The ability of stakeholders within the healthcare industry – including medical device developers, pharmaceutical companies and hospital systems – to use big data to evaluate the value of therapies is setting the foundation for the shift towards value-based payment models.
An analysis by United Healthcare estimated that at the end of 2018, more than $65 billion will be tied to value-based contracts. Furthermore, as the movement gains momentum, the adoption of value-based care is projected to account for about 59 percent of health care payments by 2020, according to the Aetna 2018 Health Care Trends Report.
Even regulators are releasing guidances to advance public health benefits and transparent communication from companies and insurers across a product’s lifecycle. For instance, a recent FDA guidance aims to improve communications between device makers and payers, enabling for better evaluation of new products before initiating value-based contracts.
Therefore, the key to success for medical device developers in value-based care is to ensure that value benefits align across stakeholders, especially with the payers.
Device developers’ role in value-based care
Medical device developers will have to carefully assess, plan and coordinate with a range of potential stakeholders to generate higher margins in a value-based care model. Manufacturers will need to demonstrate more clinical effectiveness and cost impact of new treatments to ensure providers and payers will achieve the necessary value. Payers will hold providers more accountable for delivering better patient outcomes, causing device manufacturers to encounter cost pressures. While this may make profitability more challenging, manufacturers have the opportunity to increase sustainability and improve patient outcomes by demonstrating value through new types of evidence.
Working with providers to control costs will be necessary for device manufacturers to have success in the marketplace. Therefore, manufacturers will need to provide evidence of value by sharing product performance data to providers that offer a complete solution to the procedures in which their devices are used. In addition to clinical safety and efficacy data manufacturer’s evidence will need to show how a premium priced product generates offsetting savings or patient benefit that make it worth the extra costs.
Benefits of acting early
Considering an economist’s valuation of a device late in the development process might have worked in a traditional fee-for-service model. Today, however, device manufacturers will need to begin thinking about value earlier in the product life cycle. By including an economic analysis at the start of the development process, manufacturers can avoid delaying market entry. Moreover, for some devices, manufacturers may consider investing in a pre-market approval programme that gathers detailed clinical evidence and cost impact information simultaneously.
Information incorporated in analyses should consider what different stakeholders value and their willingness to pay. Creating a stakeholder value map can help identify which stakeholders value what, and over what time frame that value is returned. Engaging in a partnership with a CRO with expertise in clinical evidence generation, economic modeling and commercialisation can assist during the stakeholder value mapping process.
Harness mHealth technologies to show value
Using mHealth and other innovative technologies can generate the evidence needed for manufacturers to demonstrate value. For instance, measuring real-time patient activity can show how a therapy impacts patient outcomes, especially outcomes that are difficult to document reliably through periodic clinical visits, such as the ability to care for themselves or others.
Diagnostic and telemedicine apps can keep patients in communication with clinics, making it easier to manage their own conditions. These mHealth technologies document the value of treatments more effectively and efficiently, helping manufacturers increase treatment value, while presenting a persuasive case to payers.
Moving forward, the implementation of value-based care models means manufacturers will need to demonstrate clinical efficacy and cost impact of new devices, especially earlier in the development process, to ensure products benefit patients, while outweighing any extra costs. Despite the challenges, the rewards of value-based care can be high for manufacturers, in so far as they can help patients to have more timely access to innovative medical technologies.
Vicki Anastasi is vice president and global head, medical device and diagnostics research, and Marie McCarthy is director of product innovation, information technology, both at ICON.