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Part 2

Expert interview: How are the prices of innovative diagnostic and medical devices determined?

While there are specific regulations in Germany for the reimbursement of medicines, funding for molecular diagnostics products is complex and virtually non-existent. There is hardly any medical insurance cover for medical devices, which therefore tend to be sold on the open market. The question therefore arises as to how a reasonable price can be determined for innovative diagnostic methods and tools. In the second part of the interview conducted by Dr. Barbara Jonischkeit from BIOPRO Baden-Württemberg, Dr. Manfred Caeser, a pricing and reimbursement specialist at LSCN Ltd., explains the situation for us.

What we are currently seeing is that comprehensive statutory health insurance reimbursement cover for innovative diagnostics procedures is far from being common practice. However, we are also seeing that people are willing to pay for such diagnostic products and services out of their own pockets. How should these products be marketed? How can an appropriate price be determined?

Dr. Manfred Caeser, a specialist in pricing and reimbursement at LSCN Ltd. © privat

Diagnostic products are a problematic issue, as you say, and discussions have been ongoing for many years. But no real progress has been made. In order for diagnostic methods to be used and covered by the SHI in the ambulatory sector, they first need to be listed on a physician fee schedule known as EBM. It usually takes a long time, often several years, before a decision is made as to whether or not to list a new method on the EBM. The reimbursement situation therefore remains unclear until such time as a final decision is made. The product has to have a proven benefit in order to be included in the EBM catalogue. This means that it has to be used by a large number of patients. However, as reimbursement is not available, it takes a while before is has been used by a high enough number of people; the evaluation of the new technology takes rather a long time. So it’s a bit of a vicious circle and this is to the patient’s disadvantage. 

The situation is slightly better for diagnostic methods that can be used to replace other methods already listed in the EBM catalogue. These new methods are then eligible for reimbursement because they are embedded in a treatment plan under a doctor’s supervision. The company that has developed them can then put a marketing strategy in place to prove that the new test is better, better to process and/or cheaper than the existing test. However, this does not apply to new, innovative tests that have not yet been included in the EBM catalogue at the time of market introduction. 

In inpatient care settings in hospitals, the principle that permission is automatically granted unless explicitly banned applies, meaning that new technologies are automatically reimbursed by the SHI on the basis of the German DRG system. The method does not have specific diagnostic and procedure codes, and the money used to pay for it is based on the individual case flat rate. As the method is in competition with all the other procedures that fall under this financing scheme, companies need to find ways to show hospitals that a particular test can be financed with standard flat rates, and that their particular method leads to better treatment outcomes and generates lower overall costs.

© Thorben Wengert/pixelio.de

NUB applications can be filed for truly innovative products. However, NUB status does not always lead to the desired outcome, namely the inclusion of the new diagnostic method in the SHI system. This seems somewhat odd to me.

Not really. But you need to be aware that only hospitals can file NUB applications in cases and that the funding of new diagnostic procedures indirectly falls under the German DRGs. However, this is not always terribly helpful, because no proof of the benefit of the new method exists, and it is in direct competition with already established methods. Having said this, the NUB pathway was introduced with the intention of accelerating market access for new technologies.

The NUB pathway enables an innovative method, either a diagnostic or medical procedure, to be introduced into the German DRG system. A hospital wishing to use the NUB pathway has to apply to the Institute for the Hospital Remuneration System (InEK), providing proof that it is suitable for applying the proposed method. It takes a long time for the InEK to evaluate the data, decide on ‘on-top’ payment and update the German DRG records. Obviously this does not happen overnight.

Let’s say you are a pharmaceutical company that wants to introduce a new technology. There are two things that you have to do: First, you have to try and establish a NUB, and second, you need to convince hospitals that the new technology leads to benefits, including financial ones, for the hospital in question, and that the NUB can be reimbursed under existing reimbursement systems. The hospital has to cover the costs of the new product from its existing revenue, from individual case flat rates and wait for the product to be given a specific procedure code.

Blood sugar monitor © Michael Horn/pixelio.de

There is no regulated market for medical devices. Let’s take blood pressure monitors as an example. They can be bought at any discount supermarket. The price is set the same way as the price of any other non-medical product. Or is there something I’m missing?

As you say, medical products are not regulated, and this applies to related data as well. The only thing a new medical device intended for the German market needs is the CE mark. The health insurance companies will not reimburse the cost of such devices, leaving patients to pay out of their own pockets. Important changes have been made in the case of blood glucose test strips. People suffering from minor diabetes are no longer eligible to receive reimbursement for test strips. Only severe diabetes sufferers who are at risk of developing hyperglycaemia are eligible for test strip reimbursement. As you can see, there is a process underway that is moving towards requiring patients to pay all their own healthcare costs.

Thank you for talking to us.

The interview was conducted by Dr. Barbara Jonischkeit from BIOPRO Baden-Württemberg GmbH.

Explanations of terms

Statutory health insurance (SHI)

In Germany, the majority of people rely on the country’s SHI (Gesetzliche Krankenversicherung, GKV) for their healthcare.

EBM (Einheitlicher Bewertungsmaβstab, German Uniform Evaluation Standard)

Point-based doctors' fee scale according to which physicians are reimbursed for ambulatory care provided on a mixture of fees, treatment lump sums, etc. Inclusion of any new diagnostic and therapeutic method requires a positive G-BA voting.

New examination and treatment methods (NUB)

New examination and treatment methods (NUB) are medical procedures whose diagnostic and therapeutic benefit and economic efficiency has not been sufficiently proven or been recognised by the G-BA. In inpatient care settings, innovative procedures are permitted with the so-called reservation of prohibition and in outpatient settings, innovative procedures are prohibited until they have been officially approved. However, innovative products (NUBs) whose benefit is not documented by the G-BA must be removed from the ISH’s benefit catalogue. Hospitals can therefore apply all innovative medical devices that have received the CE mark. In outpatient care settings, new technologies need to be listed on the EBM in order to be reimbursed, and the decision on acceptance of new procedures for coverage by the SHI needs to be ratified by the G-BA. However, since the introduction of trial regulations in 2012, the G-BA is also entitled to decide on the testing of a NUB.

Diagnosis related groups (DRG)

The German system of diagnosis-related groups (German DRG; G-DRG) is a system that uses specific criteria to classify hospital cases (inpatient and day-care patients) into certain groups. Patients that require similar types of treatment are grouped into specific groups; every individual patient is thus assigned to a specific group. The DRG-financing system was introduced in Germany in 2003. The G-DRG system is maintained by the Institute for the Hospital Remuneration System (InEK).

 

Website address: https://www.gesundheitsindustrie-bw.de/en/article/news/expert-interview-how-are-the-prices-of-innovative-diagnostic-and-medical-devices-determined