Pricing and Reimbursement Strategies for Diagnostics: Overcoming reimbursement issues and navigating the regulatory environment

Date: June 22, 2010
Pages: 125
Price:
US$ 3,835.00
Publisher: Business Insights
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: PF24ED08504EN
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Pricing and Reimbursement Strategies for Diagnostics: Overcoming reimbursement issues and navigating the regulatory environment
The reimbursement for diagnostics is the key requirement for both the diagnostic providers and the payers because while 5-7% of the hospital cost is incurred on diagnostics, they are used for around 70% of the healthcare decisions. Developing an optimum price especially with respect to emerging diagnostic technologies such as molecular diagnostics has been very challenging as evidence-based pricing does not suffice for such technologies. This complicates the scenario for early movers in diagnostics. However, there has been an on-going issue even with respect to existing technologies, as the companies have an immense need to re-consider their pricing strategies to deal with cost and demand versus reimbursement issues. Hence, it is very crucial to identify novel pricing strategies to maintain a fair plane among all the stakeholders.

Key features of this report
  • Regulatory structure for U.S. and Europe
  • Existing pricing strategies for healthcare diagnostic equipments
  • Novel pricing strategies for healthcare diagnostic equipments
  • Strategic recommendations for existing and first mover healthcare diagnostic equipments
  • Indicative prices and reimbursement amounts for healthcare diagnostic equipments
Scope of this report
  • Understand the existing structure for reimbursements for healthcare diagnostic equipments developed markets
  • Understand the existing pricing for healthcare diagnostic equipments for developed markets
  • Understand the role of various factors impacting price of the healthcare diagnostic equipments
  • Understand the evolution of pricing strategies in recent times within healthcare diagnostic equipments
  • Helps in determining the complete understanding of changing times within pricing with respect to reimbursements
Key Market Issues
  • The healthcare diagnostic industry is currently facing the issue of lack of reimbursements for various procedures which are extremely critical to patient diagnosis
  • This lack of reimbursements has started to affect the market negatively and the major markets in developed economies are seeing a negative to flat growth rate
  • Various end users are using this opportunity to push the prices of the healthcare diagnostic products further down, which can lead to decrease in the size of the industry
  • Various countries in Europe have their own reimbursement structure and policies with respect to various procedures. This is creating lot of bureacratic and pricing hurdles for the Original Equipment Manufacturers (OEMs) of these products.
  • Various governments in Europe are changing their reimbursement policies with respect to new products launched within the healthcare diagnostic industry.
Key findings from this report
  • A procedure might have a higher chance of getting insurance coverage, if it reduces the overall healthcare cost.
  • The recent reduction made by the CMS in the reimbursement amount for non-facility units is expected to impact the diagnostic devices market especially in the form of lack of innovation.
  • The reimbursement structure is restraining the growth of innovative technologies such as molecular diagnostics.
  • An OEM’s pricing is fundamentally based on its desired Return-on-Investment and the overall cost of manufacturing its equipment.
  • Fair Value Pricing and Risk Sharing Pricing are the new methods of pricing within healthcare diagnostics
Key questions answered
  • What is the existing reimbursement structure within the major markets in healthcare diagnostics?
  • What are existing pricing strategies employed by healthcare diagnostic Original Equipment Manufacturers (OEMs)?
  • What is the impact of current reimbursement policies over the pricing of healthcare diagnostic equipment pricing?
  • How do the OEMs of healthcare diagnostic equipments price their products considering reimbursement policies across the world?
  • What are the possible drawbacks of recent changes in reimbursement policies across the globe?
Pricing and reimbursement strategies for diagnostics
Executive Summary
Market overview
Key findings
Analyzing best-fit strategies for novel pricing and reimbursement
Strategic recommendations

CHAPTER 1 INTRODUCTION

Summary
Key take aways
Report description
Stakeholders

CHAPTER 2 MARKET OVERVIEW

Summary
US regulations for medical devices & diagnostics
United States Department of Health and Human Services (HHS)
United States Public Health Services (PHS)
National Institutes of Health (NIH)
Agency for Healthcare Research and Quality
Indian Health Services
Substance Abuse and Mental Health Administration
Centre for Disease Control and Prevention
Food and Drug Administration
US reimbursement structure
US reimbursement payors
Public health insurance
Medicare
Medicaid
Other public systems
Private health insurance
Employer-sponsored insurance
Administration
Financing
Private non-group (individual market)
Overview
Administration
Financing
US reimbursement procedures
Benefit eligibility
Billing process
Coding systems
Pricing processes
Guidelines for coverage decision-making
US diagnostic imaging reimbursement structure
Medicare perspective
European healthcare reimbursement structure
European healthcare regulatory structure
German healthcare system
Impact of regulations on pricing and reimbursement
French healthcare system
Impact of regulations on pricing and reimbursement
UK healthcare system
Impact of regulations on pricing and reimbursement
Italian healthcare system
Impact of regulations on pricing and reimbursement
Spanish healthcare system
Impact of regulations on pricing and reimbursement
European diagnostic imaging reimbursement structure
Pricing and reimbursement: pharmaceutical vs. diagnostics
Level of pricing transparency for diagnostic devices

CHAPTER 3 KEY FINDINGS

Summary
Introduction
Impact analysis: role of pricing in risk minimization
Payor’s (health insurance companies) perspective
Diagnostic provider’s perspective
Identifying critical issues in the pricing and reimbursement of diagnostics
Decline in the reimbursement for non-facility units in US
Evolving molecular diagnostics causing further complications
Factors affecting price of healthcare diagnostic products
Competition:
Company Profile in the local market:
Government:
Reimbursements

CHAPTER 4 ANALYZING BEST-FIT STRATEGIES FOR NOVEL P&R ISSUES

Summary
Introduction
Pricing strategy
Price management and reassessment of pricing throughout the product lifecycle
Existing product technologies
New product (first mover diagnostic) technologies
Payor engagement strategy
Introduction of separate business unit for pricing and reimbursement
Novel pricing for existing and first mover diagnostic technologies to overcome reimbursement issues
Fair value pricing
Risk based pricing
Outsourcing pricing & reimbursement strategies
Universal pricing
Free pricing
Strategic recommendations
Innovations to demand a price premium
Case study – Average selling price of mammography units
Reduced time to market to generate faster ROI
Technologies addressing unmet clinical needs to benefit diagnostics providers

CHAPTER 5 APPENDIX

Index

LIST OF FIGURES

Figure 2.1: US healthcare regulatory organizational chart
Figure 2.2: US FDA organizational chart
Figure 2.3: CDRH Organization Chart
Figure 2.4: US healthcare reimbursement and financing structure
Figure 2.5: Healthcare structure in Germany
Figure 2.6: Healthcare structure in France
Figure 2.7: Healthcare structure in the UK
Figure 2.8: Healthcare structure in Italy
Figure 2.9: Healthcare structure in Spain
Figure 3.10: Reimbursement mechanism
Figure 3.11: Different cases for reimbursement approvals
Figure 3.12: Factors affecting pricing in a healthcare diagnostic OEM
Figure 3.13: Pricing work flow in a healthcare diagnostic OEM
Figure 3.14: Pricing equation
Figure 3.15: Product lifecycle for a diagnostic product
Figure 4.16: Value-based pricing & reimbursement
Figure 4.17: Product lifecycle (PLC) for a diagnostic product
Figure 4.18: Price recommendations at Product Lifecycle (PLC) stages
Figure 5.19: Mammography: Average selling price ($)for U.S., 2005-10

LIST OF TABLES

Table 2.1: Payment & coverage in pharma
Table 3.2: Reduction in US. medical procedure reimbursement
Table 6.3: Indicative prices for in vitro diagnostic equipment – US
Table 6.4: Indicative reimbursement for in vitro diagnostic tests – US
Table 6.5: Indicative reimbursement for in vitro diagnostic tests – US (contd. 1)
Table 6.6: Indicative reimbursement for in vitro diagnostic tests – US (contd. 2)
Table 6.7: Indicative reimbursement for in vitro diagnostic tests – US (contd. 3)
Table 6.8: Indicative reimbursement for in vitro diagnostic tests – US (contd. 4)
Table 6.9: Indicative reimbursement for in vitro diagnostic tests – US (contd. 5)
Table 6.10: Indicative reimbursement for in vitro diagnostic tests – US (contd. 6)
Table 6.11: Indicative reimbursement for in vitro diagnostic tests – US (contd. 7)
Table 6.12: Indicative reimbursement for in vitro diagnostic tests – US (contd. 8)
Table 6.13: Indicative reimbursement for toxicology/DAU (Drugs of Abuse) tests
Table 6.14: Indicative reimbursement for toxicology/DAU (Drugs of Abuse) tests
Table 6.15: Indicative reimbursement for toxicology/DAU (Drugs of Abuse) tests
Table 6.16: Indicative reimbursement for toxicology/DAU (Drugs of Abuse) tests
Table 6.17: Indicative reimbursement for point of care tests
Table 6.18: Indicative reimbursement for Microalbumin and Creatinine tests
Table 6.19: Indicative Reimbursement for various kind of Hemoglobin tests
Table 6.20: Indicative prices for in vivo diagnostic equipment ($) – US
Table 6.21: Indicative reimbursement for in-vivo diagnostic tests – US
Table 6.22: Medicare reimbursement for mammography services
Table 6.23: Medicare reimbursement for mammography services
Table 6.24: 2005 Medicare payment for magnetic resonance imaging of the joints of the extremities
Table 6.25: 2007 Medicare reimbursement for SPECT/CT for selected tumor imaging and localization
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