Overview of Medical Device Markets in EU and Reimbursement

1. Overview of EU Medical Device Market Environment
Bob Parson
Vice President
Pharmacoeconomics & Outcomes Research
Alere, Inc.
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2. Agenda
 Examine current status of the EU markets
 Establishing main differences between US and EU markets
 Anticipating changing landscape due to economic changes
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3. Major EU Markets
 The five largest medical device markets in Western Europe:
Germany, France, UK, Italy, Spain
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4. Major EU Medical Device Markets
 Like all other sectors, the medical device markets will continue to be
impacted by the global economic recession in the short term.
 Global economic changes will have a major impact on domestic
manufacturing industries where the demand for exports are sizable.
 The economic downturn has lead to a strain on government health
spending as has increasing health costs, aging populations.
 Widening gap between health care costs and funding causing
regulation of prices and capping of budgets.
 Forecasts indicate that beyond the current recession, Western
Europe is expected to return to growth with leading markets
averaging compounded annual growth rate (CAGR) of 5.4% to 2014
(Euromonitor International)
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5. Medical Devices Market: Forecast for Growth
Region 2009 2010 2011 2012 2013
Americas 102.4 107.1 112.1 117.4 122.8
Asia / Pacific 42.5 46.1 49.9 54.3 58.9
Central / E Europe 10.3 11.3 12.4 13.6 14.8
M East / Africa 5.7 6.0 6.3 6.7 7.0
Western Europe 62.3 66.7 71.6 76.9 82.5
Total 223.2 237.2 252.3 268.9 286.0
In Billions USD
Source: Medical Market Fact Book 2008
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6. EU Market Overview
 Proving that a medical device is safe by conforming to the
European Medical Devices Directive (93/42/EEC) and
affixing the CE mark used to be the only pre-requisite to
marketing in Europe.
 Now, governments want to ensure that they are getting
„value for their money‟ and are assessing the cost
effectiveness of treatments before agreeing to pay for
them. In some European countries, treatments are not
even allowed on a private basis unless they have
government approval.
 This approval is obtained through some form of Health
Technology Assessment (HTA). Increasingly, a medical
device has to be associated with an approved treatment
appearing on an official „reimbursement‟ list before it can
be sold to healthcare providers in a particular country.
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7. Regulatory Approval Enables Market Access
US FDA-”Approval” EU: CE Mark
 Relatively higher hurdles  CE Mark requires lower
(510k or PMA) hurdles
 Reimbursement not  Country specific market
guaranteed, can be a very access and payment
lengthy process  Pricing variations are
 Manufacturer can set a common, but can be
target price upon approval controlled
 Post market studies may  Greater rewards for
be required innovation and early entry
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8. EU Market Overview
 Medical devices need to be associated with a coded
reimbursable medical procedure in each geographic
market within the country.
 In Italy and Spain, reimbursement lists are regional and for
some medical devices, achieving reimbursement will
require negotiations with individual hospitals.
 In Germany, the situation is much less complex and the
systems and procedures more advanced. However, this
does not stop the process from taking years, on an
average.
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9. French Market Access Pathway for Medical Device
Source: ISPOR Website
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10. Reimbursement Process: France
French Pricing & Reimbursement (PR) process for medical devices
Source: ISPOR Website
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11. Reimbursement Process: France
Source: ISPOR Website
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12. Germany Health Care System
 Insurance based Health Care System: statutory duty to
insure all residents, e.g., “individual mandate”
 90% are enrolled in public, non-profit health insurance
funds (more than 250)
 One standard list of benefits for all insured, also as
statutory basic tariff in private health insurances
 Free choice of
Health insurance
Tariffs (standard with free choice of provider; PPO,
HMO, primary care)
 Regulations to ensure quality and contain costs.
Source: Federal Ministry of Health
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13. Reimbursement Process: Germany
DECISION MAKERS AND DECISION-MAKING PROCESSES DIAGRAM
Source: ISPOR Website
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14. Markets within Markets
 There has been a strong growth in imports across western
Europe accounting for around 80% of the market. Trade
between EU dominates the import market, and companies
wanting to exploit the full potential of major European
countries need to ensure an effective marketing and
distribution network.
 Critical factors affecting the market‟s growth potential are
changes in the regulatory environment and governmental
measures such as spending controls on medical devices.
 The significant increase in an aging patient population,
along with an increasing chronic disease patients will keep
the demand for medical devices and equipment maintained.
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15. Factors Affecting Medical Device Market Growth
 The mature and high value medical device markets in Western
Europe are well established and capable to integrating new
technology. There are increasing pressures on governmental
regulators and private insurers attempting to contain health
costs and a desire to remain at the forefront of technological
innovation, hospitals will need to invest in new medical
equipment and technologies to maintain this high standard of
care.
 In addition, healthcare services will need to become more
efficient in order to cope with financial pressures and the needs
of ageing populations. There will be an increased demand for
efficiencies, for example, medical devices that facilitate
minimally invasive surgery, which can increase the number of
operations performed in day surgery and ensure a faster
turnaround of patients. Despite recessionary pressures, market
growth rates over the coming years will be positive.
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16. Overview on Provider Payment Methods
• Primary Health Care: • Hospital Payment
• Input-based line item budget • Product Price lists
• Fee-for-Service • Hospital Day (per diem)
• Capitation adjusted by age • DRG‟s
and gender • Germany: G-DRGs
• Capitation-Fee-for-Service • France: Groups
mix Homogenes de Sejour
• Pay for Performance(P4P) (GHS)
• UK: Healthcare Resource
Groups (HRG)
• Italy: US Medicare DRG
(v.24 Adapted)
• Country / Region annual
budgets + DRGs
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17. Reimbursement Process: Italy
Source: ISPOR Website
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18. Reimbursement Process: Italy
Source: ISPOR Website
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19. Tightening NHS budgets Impact Markets
 Revenue streams, particularly in early launch, are less
predictable and slower to develop
 Market entry will require innovation; premium price will
require proven value.
 Population growth doesn‟t necessarily align with market
potential
 Product development, expectations, will need to reflect
global realities
 New challenges for integration of design, regulatory, clinical
and marketing strategies
* Hull Associates presentation, Advamed Reimbursement Workshop, November 2010
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20. Trends in EU Reimbursement
• Greater opportunities for premium reimbursement
• Requires clinical studies, HTA and evidence based effectiveness
to support premium reimbursement
• Reward for innovation, particularly with efficiencies and lower
complications
• Cost effectiveness studies are not required to enter the EU
market but will become more important for reimbursement and
adoption
• Cost impact required for France, Germany, Italy, Belgium, Italy
and Spain
• Greater need for HTA with more networking and sharing of
economic evidence
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21. European Commission: Exploratory Process
Background:
An exploratory process on the future of
the medical devices sector has been put
in place over the second semester 2009
to map the existing public health and
industrial challenges in the sector and
investigate possible topics of reflection
at the European level.
This process has provided for industry, users, and
consumers of medical devices with an opportunity to
share existing challenges.
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22. European Commission: Exploratory Process
 Objective
The objective of the exploratory process on the future
of the medical devices sector was to gather at the end
of the process:
 an overview of existing public health and industrial
challenges,
 to identify current dynamics of the industry and
highlight key topics of interest at the European
level which has resulted in a set of suggested
themes of potential further reflection adopted by
the members of the exploratory process.
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23. Exploratory Process on the Future of the
Medical Devices – Commission Membership
• EUCOMED : Trade association • UEMS : European Union of Medical
representing the medical technology Specialists
industry • ESC : European Society of Cardiology
• EDMA : European Diagnostic • EFORT : The European Federation of
Manufacturers Association National Association of Orthopaedics and
• COCIR : European Coordination traumatology
Committee of the Radiological, • ESR : European Society of Radiology
Electromedical and Healthcare IT Industry • HOPE : The European Hospital and
• EUROM I : European Optical Industry Healthcare Federation
committee • EPF : The European Patient's Forum
• EUROM VI : European Industrial • BEUC : The European Consumers'
Federation committee on Medical Organization
Technology
• ESIP : The European Social Insurance
• EHIMA : European Hearing Instrument Platform
Manufacturers Association
• AIM : Association Internationale de la
• EUROMCONTACT : European contact Mutualité
lens and lens care industry's association
• PGEU : Pharmaceutical Group of the
• FIDE : The Federation of the European European Union
Dental Industry
• EFCC : European Federation of Clinical
• CPME : The Standing Committee of Chemistry and Laboratory Medicine
European Doctors
• CED : Council of European Dentists
• EAHP: European Association of Hospital
Pharmacists
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24. European Commission – Exploratory Process
 Final Report Published January 28 2010
 Future challenges and opportunities for public health and
medical technologies developments
 Balance between the patients' needs and financial
sustainability
 Competitiveness and Innovation of the medical devices
industry
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25. WHO Project on Priority Medical Devices
 Designed to identify the gaps in the market for medical
devices and to focus on meeting health and health-care
needs and addressing critical conditions.
• put in place appropriate regulatory systems;
• harmonize the nomenclature and classification systems;
• ensure that devices have proven benefits to the patient
before they enter the market;
• carry out systematic needs assessments to avoid under-use
of medical devices;
• ensure that clinical guidelines describe a specific technology;
• ensure proper training to prevent damage;
• ensure the technology is used in the proper context;
• ensure human factor engineering and context appropriate
design;
• be aware of the factors that play a role in diffusing a
technology
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26. Thank You!!
Bob Parson
robert.parson@alere.com
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