Companies face higher hurdles to approvals, with an intensifying pressure to demonstrate cost-effectiveness driven by healthcare reform.

Paul Krell, CEO of CNSystems Medizintechnik, is introducing a novel continuous monitoring blood pressure device expecting a 2010 market launch.

He said he agreed with an observation that healthcare reform in the U.S. will translate to "more patients asking for treatment as they will increasingly have access to higher technology medicine."

Yet, he added, "Cost-effectiveness is going to be the key," he said.

At EuroMedtech 2009, Krell described for an audience of fellow device makers his recent experiences that demonstrate the complexity of making a case for product effectiveness in a new landscape shifting to hard data health economics models rather than theoretical projections.

"We just had meetings with U.S. distributors and the first question we were confronted with was not so much the price of the product, but the cost-effectiveness of the price," he said.

"We were originally thinking of promoting the product on a more traditional capital investment product model. But we have switched to a consumable product model now and here the cost-per-patient measure is the single most important feature we had to discuss with the distributor, who knows the U.S. market very, very well," Krell said.

"Interestingly enough for us, in the monitoring business the distributor said that anything that is above $10 per patient for monitoring perioperatively is going to be very difficult," he said. "That becomes the threshold where the anesthesiologist is making a decision on whether to use a given device for a patient. And we will need to demonstrate this cost effectiveness not only against competitors who offer intermittent monitoring but maybe even more importantly against not using any device at all.

After this background, Krell outlined the hidden traps for medical device companies in this new environment.

Once a company demonstrates a solid case for cost-effectiveness, the question becomes who benefits from cost savings. Is it the customer buying the product or a general savings to the healthcare system, and is this an incentive to buy?

"The additional level of difficulty we see associated with this are the different budget pots that funding or savings comes out of," he said.

"Staying with our product as an example," he said, "if we can show we avoid a hypertensive episode for a patient because we detect the hypertension earlier than intermittent monitoring would do, then the anesthesiologist is paying $10 per patient per operation to avoid this. But what budget pot really benefits? Which pot would have to pay if a hypertension episode treatment is required because the machine is not used by the anesthesiologist and the episode does in fact takes place? It is likely not the anesthesiologist who has to pay for the episode."

"We do not have an answer to this, not in Europe or in the U.S.," Krell said. "Where do we generate the cost savings? In a department, in a hospital or a general healthcare system budget? These all imply very different approaches for our product marketing."

— John Brosky, European Editor