No reimbursement, no market

“No reimbursement, no market”

Ron de Graaff (Seijgraaf BV) is a reimbursement expert who operates for a wide variety of (mostly MedTech) companies in healthcare from startups to large companies, and even medical care experts such as doctors and dentists. His services and expertise are useful for any player in healthcare who has a product that can be priced. Since the founding of Seijgraaf BV in 1985, the regulatory landscape for health reimbursement in the Netherlands has undergone significant changes that have made it more difficult for companies to manage the reimbursement of their healthcare product. Because Seijgraaf BV has been operating during these changes, Ron de Graaff has a complete and thorough understanding of current regulations and thus he can guide companies to achieve early market access. In the Netherlands and other northern European countries, the healthcare market is based on reimbursement. Effectively, for companies this means “no reimbursement, no market”.

 At what product development phase does reimbursement start to play a role?

For an optimal time to market (TTM) the reimbursement criteria that you need to fulfill should be clear by the time the product enters clinical trial testing, even though the process of getting reimbursement generally starts after CE marking. Often we see companies obtain a CE marking for their product and thinking that they are at the end of the line. Generally after CE marking the company is out of funds and there is lack of reimbursement knowhow. If a company starts the process of getting reimbursement after CE marking, it can cost an extra 3 to 4 years before the product gets to the market because reimbursement will require additional data that the company will need to gather. Market authorization will say that the product is allowed to be sold on the market, but it does not guarantee a positive reimbursement decision. Market access is the process that starts with R&D and ends with obtaining reimbursement.

 What role can investigating reimbursement possibilities play for early stage companies?

Generally, start-ups don’t spend their time on investigating reimbursement. The teams are to small and the focus is on product development; spending the time and funds on a reimbursement team member is not advised. However, it is possible to hire someone to explore the reimbursement potential of the product that is being developed. Having good reimbursement prospects can help convince investors, and having bad reimbursement prospects can lead to making changes in the product. In the worst case scenario the business could be advised to stop the product development based on the reimbursement prospect.

 Is reimbursement a factor that should be considered for due diligence? How would you weigh reimbursement among other factors such as Team, Product and Market?

As stated before, it should be considered for companies that are entering/in the clinical trial phase. Because “no reimbursement, no market”, being able to get the product reimbursed or not is a go/no go criterium. For companies that are in the earlier development phases, reimbursement is not one of the main criteria for due diligence.

What is an efficient way for a company to make an assessment of reimbursement possibilities for early stage companies?

For organizations, who also perform due diligence and are investors, Seijgraaf BV can perform a quickscan of a company. In a quickscan, we weigh the product or service that is provided by the company. Additionally we can indicate the best pathway for the company to take, in order to get the fastest market access and reimbursement. A few factors that we consider during a quickscan are the business model, the costs calculation, the budhet impact, the golden standard reference and a KOL analysis. We also investigate the effect of the (proposed) product on the existing market. Something like our quickscan can yield a go/no go advice for due diligence.

General points about reimbursement

Companies tend to think that finding a distributor is a way for them not to worry about reimbursement. The question for those companies is: how do you know what a distributor needs to do for you if you do not know the market yourself. The answer is that you don’t know. This puts the company in a terrible negotiation position that distributors often take advantage of, which can lead to disappointing sales. Alternatively, for a company to manage its own reimbursement can greatly increase the value of said company. We have seen that large companies are not interested in buying a small company with only CE marking. However, after reaching reimbursement those same companies are sold quickly and for a high price.