In other words, who will pay for a developing product? It may be relatively easy to answer this question for drugs or devices that are vastly superior to current alternatives, or treat a disease with no other treatment option. However, diagnostics not tied to a change in treatment, or drugs and devices that offer only incremental improvement over current offerings may encounter a much more difficult path to reimbursement. In general, the largest and most influential payer in the US healthcare system is the Centers for Medicare and Medicaid Services (CMS). CMS and private insurance companies reimburse through complex coding systems for many devices and diagnostics, as well as some drugs. Obtaining a new code for a product can be a challenging process, so understanding if a new product would “fit” under a current code and be profitable is an important consideration. For many drug therapies the most important aspect affecting reimbursement will be placement on what is known as a formulary, or an approved drug list, for a given healthcare provider. Factors for determining placement on a formulary list may include: - alternative or generic options available
- cost
- effectiveness and
- potential side effects compared to competitors
For either route above, a considerable amount of time, effort and expense is involved in educating the relevant parties. In order to avoid a delay between FDA approval of a new product and actual sales, companies need to be focused on the process of obtaining reimbursement well before clinical trials are over, perhaps even modifying those trials or performing additional trials to address potential concerns of payors.
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