Adv. Lynn Shapiro Snyder, senior member in the Health Care and
Life Sciences Practice at the US law firm Epstein Becker & Green recommends
considering the insurance aspects of a treatment even before applying to
the FDA.
This article was written by
Gali Weinreb for Globes. It appeared in the print edition (in Hebrew) on
January 15, 2006, and in the online English edition on January 18, 2006.
It is reprinted here with permission.
"I always tell my clients, start planning your journey from your final
destination, and work your way back. Otherwise, what are your chances of ending
up where you intended?" says Adv. Lynn Shapiro Snyder, senior member in
the Health Care and Life Sciences Practice at Epstein
Becker & Green PC one of the largest US firms specializing in healthcare.
Read the press release about the medical reimbursement seminar.
What Shapiro Snyder means is that anyone interested in marketing medical products
in the US should consider all the development stages through the eyes of a healthcare
insurance company. Small differences in development, clinical trials, and product
registration can have fateful repercussions on the ability to launch the product
on the market. "In my opinion, the issue of insurance should be carefully
considered even before building a product’s prototype, and before conducting
animal trials," she says.
Shapiro Snyder was the guest of honor at this
week’s healthcare insurance
conference in Tel Aviv hosted by Trendlines International Ltd. [The Trendlines
Group], the Maryland/Israel
Development Center,Israel
Life Sciences Industry (ILSI), Israel
Export and International Cooperation Institute,Sunrise
Projects, and Epstein Becker & Green.
She is Jewish and has close ties with Israel. "I understood from my
partners that Israeli life sciences companies already have very sophisticated
relations with the US Food and Drug Administration (FDA), but their know-how
on working with insurance isn't at the same level."
Shapiro Snyder says insurance is usually an equally important part of the
process, and sometimes the structure of an application to the FDA should be
derived from an understanding of insurance. A small example: almost all insurance
policies explicitly state that they do not cover hearing aids, but finance
the purchase of an ear implant that aids hearing. This is because the company
marketing this ear implant was clever enough to register it with the FDA as
an "artificial organ," not as a hearing aid.
Historically, the
US health insurance market was a market of private companies, and there was
no government health insurance. Even now, most US citizens must see to their
own health insurance, and they usually join a collective healthcare plan through
their place of employment. "In the US, there are thousands
of different insurance plans, each of which has slightly different rules.
There are leading players, but no one company dominates the market. The US
differs from Israel in this way. In Israel, the number of insurers is in the
single digits, and Clalit Health Services has half of the market. The US is
completely different from countries where insurance is wholly financed by
the government, which is the sole buyer."
Although there is no complete healthcare plan in the US, there is an opinion
maker: the federal Medicare and Medicaid programs. Medicare finances health
insurance for people over the age of 65, most of whom are retirees, and most
of whom cannot get insurance from companies. Medicare is a health program
for the poor. Poor elderly Americans are eligible for both programs. Through
Medicare, Medicaid and a few small programs for military veterans, government
and state employees, and the chronically ill, the US federal government finances
45% of total US health spending. If a company's product is designed
for the elderly or the poor, rather than the young and the rich, this will
help the company in the US. The US federal government spends $295 billion
a year through Medicare. 41% of healthcare spending is financed by employers
and 14% by patients. 15% of Americans have no health insurance of any kind.
Shapiro
Snyder says, "Many companies examine Medicare policies when
they decide whether to finance a particular product or treatment. There are
those who won’t include your product in their plan, until you can show
that Medicare does. With other plans the opposite is the case: they can approve
new products quickly, especially if the products clearly show they’re
cheaper and more effective than existing solutions. Medicare, as a government
program, operates more slowly." In general, Shapiro Snyder supports
a foot-in-the-door policy: once a product is included in a healthcare plan,
this can be used as a precedent with other plans.
Let’s assume that I’ve developed a product
that is excellent for patients, but is costly for insurance companies. Is
there a strong patients lobby that can pressure insurance companies to finance
the product?
Shapiro Snyder: "First of all, there's
a chance that at the insurance companies there’s someone who will say, ‘This
is an expensive but life-saving product. We'’ll finance it.’ All
in all, these companies are competing with each other. If this doesn't
happen, it’s necessary to hire lobbyists who will pressure the insurance
companies. Until a few years ago, these were mainly doctors, because patients
didn't know the new products or how to evaluate them. In recent years,
it has been the patients who come to doctors with pages and pages downloaded
from the Internet, and know more about their illness than the doctor. A patient
who contact his or her insurance company to obtain a treatment, and discovers
that it isn't covered, can file an appeal asking for coverage on the
grounds that special circumstances require this treatment. If the appeal
is accepted, followed by another one, and another, the companies might change
their comprehensive policies.
"I always tell my clients, "If you believe in the product,
never accept 'no' as an answer.' There are always other
options."
Israeli companies already know how to present their products
as cheaper for insurance companies than existing solutions. What else do
insurance companies look at when evaluating a product?
"The cost of treatment is very important. Even if a product
saves an insurance company money immediately, it's important to emphasize
the saving from returning a person to full health, avoiding complications,
avoiding long-term care, and so on. Lately, we've tended to present not only
the total cost of treating a patient, but also the total costs of treatment
for the family , because we've begun to discover that looking after a family
member with a severe chronic disease is liable to cause the health of other
family members to deteriorate, due to stress, depression, and the neglect
of health by the caregivers themselves.
"There's also a preference for products that make possible treatment at
private clinics, rather than at hospitals, and preference for treatment at home
over treatment requiring a visit to a clinic. When it comes to the elderly, special
attention is paid to ease of use. Anything that leads to adults treating themselves
correctly, not to forget, err, or forego is welcomed by insurers."
If you encounter repeated refusals, maybe you’re making
the presentation in the wrong way.
"It may be necessary to conduct further clinical trials,
but this time from a health economic perspective: can the product replace
an existing product? What are the rates of return to work over time? Naturally,
it's better to gather such data in the first clinical trials for the
FDA. However, it is possible, and even worthwhile, to design trials so they
can be used as marketing tools vis-a-vis the insurance companies."
Advice for investors
Epstein, Becker & Green not only advises companies, but also
potential investors wanting to know whether the companies they’re considering
investing in have a chance of obtaining coverage for their products, and what
the final price is likely to be. Shapiro Snyder lists some questions that should
be asked:
Who the target users that will profit the most from the technology,
and which plans cover these users? This question can change the way research
is conducted, so that the target users being examined are the target users
for the relevant insurance plan. In addition, it may be possible to use information
found at insurance companies as part of the clinical trial planning process
and as a supporting document submitted to the FDA
Where will the treatment
be given? At home, at a clinic, or in hospital? It might be worthwhile to gather
data on how the product is used in each of these places.
Does the product cure
the patient, or only contribute to lifespan and quality of life? If the contribution
is extending a patient’s life, what is
the average extension? If the contribution is to the patient’s quality
of life, what can the patient do that he or she could not do before
How does
the product stand up in competition against other possible treatments for
the same patient, including doing nothing? How is it better or worse?
How
much will the product cost an insurer, how will a hospital profit relative
to its investment, and how much will the patient have to pay personally?
Each
of these factors can be a potential entry barrier. "There are
companies that celebrate when they obtain insurance coverage, but fail to
notice that the coverage is ridiculously low," says Shapiro Snyder.
