Scale#It is a Knowledge and Competency resource for entrepreneurs to strengthen governance and investors to fuel their knowledge of this asset class. This platform is under construction. Click on this banner to sign-up to be informed of new articles as they are released.
The challenges of steering the European regulatory and reimbursement landscape for medical devices
As investors in the Belgian & Northern French medical device and Healthtech market, we have observed a great deal of innovations and solutions that could well become the pinnacle of tomorrow’s healthcare delivery (optimised workflows, improved patient outcomes, significant decreases in costs for the taxpayer and reduced pressure on the system as a whole). However, obtaining market access and reimbursement, while remaining competitive is a whole different ball game for these innovators. Sadly, this results in a vast majority of files that have an “America First” strategy because of the above-mentioned reasons. How have we arrived tot his point?
Due to the ageing population that reinforces the need for innovative medical solutions, the medical device market throughout Europe has grown rapidly over the last few years. On the other side, the regulations, which are very much needed to guarantee patient safety, have also burdened these cash-strapped innovators with challenges that weren’t applicable 20 years ago. Furthermore, obtaining reimbursement codes has proven even more difficult, especially in Belgium. We aim to highlight the main challenges that exist today both regulatory and on a reimbursement level. To overcome these challenges, a wake-up call for better collaboration between stakeholders is needed now. Considering, European start-ups are being forced to turn their development focus to the United States.
2. The Challenges
Main regulatory challenges:
- Withdrawal of contract manufacturers and subcontractors:
Increased compliance with directives, laws and standards has medical device manufacturers re-assessing their engagement in the production of various components needed to build these devices. In turn this results in a positive feedback loop, where the challenges increase as the pool of qualified manufacturers further declines.
- Increased pressure on notified bodies:
Notified bodies are organisations that are designated by EU countries to assess the conformity of certain products before being placed on the market. To assess the conformity of medical devices, notified bodies have clear a mandate to not only review the Medical Devices Regulations (MDR) but to also manage the Medical Device Directives (MDD). This has put an enormous burden of extra administrative work on the notified bodies, which decreased the number of notified bodies from 96 to only 40 under the transition to MDR. We have also witnessed this in delays and undercapacity resulting in a longer time to market and more costly development, first-hand.
- Staff scarcity has a ripple effect on the validation studies:
It is not a recent phenomenon that companies in general and hospitals in particular struggle to attract and keep talent on board. In hospitals this has only further increased after COVID-19. Claiming that providing quality care is still the core business of hospitals, it has had a direct impact on the capacity of hospitals to conduct validation studies. This lack of available personnel can lead to significant delays in product development, market entry and increased costs for both innovators and their investors.
Main reimbursement challenges:
- The deficiency of reimbursement codes:
While obtaining market access is already notoriously hard, obtaining reimbursement codes in Europe and especially Belgium is like squeezing water from a stone. These codes are critical to challengers in the market because they determine how much health providers will be reimbursed for a particular device or technology. If the company can’t obtain such code, clinicians, physicians, surgeons and other HCPs will hesitate greatly to use these new innovations as they are not reimbursed to use them. To obtain a code, companies must file extensive amounts of data, and documentation and enter lengthy processes to prove the safety and efficacy of a particular device. Unfortunately, during this whole process, there is no sign of guarantee that your code can be assigned. This creates a monumental barrier for small companies. Since innovation mostly comes from new entrants, it creates an uphill battle for all who try to bring innovation to the market.
- Differences in reimbursement
Imagine a specific company has successfully navigated all the abovementioned paths. You may assume that it takes multiple years to achieve market access and reimbursement in one EU country. The company has not yet arrived at its destination in terms of full-market access. Considering, the many differences in healthcare systems, payment models and regulations, companies may experience numerous challenges from one country to another. This results in an unfortunate decrease in patient accessibility to innovative treatments.
3. Improvements that benefit all stakeholders
- Streamline both regulatory and reimbursement processes across EU countries:
As emphasized by multiple stakeholders in various research papers, the only way for Europe to compete with the United States in both attracting and developing digital health and medical device solutions is to become a single regulatory market in this area. Creating a level playing field on quality and market access frameworks might be the first step while preventing further fragmentation must be a topic that needs treating urgently. In the long term, the EU should syndicate all the healthcare systems to harmonize reimbursement across the continent. However, for now pricing and reimbursement decisions remain a national competence where change is much harder to implement.
- Strong promotion of syndication of knowledge and best practices:
As the first improvement was directed at European governments, some initiatives can be relevant for innovators and industry associations. To shorten the time to market and reimbursement processes, it is of utmost importance that best practices and knowledge are shared. One of the main takeaways is that companies need to invest heavily in strong clinical data and health economic evidence. To achieve this there needs to be a platform where innovators can share ideas and have constructive dialogues about their own experiences, challenges, and most importantly their solutions.
- Create a better climate for establishing PPPs that support innovation in the medical field:
Finally, greater collaboration between hospitals, innovators, insurers, and regulatory bodies is pertinent to ensure smoother and improved processes. One approach that needs to be reinforced is to leverage EU funding such as the Recovery and Resilience Facility to establish a dedicated fund for the acceleration of digital health and medical device innovation and invest next to private funds. Particularly to support and syndicate evidence generation for solutions developed by coalitions of start-ups and academic organisations. Furthermore, it can establish a framework for collaboration and data sharing between public research, academic organisations and private healthcare organisations to use and give value to collected health data and reduce overall costs for innovators.
To conclude this article, all stakeholders must accept that the challenges that exist today will kill present and future innovation. A more harmonized system for regulatory approval and reimbursement is necessary to incentivize foreign and national investment in European champions and to create a level playing field with the United States. European governments need to act now, but innovators, industry associations and even hospitals should form a unified front to further increase pressure on regulatory bodies to make sure change is in line with expectations and is moving away from further fragmentation. Another important aspect is that new regulations focus on improving patient safety while not increasing the administrative burden of innovators. For investors, it becomes increasingly important to look at the regulatory and reimbursement pathway from an operational perspective and dig into the tactics, something we have been cautiously doing at TheClubDeal.
Harrington, D. (2023). More work, fewer resources and broad uncertainty put pressure on notified bodies. [online] IDEA Regulatory. Available at: https://idearegulatory.com/more-work-fewer-resources-and-broad-uncertainty-put-pressure-on-notified-bodies/#:~:text=The%20challenge%20for%20notified%20bodies
Kay, A. (2023). ” THE BEST WAY TO PREDICT THE FUTURE IS TO INVENT IT.”. [online] Available at: https://eithealth.eu/wp-content/uploads/2023/02/EIT_Health_Digital-Medical-Devices_Paths-to-European-Harmonisation.pdf.
Ns-yannick (2015). A clear, predictable and effective regulatory framework for Europe. [online] MedTech Europe. Available at: https://www.medtecheurope.org/news-and-events/news/a-clear-predictable-and-effective-regulatory-framework-for-europe/
Mundell, I (2023). Start-ups left hanging in EU medical device regulation snarl-up. [online] Available at: https://sciencebusiness.net/news/Medical-technology/ecosystem-start-ups-left-hanging-eu-medical-device-regulation-snarl