United States: Thinking Bigger: Broadening Regulatory Strategy For New Medical Devices By Planning For Both Regulatory And Reimbursement Approval

One day, Michelangelo entered Raphael's studio, and looked at one of young artist's early works. After studying the small painting for some time, Michelangelo wrote across the top of the canvas 'Amplius,' meaning 'greater' or 'larger.' On a small canvas, Raphael's composition was too crowded and narrow, and its impact could only be felt through an expanded composition.

To succeed in bringing new medical technologies to market, manufacturers developing their regulatory strategy would do well to heed Michelangelo's advice: Think Bigger. Specifically, to meet the demands of the "New Health Economy,"1 a more expansive regulatory strategy must consider reimbursement to ensure the best, most efficient outcome.

Among the many disruptions occurring in the life sciences industry, changes to reimbursement models are placing new pressures on medical device manufacturers. To be sure, enabling speedier patient access to novel innovative devices and demonstrating their value in an already crowded market top the list of challenges.

The concept proposed in this article—combining reimbursement considerations into the development of a regulatory strategy for approval of new medical devices—may not, in and of itself, be novel. However, rapidly evolving reimbursement models lend a new sense of urgency to examining it as a concept and adopting as a tactic.2



A growing trend has emerged over how payers reimburse health care providers for their services: payers are moving away from the traditional fee-for-service model, and instead are basing coverage decisions on health outcomes, financial metrics, or some combination.3 Known as "Pay-for- Performance" or a "Value-Based," such payment models are "the wave of the future."4 While "value" in health care products and services may lie in the eye of the beholder (patient, doctor, payer), in the New Health Economy, "value" means reducing costs and improving health outcomes.5

This change has significant implications for introduction of new medical devices and can be addressed through development of an expanded regulatory strategy development. First, uncertainty regarding reimbursement is rising.6 Payers are imposing more onerous evidentiary requirements to secure coverage of new medical technologies.7 Increasingly, manufacturers will need to present evidence of "clinical value"— i.e., demonstrating that a new technology is an improvement over the existing standard of care, and "economic value"— when ethical and if the economic impact is significant.8

Second, who makes utilization decisions is changing. Under the conventional fee-for-service model, payers act as the gatekeeper to patient access of new medical devices, with health care providers assuming a "countervailing patient advocacy role" to ensure access to new devices.9 Under a value-based model, providers are, to a degree, reimbursed based on health outcomes and efficiencies.10 Consequently, a value-based model may actually lead to providers as gatekeepers, resisting adoption and use of new technology.11

Third, payers are requiring more evidence and using new metrics to assess new technology and to make coverage decisions.12 To ensure coverage by payers and utilization by providers, manufacturers of new medical devices will be called upon to demonstrate "evidence across the spectrum of care management and delivery, including outcomes studies, and analyses and evaluations and patient and population-level of alternative care pathways."13

Likewise, development, selection, and validation of financial and quality-related metrics, and application of evidence to those metrics, will become of paramount importance to the success of new medical devices in a changing industry.14 To adapt to this changing landscape, proactive regulatory planning must include early consideration and of gathering the necessary data to support broad reimbursement.


FDA approval or clearance is a precondition to any public or private payer reimbursement for a new medical device. However, "clearance is no guarantee of coverage"16 by either CMS or private payers, and more importantly, it is "not equivalent with patients getting access to that device."17

Ultimately, decisions regarding regulatory approval or clearance and reimbursement alike depend on evidence gathered to support those decisions. However, the type of evidence gathered at each phase necessarily varies.


FDA approval or clearance is a prerequisite to legally marketing a new device, and the manufacturer must present evidence demonstrating that the device is safe and effective for its intended use. Regulatory strategy for identifying the appropriate path to regulatory approval or clearance is vital to a new product's success, both pre- and post-launch.

Implicit in that regulatory strategy is creating a sound plan for gathering the evidence necessary to submit in support of approval. Clinical trial design, including development and identification of appropriate clinical trial end-points, identification of the targeted patient population, identification of the risks associated with the device and mitigation of those risks, are all within the purview of regulatory strategy.


FDA approval or clearance is the first significant hurdle that a device manufacturer must overcome on the path to market and patient access, but it does not end the inquiry. Unlike regulatory approval, coverage decisions are ultimately concerned with real-world clinical outcomes, and the costs associated with achieving those outcomes.18

To ensure coverage by CMS' Medicare program, for example, a manufacturer must demonstrate that the item covered is "reasonable and necessary for the diagnosis and treatment of illness or injury ..."19 Thus, to be covered by Medicare, a product, or service must fall into one of the statutorily defined benefit categories and be approved or cleared by the FDA.20 For private payers as well, a focus on optimizing health outcomes for a defined population and within budgetary constraints leads to collection of evidence different from evidence collected to ensure regulatory approval or clearance.21



Traditionally, the processes of seeking FDA approval or clearance and securing third-party payer coverage are done sequentially.22 Following FDA's device approval or clearance, payers then assess the new technology and render a coverage decision, as depicted in the diagram below.23

As described above, the type of evidence necessary to achieve regulatory approval is different from evidence necessary to secure reimbursement—demonstrating safety and efficacy versus establishing that a new device is reasonable and necessary. What is more, the timing of seeking a coverage decision —after securing regulatory approval or clearance is different.24 As a result, this "serial" review process extends both patient access to and a coverage decision regarding a new medical device.25

To shorten an otherwise protracted process and to address demands posed by the New Health Economy such as value-based reimbursement, a new tactic has emerged in which regulatory and reimbursement strategy are implemented in parallel, as depicted below.26

Effective execution of this strategy requires broader consideration and proactive planning to gather the requisite evidence necessary to collect and to do so earlier. Consequently, the widespread adoption of value-based reimbursement should drive development of a broader regulatory strategy in the New Health Economy.


As described above, both FDA approval or clearance and third-party payer coverage rely on evidence developed, gathered and analyzed during different phases of the medical device product development cycle. Forming a regulatory strategy that timely accounts for gathering evidence to support both regulatory approval and thirdparty payer coverage for new devices can lower the barriers to early market access posed by value-based reimbursement models. Indeed, both the FDA and CMS have recognized the importance of this new strategy.

During a November 21, 2014 presentation, FDA's Ken Skodacek presented the slide27 above, explaining that for FDA, "it's all about gathering evidence," and "if you're gathering evidence for FDA to meet certain needs ... I want you to think about gathering evidence for other stakeholders along the way."28

Such information gathering had been underscored on October 7, 2011, when FDA and CMS announced their joint "Parallel Review" pilot program. "Under the ... program, CMS and FDA offer concurrent review of medical devices for FDA approval and Medicare coverage."29 FDA described the goal of the pilot program as follows: "Both agencies rely on clinical data in reaching their decisions, and while the two agencies have distinctly different regulatory responsibilities, parallel review can reduce time between FDA approval and Medicare national coverage determinations."30 Indeed, the program's "linchpin" is the "increased interaction between the primary stakeholders, ideally leading to a clinical trial that meets the needs of all parties involved."31 Importantly, Parallel Review is designed to reduce the lag between regulatory approval and determination of CMS coverage by as much as six months.32

Although innovative, Parallel Review has limitations. Not only is the program voluntary, it is also only available "for qualifying new medical device technologies." Further, only five devices per year can participate in the program.33 Recently renewed, the program is set to expire on December 18, 2015.34 Of course, nothing about the pilot program changes the "existing separate and distinct review standards for FDA device approval and CMS coverage determination."35

To date, only one device has been approved through the parallel review program. On August 11, 2014, FDA approved Exact Sciences' "Cologuard," the first stool DNA-based colorectal cancer screening test, and simultaneously, CMS issued a national coverage determination (NCD).36


In addition to the Parallel Review program, FDA has created a task force on reimbursement, the mission of which is to "[s]treamline the pathway regulatory clearance or approval to reimbursement to support patient access to innovative medical devices."37 To do so, FDA is working to "[d]evelop a voluntary process that facilitates earlier interactions with payers ... about evidence to support coverage and reimbursement."38 Similar to Parallel Review, FDA is proposing a mechanism whereby device manufacturers can request a pre-submission, confidential meeting with FDA and one or more private payers to shorten the time between device approval and a coverage decision.39

Like Parallel Review, nothing about this mechanism changes the method by which FDA evaluates safety and effectiveness.40 Moreover, the program is voluntarily for manufacturers and payers, with manufacturers inviting payers to attend the pre-submission meeting and otherwise participate in the process.41

The benefits of these voluntary initiatives are farreaching and signal FDA's understanding that all stakeholders need to adapt to industry-wide changes. For patients, FDA's initiatives represent an effort to fulfill its goal of enabling "[e]arlier access to innovative technologies."42 For payers, these programs represent a chance to obtain earlier information about new technologies, understand the FDA review process, and offer meaningful input into the data and analyses most useful in making coverage decisions.43 For device manufacturers, they have an early opportunity to understand payers' evidentiary needs in making coverage decisions, evaluate and address coveragerelated issues sooner in the regulatory process, and obtain earlier reimbursement decisions.44


Systemic changes in the New Health Economy are having ripple effects throughout the spectrum of health care. In particular, a shift to value-based reimbursement models means that all stakeholders must identify strategies for reducing costs and improving health outcomes.

For manufacturers developing innovative medical devices in this environment, their regulatory strategy should incorporate reimbursement considerations. Indeed, the two gatekeepers for entry to market—FDA and CMS—have signaled a combined willingness to facilitate the success of new medical technologies by encouraging parallel review of both regulatory approval and coverage. Adopting a broader regulatory strategy to plan for gathering evidence to simultaneously meet the demands of both approval and coverage is an important tactic in establishing and demonstrating the "value" of new medical technologies.


1. PwC Health Research Institute, The FDA and industry: A receipt for collaborating in the New Health Economy, Jan. 2015, p. 2.

2. Long, G., et al., "Evolving Provider Payment Models and Patient Access to Innovative Medical Technology," J. of Med. Econ., (Accepted for publication in 2014), pp. 1-2.

3. Id., p. 4.

4. Id., pp. 3-4, 7.

5. PwC Health Research Institute, p. 10.

6. Long, G., et al., p. 10.

7. Id.

8. Id.

9. Id., p. 11.

10. Id.

11. Id.

12. Id., pp. 14-15.

13. Id., p. 15.

14. Id., pp. 14-15.

15. Roger Murdock (Kareem Abdul-Jabbar) to Capt. Oveur (Peter Graves) in Airplane! (1980).

16. Judith Hickey, "Considering Reimbursement Issues During the Regulatory Planning Process for Product Success," RA Focus (June 2006), p. 34.

17. "FDA Task Force Aims to Solve Lag between Device Approval and Reimbursement," Homecare, Dec. 19, 2013.

18. Felix W. Frueh, PhD, "Regulation, Reimbursement, and the Long Road of Implementation of Personalized Medicine," Value in Health 16 (2013), p. S29.

19. Hickey, p. 33.

20. Id.

21. Id.; Blue Cross Blue Shield Association Technology Assessment Criteria: http://www.bcbs.com/blueresources/tec/.

22. Ken Skodacek, "Improving Patient Access Through Early Collaboration," FDA/ CDRH, Nov. 21, 2014, p. 12.

23. Id.

24. Id.

25. Id.

26. Hickey, p. 32; Frueh, p. S29; Skodacek, p. 12.

27. Skodacek, p. 5.

28. FDA/CDRH Transcript from "Brain-Computer Interface (BCI) Devices for Patients With Paralysis and Amputation," Nov. 21, 2014, pp. 38-39.

29. "FDA, CMS launch pilot program for voluntary parallel review of innovative devices," FDA News Release, Oct. 7, 2011.

30. Id.

31. Rothenberg, Stephen, et al., "What Parallel Review Means for Manufacturers," BIOTech Now, Mar. 12, 2012.

32. "FDA approves first non-invasive DNA screening test for colorectal cancer," FDA News Release, Aug. 11, 2014.

33. FDA News Release, Oct. 7, 2011.

34. 78 Federal Register 76628, Dec. 18, 2103.

35. "FDA-CMS Parallel Review," http://www.fda.gov/MedicalDevices/ DeviceRegulationandGuidance/HowtoMarketYourDevice/ PremarketSubmissions/ucm255678.htm.

36. FDA News Release, Aug. 11, 2014.

37. Skodacek, p. 10; FDA/CDRH Transcript, pp. 39-40.

38. Id.

39. Skodacek, p. 13; FDA/CDRH Transcript, pp. 39-40.

40. Skodacek, pp. 13-15.

41. Id.

42. Skodacek, p. 16.

43. Id.

44. Id.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.