While gaining market access in any country certainly is no cakewalk, U.S.-based med-tech firms may find that with a little due diligence their products can find a home in the Federal Republic of Germany. In fact, Jo Ellen Slurzberg, vice president of global health policy at JR Associates (California) said the coverage and reimbursement landscape for medical technology and diagnostics in Germany is similar to that of the U.S.
Speaking exclusively with Medical Device Daily, Slurzberg outlined some of the key regulatory and cultural differences that global med-tech companies need to factor into their market strategy for Germany.
Number 1: Hospital cost constraints are very tight in Germany, so hospitals are sensitive to adopting new, expensive technologies.
"Hospitals work on a budget, and they have to determine what new products they can [afford to] bring in, so you have to make a case to the hospital about purchasing a new product," Slurzberg said. "Especially if a payment level is not yet established, your economic argument is to the facility."
Because hospitals budget annually, timing also is a major factor. This is particularly true for innovative products or procedures with costs that fall outside a German diagnostic related group (G-DRG), which also are updated annually and are based on claims data from the previous two years. Therefore, there is lag time between CE mark, the launch of the product, and payment updates that reflect the cost of new treatments.
Like the U.S., Germany does offer an add-on payment opportunity for innovative technologies called a NUB (Neue Untersuchungs und Behandlungsmethoden). However, the application process happens on an annual basis, and each individual hospital where the technology may be used has to apply. Therefore, Slurzberg said, companies have to be mindful of the product type and other innovation applications the hospital is making, and how the innovation monies will affect the hospital budget.
"The bar is pretty high for truly innovative products in Germany, and you don't usually get there the first time you try," Slurzberg said. "It may take a couple of years before a new technology qualifies for extra payment because there is a strong emphasis on clinical data. Because the clinical evidence requirements for a getting a CE mark typically are lower than they are for getting an approval in the U.S., the challenge is that manufacturers don't have a lot of data to support the clinical effort or the NUB application."
"Don't move too fast before there is sufficient data to support the NUB application," she added. "Sometimes the best strategy is to wait."
Number 2: The setting in which the product or treatment is administered makes a big difference in payment rates. In the inpatient setting, treatment is based on the standard of care.
"If you have a product that is being used on an inpatient basis, there really isn't a coverage issue, with some exceptions for bariatric surgery now, and chronic obstructive pulmonary disease in the future," Slurzberg said. "For most inpatient procedures, treatment is based on standards of care and is at the discretion of the treating physician."
In Germany, procedures are covered and paid through funding by regional health authorities, and a small percentage of private health insurers. "Outpatient treatment standards and payment is driven by medical societies who put standards in place and determine value units associated with the procedure, which determines the payment to the clinic," Slurzberg said.
Number 3: In Germany, physicians are not reimbursed on a fee-for-service basis, which changes the incentive structure compared to the U.S. Having salaried physicians mean that physicians are not financially incentivized to perform more procedures.
"In the U.S. the physician is always paid separate from the hospital, but since physicians in Germany are salaried. there are not the same incentives for doctors," Slurzberg said. "The incentive structure in the U.S. is that doctors do more because they get paid on a per-item basis. Outside of U.S., that structure does not exist."
Number 4: Germany does not use cost effectiveness as the UK and some other EU countries do as a driver to determine whether to allow a treatment to be done. For inpatient treatments, hospitals will examine their own internal costs and cost offsets related to new technologies..
"So when a new, more expensive product in a category that already exists – such as pacemakers – is added as part of the standard of care, the device is covered as part of the procedure and the existing payment does not go up to reflect the increased cost of the product," Slurzberg said. "Instead, budget neutrality means when they add something new, the offset has to come from somewhere else in the system. This is not unlike how prospective payment systems function in the U.S."
To be successful under such constraints, companies need to show where their product is going to reduce cost by shortening the operating time or the length of stay, or by eliminating a more expensive product or procedure, for example. "But if you want to charge more, you need to clearly demonstrate that the device has a greater value and will offset cost somewhere else in the system," Slurzberg said. "This means that the manufacturer may need to produce clinical evidence beyond the regulatory requirements."
Number 5: Mind Your Manners.
Germans prefer formality in all correspondence, including e-mails.
"The main thing we see is too much informality in correspondence," Slurzberg said. "In Germany and other parts of the EU, they are really buttoned up, so titles and formalities are very important until you are familiar with the person with whom you are communicating. You have to be aware and err on side of being more formal and ask if you do not know. Just be mindful of the cultural norms."
Overall, Slurzberg believes every company should consider developing a multi-national marketing and reimbursement strategy so that the company can leverage clinical data and lessons learned. Germany is a very large market and because their coverage and reimbursement system is similar to that of the U.S. in many respects, it can prepare a company for issues that may arise in the U.S.
"There are ways you can develop a strategy to meet the reimbursement needs of multiple countries, so you have to think about pricing and the data you might need to demonstrate the economic rationale," Slurzberg said. "Your market strategy should assume that you are going to be in all these markets so you can gain the most out of all the work you are doing."
Having a global strategy is particularly important. The key, Slurzberg said, is to think strategically then tactically.
"If a product has negative assessment outside the U.S., all countries access that information, and now many assessments are in English so they are accessible to the U.S. payers," Slurzberg said. "You can't look at regions or countries in a vacuum anymore because what happens in one is going to affect how others view your product and could negatively affect your ability to do business elsewhere. It makes no sense to spend all that money to gather evidence for one region or country when you can think globally and gather information to support reimbursement in other regions as well," she concluded.