturers to consider comparative effectiveness research and outcomes reporting in product design and commercialization:

• Integration within pivotal clinical trials
• Parallel studies that evaluate technologies against alternative treatment options
• Use of registries that evaluate the long-term effectiveness of technologies against treatment alternatives
• Integration of quality through customer training and continuing education programs

* * *

Although the last chapter of this story has yet to be written, medical technology companies should consider comparisons to alternative treatment options and technologies within their clinical study strategy. Doing so will create more favorable reimbursement pathways for your technology. 

1. Agency for Healthcare Research and Quality. Methods Reference Guide for Effectiveness and Comparative Effectiveness Reviews, Version 1.0 [Draft posted Oct. 2007]. Rockville, MD. Available at: MethodsGuide.pdf

MedPAC's Recommended Tools for Healthcare Reform
  • Using comparative effectiveness information
  • Linking payment to quality
  • Reporting resource use
  • Bundling services within payment
  • Creating pressure for efficiency through updates
-- Mark Miller, MedPAC Executive Director testimony to Congress, Sept. 16, 2008

Charles Schneider is vice president of reimbursement for Musculoskeletal Clinical Regulatory Advisers, LLC (MCRA) in Washington, DC. He directs MCRA’s reimbursement department and is responsible for assisting companies in the preparation of coding applications, creating reimbursement pathways (Phase I through Phase IV), preparing submissions for use by commercial carriers (TriCare, Medicare, and fiscal intermediaries), and to support national coverage determinations by the Centers for Medicare & Medicaid Services. Working with MCRA’s clinical and regulatory teams, the reimbursement division further supports client needs through coordination of health economic and utilization review outcomes and comparative effectiveness studies, whether it is within an FDA mandated or marketing study. Please send inquiries to Mr. Schneider at

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